On paper, the losses from the credit crisis are probably "the greatest destruction of financial wealth that the world has ever seen," writes Steven Pearlstein. But the trillions that have disappeared aren't the biggest casualty of the last year. Rather, says the Washington Post columnist, we are undergoing a fundamental recalibration about credit—the era of cheap money is over.
With stocks plummeting and companies collapsing, the financial industry is getting hammered for its recklessness and greed. But while the markets are punishing Wall Street, they've only just begun to affect "the majority of US households that relied on borrowed money to maintain their lifestyles." Inevitably, Americans are going to have to start spending more prudently—which might sound good, but which means "a recession is almost inevitable."