Credit markets have started to thaw, yet stocks and the larger economy keep sliding. What's going on? Among the problems are the reality of recession and the uncertainty over Barack Obama's policies.

The original bubble was in housing prices and mortgage-related assets, which the Federal Reserve helped to create with its negative real interest rates from 2002 into 2005. This was Alan Greenspan's tragic mistake, not that the former Fed chief will acknowledge it

As for the second bubble, this one began in August 2007 with the onset of the credit panic. This is Ben Bernanke's creation. The Fed chose to confront the credit crunch as if it were mainly a problem of too little liquidity, not fear of insolvency.

The Fed's liquidity burst nonetheless sent markets for a 14-month loop, as the nearby charts indicate. The Fed created a commodity bubble of record proportions, with oil doing a round trip in a single year from $70 up to $147 and back down to $69 yesterday.