One of the more severe myths peddled by economic commentators has been that we have faced a single financial crisis from 2007 to now. It's understandable that many journalists want to follow one narrative through to its conclusion, but things have become far more complicated.
We can broadly define two recent financial crises. The sub-prime collapse of 2007/8 which saw bank failures as artificially low interest rates kept credit too cheap and loans that shouldn't have been offered turned to bad bank balance sheets. The latter crisis is one of sovereign debt, as economies have engaged in runaway expansion of state spending.
Both of these are still ongoing. Banks are still implictly backed by states who considered them Too Big To Fail. States are still spending far too much in an unsustainable fashion. Financial institutions need to know that they will be wound down in the event of future collapse and governments need to tackle their bloated regulatory systems and heavy taxation, as well as restructuring spending to reduce debt to GDP ratios.
While this isn't happening, employment in the Eurozone is suffering. In January unemployment reached an all time high of 12 per cent according to new revisions today.
My annotation of Eurostat unemployment graph. €Crisis rise in jobless will soon trump Lehman crisis. Good Job. twitter.com/faisalislam/st…
— Faisal Islam (@faisalislam) April 2, 2013