There is a rumor — which we started ourselves — that Captain Francesco Schettino of the Costa Concordia has been invited to join the Federal Reserve.

Obviously, in view of the recently released minutes of its meetings in 2006, the Italian ship’s captain and the Fed are meant for each other. Both are prone to error, cowardice and confusion.

Ben Bernanke in 2006, just as the housing and finance bubble was reaching its zenith:

“I think it would take a very strong decline in the housing market to substantially derail the strong momentum for growth that we are currently seeing in the economy.”

“Capital markets are probably more profitable and more robust than they have perhaps ever been,” added fellow Fed governor Kevin Warsh.

A year later, the great ship hit the rock that was clearly visible to dear readers and to anyone else who cared to look — subprime mortgage debt.

Captain Schettino will probably never be asked to take command of another cruise ship. But Captain Bernanke and his crew are still at the controls of the US economy. Apparently, they still have no idea where they are…or where they are going.

They think we’re coming out of a recession. But the recovery is so slow and so hesitant, that the press has begun referring to it as a “Great Recession.”

Wrong on both counts, in our opinion. It’s not a recession. And certainly not a great one. It’s not a recession because it is not a temporary setback for an otherwise healthy economy. Instead, it is a turning point…a major turning point.

Besides, a ‘great recession’ is self-contradictory. It’s oxymoronic. Like “prudent banker” or “honest politician,” the words don’t go together.

If it were a recession, it might end soon, and then the economy could go back to what it was. But that can’t happen. Because the economy pre-2007 depended on a couple of myths and more than a few frauds.

The biggest myth was that housing would rise forever. This is what allowed households to go further and further into debt, confident that they were getting richer all the time. And it allowed Wall Street to package up mortgage debt, slice it, dice it, and spread it all over town. The combination of rising housing prices and financial engineering produced the biggest bubble in human history.

But once a bubble like that explodes, there is no question of going back…or recovering. It’s over. You might as well try to put a suicide bomber back together as to recover the bubble economy of 2006. You can’t go back. You have to go forward to something new.

What are we going forward to? That’s the big question. No one knows the answer.

Here’s the funny thing, dear reader; the people who are charged with guiding us to this new world are the same goofballs who got us into this mess…and then who didn’t see the fix they had gotten us into until it was too late.

But heck…that’s just the way it is…

We’re not going to hold out much hope that they figure it out and guide the economy safely into port. More than likely, they’ll soon run aground again.

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.