... and the Republicans are still floundering, what happens? Yglesias says the GOP comes back anyway:

[A] hard-right agenda ... certainly isn't where the country is right now but it's not so unreasonable to think that things might change. I think we'll be growing again in late 2012 and Obama will probably get re-elected no matter Republicans say or do. But it's possible that things will really go off the rails and we'll have a years-long L-shaped recession in which case if what the opposition party has to offer is hard-right nihilism, then hard-right nihilism is what the voters will embrace.

Will Wilkinson says don't bet on it:

... Obama seems to be very boldly arguing: "If not my specific package of policies, then surely disaster!" I think this can be a bit perilous but in this case probably smart since the Republicans are so hapless. If Republicans can sabotage the thrust of the Democrats' policies -- refuse funding for your state, call for a spending freeze -- and the recovery occurs anyway, then Obama's bold conditional is decisively falsified. But voters aren't logicians, and if we get a recovery, Obama's going to get the credit anyway. So that tack seems like a loser for the Republicans even in the best case. (And in the worst case -- everything goes further south and they get pinned with the blame -- totally disastrous.) The only plausible Republican strategy is to put forward an attractive personality able to forcefully and intelligently explain in a relatively detailed way why the Dem's plans are likely to fail, and to forcefully and intelligently articulate a plan likely to work better. That's the only way to sow broad doubt in the wisdom of the majority's leadership: offer an alternative that looks at least as or more credible. David Cameron is a great example of how to do this incredibly well. But as Jindal's embarrassing performance shows, the GOP has absolutely no one capable of doing anything approaching this. So, as far as I can tell, the GOP is going to continue to get flattened, Obama will get basically whatever he wants, and if it doesn't work, then it almost worked and who else are you going to trust?

It's worth bearing in mind that there's a third option. When Jim Fallows anticipated a different (though not entirely different) economic calamity in his big "Countdown to a Meltdown" essay for us several years ago, he framed the whole thing as a strategy memo to a soon-to-be-elected third party candidate, who was on the verge of triumphing after two consecutive failed post-Bush administrations, one Democratic and one Republican. This is obviously an unlikely scenario - but there's nothing written in stone that says the current two-party lock on the presidency has to endure unbroken forever, and a long L-shaped recession in which both parties look ineffectual is exactly the kind of time when unlikely scenarios start looking at least somewhat more likely. Ross Perot's 1992 candidacy, you'll recall, was premised on the idea that the GOP had failed and the Democrats couldn't be trusted; if Obama's presiding over an economic disaster in 2012, then a third-party run premised on the idea that the Democrats have failed and the Republicans can't be trusted might do rather well indeed.

At the very least, I bet Ron Paul could get 5 or 10 percent of the vote running as an Independent in that landscape ...