The cheh shaped recovery – Part I: End of the beginning

Cyrillic letter depicts the FIRE Economy Depression
Defusing the Dollar Bomb
What mixes like oil and water? Deflation theory and $70 oil.

Forget the boom bust cycle. This economic crisis spells the end of the FIRE Economy. The elongated process of devolution has many components, from the FIRE Economy debt hangover that drives the Debt Deflation Bear Market to Peak Cheap Oil. Going into midterm elections in 2010 with U-3 unemployment over 10%, the political component looms large.

Political Pig Pile

Harsh cover article in this month’s Harper’s Magazine. Kevin Baker in "Barrack Hoover Obama" hammers the new president for lack of sack. The chorus of armchair presidents including Bill Maher opines: the policy of do-it-all bi-partisan appeasement is failing. You can’t reason people out of their perceived self-interest. Obama should channel his inner Dick Cheney to bring out the conniving take-no-prisoners ass kicker within to punch a pared down to-do list.

To be fair, the administration inherited an overflowing economic outhouse built atop 30 years of politically expedient policy effluent dumped by both Republicans and Democrats. Monetarist in booms, Keynesian in busts, by turns the two parties filled the ground that was America’s productivity promise with a heap of reeking debt to overflowing.

The soggy floor above it all sagged under the weight of the Bush administration’s megalomaniac military ambition to keep oil cheap by force of arms starting in 2001. Oil prices responded by heading in the wrong direction and the floor caved in. But as hastily as the GOP scampered from the building as all the floor boards crumbled away President Obama leapt in like a kid into a lily pond on a hot summer’s day, without so much as holding his nose.

At a news conference at the end of April, he said that one of the biggest surprises of his first months in office was the sheer number of crucial issues that have come to the fore at the same time.

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