How will the current crisis come to an end? and how bad will it get?

If person X thinks that their future financial state is probably going to be worse than it is now then there is only one course of action they can take. They will try to avoid spending on stuff they don't really need. And the more worried they are the harder they will try. The effect of this is that a person Y who makes the goods, that X is now avoiding buying, will be out of a job. The effect of Y losing his job will be to prevent him from being able to buy all sorts of things that he used to buy, and to an even greater degree than someone who has a job but is simply "worried". Not only that, but the fact of Y losing his job will scare people in to thinking its more likely they will lose their jobs... and so on and so on.

Notice that the jobs that are lost are the ones producing stuff that people easily cut back on. If your job is to grow basic food stuffs then you are safe. As long as there are social security systems in place then nobody will be cutting back on food. The people I feel most sorry for are poor people who's job it is to make frivolous stuff that people don't really need at all. They will be the first ones out of a job.

Now one may ask how does it ever come to an end? And the answer lies in the bold text in the very first sentence in this blog entry. People have to be worried that its going to be worse in the future. Now when everyone who manufactures stuff that people don't really need has lost their jobs then the news reports are going to change from "the economy is a disaster and thousands more people lost their jobs" to "the economy is a disaster but not many more more people lost their jobs". When people hear this, then although they may be in a poor financial state, they will at least start to assume that the future is not going to be significantly worse than the present. Then they will be able to make more normalized decisions about spending their money. There will no longer need to be any cutbacks "just in case". This will be the turning point and things will start getting better from there on in. The bad news is that one hell of a lot of people will have lost their jobs. In the past, the proportion of goods that were made, that could be considered luxuries-people-will-readily-cut-back-on, was much smaller that it is today. Nowadays this fraction is so large that the loss of the jobs making those things will be huge. I predict that we will see unemployment rates of 20% or more in great swathes of the world before things get any better.

Please tell me I'm wrong.