Evidently the Very Serious People have decided that austerity is the name of the game (despite the best efforts of Prof. Krugman to explain the reason this is crazy). As Digby says, they believe if enough pain is felt by the "little people" the system will come back whole. But this is a very short-sighted view of the problem and the "cure" (austerity) could well be worse than the disease (deficit spending).
One of the fascinating points in the This American Life episode I linked last night was the way the Barbados society determined to get through their crisis. Here's what they did to make it work as a country and a society.
The workers and the business community put forth one central tenet for how they would make decisions: they decided that although things were very bad at that point, the crisis would not last forever and that "our people have to be healthy when we come out of this crisis." They told the IMF that the IMF policies would do more harm than good. Tony Walcott, the negotiator for the business community, relayed the position put together with the workers on the IMF proposals (one of which was to double the class sizes by firing half the teachers):
We told IMF that increasing size of classrooms was not acceptable.
And the IMF wanted people going to hospital to pay for services. Our position was that we were going to have to be under an IMF program for awhile, but we were going to come out from it. And that when we came back out, our people had to be healthy, and they had to be educated and ready to take on the job of building up the country again.
And the IMF was persuaded by us and I think the government was persuaded by us.
The people of Barbados did have to face tough economic times as their economy shrunk to adjust to what they could afford in the face of the economic crisis. But the overarching shared goal for the society was that they would face these hard times together: honestly and with a shared sense of purpose and a shared willingness to sacrifice so that in the future Barbados could do better for all of them. It was a remarkable example of what can be done when people find a shared goal to which they can all commit when faced with very hard choices.
Unfortunately for us, the overarching goal of too many today seems to be "I'm gonna get mine and forget about you and your concerns." The winner take all society is a severely dysfunctional society especially when things are rough. And whenever times finally become better, so much trust and social cohesion have been destroyed that the society might never come back. The society as a whole is much poorer when the dog-eat-dog philosophy drives decisions when things are tough.
And btw: today many countries are facing tough times and too many are doing it on the backs of their poor and most defenseless. Indeed, with the consequences of a changing climate, this picture will be replicated throughout the world. We either learn to share a common goal that we can use to make decisions to pull through the coming storms together, or we devolve into a brutal Mad Max world where the seeds of our uncaring begin to bloom.