It's Still 2008.

Over at the City Journal (h/t: Ace), Nicole Gelinas argues that the recession has been prolonged because the cause of it has not been dealth with. To wit: the mortgage-backed toxic assets that 2007's Super SIV (Structured Investment Vehicle) and 2008's TARP are still there, and they're ready to wreak havoc as soon as the Fed tries to do anything with them:
That’s what started to happen just a few weeks ago, when the

Fed gingerly tried to declare victory. Because the central bank figured that markets were returning to health, it decided to sell some of its AIG-related securities. After the Fed made its move, an index that tracks this type of securities plummeted, after having doubled in the previous two years. The Fed panicked and made an unusual announcement that it wouldn’t try for sales again any time soon. The index then rose by double-digit percentage points.
These are not signs of a healthy financial market. Those toxic assets are still there, and they’re spreading their poison into the rest of the economy. Private businesses have no idea what will happen when the Fed pulls away all its support—or what will happen if the Fed doesn’t pull away its support. So companies hoard cash rather than create jobs. People, too, hoard cash. Stuck with the bubble’s hangover of private debt, they have no idea how they’re going to pay for their kids’ education or their own retirements. Even employed people without much debt are terrified that they’ll lose their jobs and won’t get new ones—so they don’t spend money, further depressing consumer spending and killing more jobs.

Obama's trillion-dollar Stimulus is utterly beside the point: it was merely the Illusion of Action, miles away from the actual source of the problem. Which means that he not only doubled-down on Bush's initial mistake, he added a new one. When the market isn't allowed to do its job, the market becomes bloated and stagnant.
Read the whole thing.