Excuse me if I take politics off for a while. (Picture from Estelle Carol of EstelleGraphics.)

Despite the excitement both sides feel toward political minutia, politics is still generally driven by the economy. Without profound economic change there is no real political turmoil, just the appearance of such created by politicians, pundits, and a press that demands stories.

For the last quarter, officially, GDP was up 3.8%. (Actually, it was up at an annual rate of 3.8%, but that's how it was reported.) Sounds good. Is good. Employment is even up in Silicon Valley. It's not the go-go 1990s, but then what is?

On the other hand we already know what will cause the next recession. Debt. The world economy is running on twin Ponzi schemes right now -- our willingness to create debt, China's willingness to buy debt. Those trends can't continue indefinitely. China's currency must rise in value to reflect the country's holdings of our assets, and our currency must be devalued to reflect our Peronist economic policy.

There is no such thing as a "soft landing" from that unwinding. There are literally trillions of dollars in real estate debt whose holders think it's backed by the U.S. government, but isn't really. (It's backed by two quasi-government agencies, FNMA and FHLMC.) Popping that bubble will make the dot-bomb look like a picnic.

All this is just a matter of time. How much time? I don't know. No one knows. Judging by the yard signs around my house, that process may have already begun. Where the "street spam" here in Kirkwood was once all about "we'll buy your house for cash" now I'm now seeing "buy your own house" and "investment opportunity" signs. Bond yields are up, meaning the cost of money to buy housing equity is up. And this is before the Chinese hammer falls.

Meanwhile the debt mountain continues to pile-up in Washington. Some analysts see it, but no real action is anticipated. Even the "tough" anti-deficit package recommended by some Republicans won't bring the budget into balance, just reduce annual borrowings a bit.

The next recession is "baked into" the economy, in other words. Its depth, and our response to it, will determine the course of our future politics. Not abortion. Not Iraq. Not Fitzgerald. Certainly not our Internet policy.