If you read the beginning of this website, the first few links, you will see that the politicians and the Fed don't really, ultimately, have much control over the situation - the natural human psychological cycle defined by the Kondratieff wave at least ultimately determines the situation. That is why I was successfully able to make the prediction that I made in the summer of 2001 for a big economic and stock market downturn sometime in 2007-2010.
But a big economic downturn really should have happened in the early 2000's already - in the wake of the gigantic stock market exponential of the late 1990's. And in fact, the law against recessions was set to expire in 2000, and did so (interestingly enough). But the authorities who were operating in the system at that time decided to continue to enforce it as if it had never expired - and because there was so much momentum of perception (not real economic momentum, there was not much of that left by then, see this website) from the late 1990's bubble economic boom (which was accompanied by a stock market bubble), they were able to keep people spending and so they were able to maintain the momentum that they needed.
The result was that the economy kept going until the next major down cycle was due - and because there was no major economic correction in the early 2000's - even in the wake of a huge (and completed) stock market exponential, the imbalances continued to build up (in no uncertain terms), which meant that there was going to be a HUGE economic downturn the next time the big down cycle was due, in 2007-2010, and it was just about guaranteed. That is what happened.
But since the authorities decided to continue to enforce the law against recessions in 2000 (instead of letting the stock market downturn in the wake of the stock market exponential run its course in the early 2000's, including economically), that meant that the only way a BIG economic downturn could happen was if the Fed lost control - which is exactly what happened in 2008.
It is my claim, my contention, that once that happened, there would be so many imbalances built up that there would be no way the Fed would be able to (fully) regain control - and it is my claim that that is what has happened. My evidence is that as long as the Fed has to continue to say in its statements that the economic recovery is proceeding at a moderate pace (rather than vigorously) and overall conditions in the labor market are improving gradually (rather than quickly), but investment in nonresidential structures is still weak and the housing sector continues to be depressed, the Fed is not fully in control.
So the stock market has, in fact, returned to trading the way it normally does in a downturn - down, up, down. We are now in the upturn in the middle - a major corrective bounce (that is what happens during overall big bear markets), not a new bull market, see in the third section of links in the menu on this website for a description of bull market vs. bear market bounce that will clarify at a more technical level why we are in a bear market bounce instead of a new bull market - and what follows will be a deep downturn, deeper than the previous one in 2008.
One reason why I claim that the Fed is not fully in control is because in a majority-homeowner country - which America is - especially if people tend to move around a lot, which Americans do on average, people care about house prices. So if the real estate market is not healthy, that is a big problem. See elsewhere in the menu on this website, in the third section of links, for an article about real estate recovery, i.e., why the real estate market won't fully recover because it can't fully recover.