No, this isn’t a recession, it’s a long, hard, debt-driven ‘Great Contraction’

Ezra Klein had a good summary of an economist’s argument about why the current situation is not a recession, with a predictable quick recovery pattern, but rather a contraction caused by excessive debt, with a recovery that takes many years and likely is followed by slow growth.

Here’s the money quote, as it were:

"Debt de-leveraging takes about seven years. That’s the essence," she says. "And in the decade following severe financial crises, you tend to grow by 1 to 1.5 percentage points less than in the decade before, because the decade before was fueled by a boom in private borrowing, and not all of that growth was real. The unemployment figures in advanced economies after falls are also very dark. Unemployment remains anchored about five percentage points above what it was in the decade before."

If you are not depressed yet, try this from the Financial Times.