The intimate interconnections between economics and psychology show up in asking and answering this question “How far can an unequal sharing of economic costs and benefits go before its victims rebel, say enough is enough, and demand change?” The economic crisis that officially started in December, 2007, has seen US unemployment rise from 7 million then to over 15 million now. We are seeing over 200,000 home foreclosure legal proceedings initiated every month. Most states and cities are announcing major layoffs of teachers and other government employees, cutbacks in services, and more of each to come next year as well.

Meanwhile, politicians, bankers, and the media publish stories about recovery. True enough, there has been recovery for the banks because they got the bulk of government bailouts. The banks lent some of their money, gotten at or near zero cost from the government, to stock market speculators (who generated a nice recovery for them since March 2009) and to a few other major borrowers. Politicians who had bailed out banks needed to celebrate their recovery as if it were a general recovery to justify their bailouts. The media dutifully followed suit.

The truth is: recovery for them, ongoing crisis for the rest of us. This will continue in the US as everywhere else so long as the mass psychology of crisis victims blocks their resistance to and rebellion against the unequal sharing of economic costs and benefits.
 While most Americans continue to endure hard times with more to come, even the recovery for banks and the stock market is everywhere seen to be hesitant, uneven, and precarious. In Europe, a new crisis has arisen caused by how its politicians responded to the old crisis. Like the US, European governments borrowed money to bail out their financial sectors. But now lenders to those governments – especially the economically smaller and weaker among them such as Greece, Portugal and Ireland – are refusing to lend more or even to renew existing loans when they come due. Lenders see the rising debts as warning signs that stressed, over-indebted governments may not be allowed by their citizens to raise the new taxes or cut public services to raise the money needed to service the increased national debts. “Sovereign debt,” as these governments’ bonds are called, has become risky. Street battles and general strikes in Greece and Portugal witness the rising tensions over the new national debt crises.

The people in Greece and Portugal are now rebelling in ever larger numbers through their labor unions and portions of left political parties (often splitting them, implicitly or explicitly). They say, in effect, “enough: we are not going to pay ever more of the costs of economic crises we did not cause while the benefits of government bailouts go to others more than us, especially when those others include those most responsible for the crises.” In economic terms, those people are demanding that they get more of the benefits of government recovery programs (public employment, maintained public services, etc.) while paying less of their costs (raising new taxes on those most able to pay: corporations and the richest 10 per cent of the people). A political program is emerging that contests and confronts the existing governments’ programs of financial bailouts.

The US has, in comparison, been relatively quiet. So far, only some right-wing expressions of resentment and anger have taken public, political forms: the tea-baggers’ efforts inside the Republican party. In Greece, its socialist government has been unable to stop the mounting mass left-wing opposition to the austerity economic policy demanded by its private lenders and now also by its public lenders (the European Union and the IMF). In the US, a far-from-socialist government has had very little left-wing opposition and struggles instead against a still relatively smaller right-wing opposition. The big political question is: how much longer can the crisis in the US continue with so blatantly unequal a sharing of the costs and benefits of crisis and recovery? The closely intertwined psychological question is: why do (and how much longer will) the US victims of this crisis and this government’s recovery program fear to think or hesitate to act like their counterparts in Greece, Portugal, and beyond?