This is how an economic crisis develops in a rich country:
1. An abundance of cheap imports based on heavily exploited labour leads to a fall in the cost of consumer goods.
2. The economy is in a growth phase and as such wages remain stable.
3. As a consequence of 1. and 2. the costs of housing rise reflecting changes in supply and demand of housing stock given the political situation of the housing market. House prices increase.
4. People invest in housing to profit from increasing house prices. Speculation inevitably takes place multiplying the increase in housing costs (3.). House prices and housing costs are bound together. The spread between them increases on account of speculation. Capital relatively fixed in the form of institutions or "machinary" comes to depend on the second order of income: growth, or even growth of growth e.g. the specialist mortgage banks. Leveraging may accentuate this process but is only a way of purifying an investment based on second order income; it is not constitutive of second order investment. Leveraging is not somehow inimical to functional capitalism. Capitalism essentialy is a system of "leveraging" the productive class. This is how it differs from feudalism. Nor is speculation the result of individual profligacy. Speculation includes quite rational attempts by erstwhile workers to de-leverage themselves.
5. Since gains and losses from the growth in housing costs/house prices depend as much on the time the initial investment was made as income (which correlates to social class) the effect of this growth in housing costs/house prices is to confuse and attenuate the previous class structure.
6. Another effect is to crowd out investment in new productive capital: factories.
7. Eventually wages can no longer support further growth in housing costs. House prices cease to rise.
8. A great deal of the machinary predicated on second order income becomes redundant: useless. This is the source of the deadweight loss in a recession. Failure of productive capital is constitutive of recession.
9. Capitalists then orient their strategy toward a recession phase based on consolidation through fire sale acquisitions and cartelisation. The orientation of the state changes to reflect this.
The workers ought to have fought the increase in housing costs (3.) for the same wretched housing but the attenuation of the class structure (5.) mitigated against this. We know that the banks aren't spiritual entities but consist of capital fixed in institutional form for the purpose of distributing finance capital for profit. Likewise the institutions of the ostensible "left" (unions and political parties, publications and intellectuals circles) consist of more or less fixed "machinary". They struggle to adapt to changed conditions. This situation is in the process of working itself out. Human progess, as before, depends on the amelioration of working conditions in China, Indonesia etc.