Standard & Poor's downgrades US debt, stock markets gyrate around the world, Sarkozy and Merkel perform yet another empty summit, the Chinese and Japanese economies look worrisome. Serious commentators worry about global recession, another global banking collapse, eurozone dissolution and austerity programs that only make matters worse. Nouriel Roubini, famed professor at NYU's Stern School of Business asks this month, "Is Capitalism Doomed?" His answer: maybe.

The crisis of capitalism that erupted in mid-2007 now enters its fifth year. It grew out of excessive debts of US households and enterprises (especially financial enterprises) that their underlying incomes and wealth could not sustain. Key to the crisis was real wage stagnation since the mid-1970s. As the cost of the American Dream kept rising while real wages did not, households borrowed (mortgages, credit cards, student and car loans). Debts accumulated on the basis of stagnant real wages. That unsustainable credit bubble blew in 2007. Nothing since has significantly relieved or alleviated that basic contradiction. With high unemployment, total wage incomes have fallen and little extra credit will flow to already over-indebted workers. The crisis deepens as US demand remains hobbled.

Since the 1970s, banks, insurance companies and hedge funds invented new speculations on the rising debts of US households (asset-backed securities, credit default swaps etc.). Those financial speculations were even more profitable than the soaring profits of non-financial corporations that could keep their workers' real wages flat even as rising productivity delivered ever more product per worker to those corporations. Huge speculative profits prompted financiers to borrow in a self-reinforcing spiral ever further removed from the household debts on which it was based. When that base collapsed as millions of US workers could not longer sustain their debts, so, too, did the financial speculations built upon it.

The wealth and power accumulated by the financial industry since the 1970s secured massive government-funded bailouts after the crisis hit. Recoveries were underway for banks, insurance companies and larger bankrupt corporations by mid-2009. But no recoveries were provided for real wages, declining job benefits, excess household debts, falling public services - nor for the unemployed or the foreclosed.

By bailing out their private financial industries, the US and other governments took over (nationalized) that sector's bad debts and soured speculations. Governments borrowed to do that, thereby adding massively to national debts. "Recovery" for the financial markets bypassed the mass of people. Economically depressed working classes and increasingly indebted states now combine to unravel even the financiers' recovery.

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