While it is perfectly true that arbitrage trading could, theoretically, decline a market in a matter of seconds, are economic solutions comparably fast in the digital age? We don’t think so.

In fact, because the possibility of electronic trading could literally wipe out a market, the leadership of those markets implemented a system of brakes to slow, considerably, any electronic trading that could wipe out the market. So rest easy. The DOW won’t drop to zero.

However the answer to our query will not be so comforting. The simple truth is that economic crises do not happen with the singular act of a decline in markets. Those are simply reflective of other conditions, usually on Main Street, not Wall Street. Usually, those crises start innocently, or unnoticed and take on their own momentum, cascading to a point where markets become affected.

This process can take months or even years, and so too, the cures can take two, three or even ten times as long.

Solving economic crises, depressions or recessions is not a matter of uploading a new protocol to the Internet or fixing a broken integer in a database. Instead, it is a slow, painstaking and very difficult process that invariably rattles everyone in the process.

Our present Depression 2.0 (as we call it), is not going to be solved by President Obama’s economic recovery team tomorrow, next week or possibly in his first term. When it finally is resolved, things will not be the same as they were in 2006, with fast flowing capital, easy deals and easy credit. Rather, a whole new world of finance is being drafted now, and each line of those drafts will change a dozen times over before something becomes suitable to bring about a slow recovery.

Just as government didn’t notice that things were heading towards depression, they probably won’t notice the recovery until it is well underway. It is often hard to determine, even for the best trained and most observant economists, whether an economy is heading upwards or downwards in the long-run.

For one thing, the majority of economists, particularly government economists, work from statistical data – those wonderful reports that provide information on an infinite number of conditions in the national or global economy. Yet with their noses to the grindstone and the figures swirling in their heads, more often than not, such economists cannot see the real world numbers taking shape in real-time on Main Street or your street.

Usually, what happens in the real world doesn’t actually catch up with the statistical data for as much as six, sometimes more than 12 months. Until it does, the professionals who report economic conditions are often in the dark. Worse, each individual department, either as agencies or divisions within agencies, focuses its attention on unique and individual components of the economy.

This keeps reporting isolated and un-coordinated and ultimately, prevents those economists from seeing the holistic picture.

One of the fundamental reasons Epicurus Institute’s economists have been successful and accurate in reading the economic trends have been that we focus on real conditions, not solely upon economic reporting. When you consider that we wrote about the present condition as early as 2007, it should come as no surprise that we did not rely upon the same sort of empirical data sources others find so comforting.

Moving forward, a new stimulus plan is about to be forged. Will it work? Possibly; and then again, maybe not, but no matter which, it will move funds – a little.

Congress, the FED and Treasury have remained totally blind-sided to the same facts we at the Institute have seen since 2003. That banks have lost the ability to police themselves and that as a result, the investor class will not put pen to paper to buy a single share in lending backed securities until the system is cleaned up and loans are safe again.

As perception is as valuable as reality, government must consider that the average investor now perceives banks as unsound, irresponsible and poorly managed institutions incapable of initiating and closing a safe loan. The perception is not necessarily true across the board, but is, unfortunately quite accurate with some of our larger commercial banks.

To prevent the public perception from becoming the de facto belief of investors, government’s first order of business must be to implement solutions that improve the lending process and provide independent, reliable third-party oversight of the lending process. Without this, investors will remain unwilling to buy bank securities, effectively keeping the banking system in lock-down mode for years.

Yet in any crisis, it is so easy to become distracted by seemingly important issues and blinded to the reality and true priorities. Congress, and indeed even the White House are distracted by things like executive compensation and spending by companies that received TARP funds. While these are important, they are fundamentally not the cause, nor the effect of the crisis.

Bad lending is the cause and so everyone needs to get on that bandwagon or the Depression will remain in full force for at least ten, possibly as many as 15 years.

Knowing that, what would you priorities be?