I'm back! Just in time for the Apocalypse...

Boy, I missed a lot over the past few weeks: Biden's impeachment, the discovery of Sarah Palin's lesbian porn escapade from 1986, Dick Cheney's bizarre shoplifting incident at a Wyoming car wash, the discovery of a strange magnetic anomaly on the Moon's Tycho crater, and the revelation that Michael Jackson staged his own death. (No, really!)

Fortunately, I came back in time to discuss the big story: We came parlously close to Armageddon in the closing days of the W administration.

The Bush administration and Congress discussed the possibility of a breakdown in law and order and the logistics of feeding US citizens if commerce and banking collapsed as a result of last autumn's financial panic, it was disclosed yesterday.

Making his first appearance on Capitol Hill since leaving office, the former Treasury secretary Hank Paulson said it was important at the time not to reveal the extent of officials' concerns, for fear it would "terrify the American people and lead to an even bigger problem".

(Emphasis added.) What's frightening about this story is not the just image of the hapless Dubya trying to figure out how to put food on our families. It's the hard, indisputable, confessed fact of official lying. Here's what Paulson said on October 14, 2008:

The overwhelming majority of banks in the United States are strong and well-capitalized. These actions will bolster public confidence in our system to restore and stabilize liquidity necessary to support economic growth.

America is a strong nation. We are a confident and optimistic people. Our confidence is born out of our long history of meeting every challenge we face. Time and time again our nation has faced adversity and time and time again we have overcome it and risen to new heights. This time will be no different.

I suppose that one can excuse putting one's best face forward during a time of crisis. Justifiable mendacity, one might call it. But such mendacity, justifiable or not, calls into question pretty much every subsequent official pronouncement.

In that light, let's take a look at the latest poop from good old Larry Summers:

According to a statement made by the National Economic Council Director, Larry Summers, while a full economic recovery may take its course to materialize, the stimulus plan of the Obama administration is working and the past few months have seen the economy stabilize.

In his speech at the Peterson Institute for International Economics - a non-partisan think-tank which focuses on global economic policy - Summers said that with the business and consumer confidence having risen, there are indications that the gross domestic product of the country "is on a close to level path with prospects for positive growth to commence during this year."

Mentioning of yet another optimistic, yet unusal, indicator of the progress on the road to recovery, Summers said that Google searches for "economic depression," which had increased by a factor of four, are now back to their pre-recession levels!

Summers also added that another cause for optimism is the slowing pace of economic contraction; and the fact that the Wall Street institutions that received federal aid have started showing unexpectedly better earnings!

Don'tcha love the way each sentence ends with an exclamation point? I feel like I'm reading a 1967 DC comic book.

Alas, as it turns out, things may not be so rosy! In fact, the real shit may not have yet impacted the fan! We may be doomed!

* Banks are walking away from homes they acquired through foreclosure.

* The majority of those on unemployment will soon lose their benefits, precipitating another crisis. Indeed, one could argue that the real crisis was merely postponed by the dole.

* Harley-Davison's profits have plummeted 91%.

* The University of California system will suffer a 20% budget cut.

* The unemployment rate tops 10% in fifteen states, with more states soon to join the party:

"A lot of older industries are having to shut down and many of these jobs will never come back," said Bernard Baumohl, chief global economist at the Economic Outlook Group.

Many workers have seen hours trimmed, their pay cut and have lost benefits. Combine that with a dismal housing market making it difficult for people to sell their homes and move to other places to find work, some jobseekers are trapped.

Remember: People who run beyond their 26 weeks of unemployment benefits aren't counted in those unemployment figures. As noted above, most of those now receiving benefits soon will join that unhappy group. The official unemployment figures are thus deceptive, and will stray ever further from reality over the coming months.

* A new crisis in commercial real estate will soon hit.

That dark cloud is the commercial real estate sector. With rent prices falling and vacancies rising due to the recession-weakened economy, delinquencies on commercial mortgages are already escalating steeply. And the credit crunch bred from the recession is often making it impossible for property owners to avoid deeper trouble by refinancing.

“It’s a one-two punch combination: First, soaring vacancies take the wind out of positive cash flow; then the credit crisis hits like a rabbit punch, snapping off the main arteries to refinancing,” says Money Morning Contributing Editor Shah Gilani, a retired hedge-fund manager and expert on the U.S. credit crisis who predicted the implosion of the commercial real estate sector several years ago. “This is like Samson hitting the ground. The giant asset class we call commercial real estate is not going to get up any time soon.”

When the new crisis hits, the government will have to bail out banks yet again, making it impossible to fund a much-needed further stimulus package or to extend unemployment benefits.

* There's also a looming crisis in sovereign debt -- and this may be the killer crisis that upends everything. This stuff gets complicated and my bag it is not. But if I understand the sitch correctly, we may soon have to face the civilization-ender.

Governmental entities of all sorts -- nations, states, cities -- have borrowed heavily. You already knew that, of course. What you may not have known is that much of this debt is covered by credit default swaps, a form of insurance. The subprime crisis taught us a lot about the dangers of credit default swaps.

If nations default, the banks selling the credit default swaps will be hit very hard. Very, very hard. Of course, banks are now considered holy institutions which may not fail. Naturally, they will seek bailout money from national governments -- which will have to go further into debt, leading (in all probability) to more defaults. And so on.

The result could be far worse than the subprime crisis which had Paulson and Bush talking about how to feed the U.S citizenry after a financial collapse. A lot of people were far too willing to blame that crisis on black home-owners. Who will we blame when Italy or Japan or Vietnam or California undergoes a "credit event"?

* So where are the new jobs going to come from? Beats me. Beats Business Week.

But hey -- Larry says that the Google searches for "economic depression" are down. So, in the immortal words of Bozo the Clown: Always keep laughing!