I agree that we shouldn't view what has happened as a standard recession.   But I also don't think it is accurate to see it entirely as a "financial crisis".

Sure people are digging out of debt.   And sure, over time, people might start building up more credit card and mortgage debt again as they regain a bit of "confidence".   Consumption and real estate will rebound.   But I wouldn't count on the old levels of household debt debt coming back.  And even if they do, that is really not a good thing since excessive household debt was a major contributing cause to both the blowing up and popping of the financial bubble that precipitated this crisis.  If we reinflate the credit bubble and don't address the structural pathologies that produced the bubble in the first place, we'll just get another rapid crash.

The fact is that we have had a widening income gap in this country, and it is finally catching up with our overall economic health.   The affluent have appropriated and extracted so much from everyone else, through a long-term pattern of holding bottom-half incomes flat while encouraging surges in short-term material affluence through the piling on of debt, that the ordinary American no longer has sufficient income to spend at levels that can sustain the income and lifestyle of their more affluent fellow-countrymen in the manner to which the latter have become accustomed.  The long-term solution to this problem cannot consist in encouraging income-strapped Americans to pile on more debt.   That racket has become unsustainable and has come unwound.

To say we are in the midst of a financial crisis suggests that people are eager to acquire credit and borrow a lot more, but cannot get the credit they need.   But most people can still get credit cards, can't they?   They don't want that much more credit because they finally learned the hard way that they no longer have income levels that sustainably support the heavy debt loads they used to take on.

Those who have plenty of money see the problem as a frustrating reluctance on the part of ordinary Americans to borrow the money of the affluent, and indenture themselves to the affluent.  The monied are eager to start sucking more fees, interest payments and rents out of everyone else again, in exchange for providing the short-term cash flow necessary for ordinary people to buy the stuff that is sold by the companies that are also owned by the affluent.  But ordinary Americans don't need more credit; they need more income.

That additional income exists, in great abundance, to rebuild the broad capital base of society.   But it is trapped in the vise-like and jealous grip of its present owners.  In bygone times, we know that collapses in agriculture were sometimes caused by absurdly unequal, and hence inefficient, distributions of farmland.   The sustainable and progressive solution did not consist in even more feudalism and tenant farming.  The only solution - the one that is both morally and economically progressive - was to undertake land reform.  That meant taking hoarded lands from people who had abundant, surplus amounts of it and giving those lands to others who were zealous to acquire real property and work it.

That's what we need now too.  But rather than redistribute land we need to redistribute other forms of wealth via the instrument of money.  Gross inequality is not just unjust, it is also economically inefficient and destructive.   The entire society does less well, on aggregate, when its wealth is hoarded in unbalanced, concentrated pockets.  When this happens, public action must rectify the distributive inefficiencies of private accumulation

We don't want people to start borrowing again at their old destructive and unsustainable levels.  We need to get more actual income into their hands, so they can feel their standards of living rising in a reasonable way on the basis of something other than adding a new credit card each year, or borrowing against inflated home equity.  And we need to put a system in place that prevents massive income gaps from growing in the first place.  That will give people the confidence that their hard work will pay off in terms of rising income, rather than stagnating income coupled with invitations to accumulate more debt.

Instead of the "financial crisis", or the "great contraction", maybe progressives should start referring to what has been happening as the Great Income Crash.  Two decades of widening the gap between the top and the bottom and suppressing income growth of the bottom, in a context of widening overall desire and affluence, with the consumption-production balance strained to the breaking point by its dependence on consumer borrowing and indebtedness to the same people from whom these consumers buy the consumption goods, has resulted in a general collapse of the consumption levels and work levels that were the engine for our previous levels of economic activity.  They can't be restored just by boosting confidence and restoring old debt levels.

The most obvious manifestation of the income crash is the most harsh and extreme version of income loss - unemployment.   But rather than move to mobilize and redistribute resources to provide productive work opportunities and income to the unemployed, our society's affluent classes, with the assistance of the political parties and governing institutions they own, have decided on a strategy of simply downsizing themselves, and writing off the unemployed as an abandoned resource, while moving to diminish the power of government and stanch the redistributive flows through government.   These politically powerful elites have also moved to protect rigorously the interests of creditors and prevent any efforts by debtors to obtain relief from government.  The government's response has been to start building gated communities around the assets of the most well-off members of our society, and to make sure that nobody outside these communities gets their hands of the stuff of people inside those communities.

When I listen to NPR these days, or read the major newspapers, or view other major media outlets, I hear a culturally and economically smug ruling class, some self-identifying as liberal and some as conservative, in general mutual agreement on the best way to proceed: thwart the efforts of people to use the only effective tool at their disposal in the face of an economic aristocracy - a powerful and activist democratic government.  You hear much the same story if you listen to priggish hectoring coming out of the UK.

The big lie these days is that, because state and local and federal governments are shutting down and curtailing operations, that is because we have "run out of money" - or because the government is "out of bullets."  But of course even the smallest of governments can run out of money if those who run that government refuse to collect the revenues needed to fund its operations.  If I am making a handsome income, but refuse to put gas in my car, my car will run out of gas.   Maybe people will be fooled and say, "Poor Kervick!  He's so poor that he's now running at of gas!"  But they would be wrong in their conclusion about what is going on.

And as for bullets:  The public has vast armories of governmental heavy weapons, with all the ammunition these weapons need.  But the weapons are locked up in well-guarded armories by those who have seized effective ownership of the government, who who are determined to prevent their use.

Is there a box to check next to :

The Royal Flush? (and no, that's not meant as a poker reference...)