The financial crisis is more than just a global recession. It's a Panic, according to Kevin Warsh, a member of the Board of Governors of the federal reserve system.

In a speech to the Council of Institutional Investors, Warsh compares the conditions to the Panics of 1837, 1857, 1873, 1893, and 1907 where depositors withdrew funds and hoarded cash, where banks lost confidence in one another driving up the price of their raw material, money, and where rates on call loans to brokerage houses soared to extremes.

Warsh is talking about a complete collapse in trust and confidence and he acknowledges that it will take a long time before that's restored.

"Though the pace of decline is likely to abate, I am decidedly uncomfortable forecasting a sharp and determined resumption of growth in the coming quarters," Warsh says. "The panic conditions that have marked this period may also have long-run implications. I suspect that the process of an efficient reallocation of capital and labor will prove slower and more difficult than is typical after recessions. Policymakers should be wary of policies that make the economy still less capable of the growth, productivity, and employment trends that have marked the postwar period."

If he is right, you can forget Ben Bernanke's prattle about green shoots in the US economy and the latest New York Times/CBS poll showing Americans are now more optimistic about the economy. If Warsh is right, it's going to be a long and painful haul.