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On irc, a user suggested to turn off KMS by creating /etc/modprobe.d
/radeon-kms.conf with the line "options radeon modeset=0" (no quote).
That got me passed the problem.  Now I get "direct rendering: Yes"

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https://bugs.launchpad.net/bugs/757467

Title:
  Radeon 7000VE (rv100) fatal error during GPU init