But we have several things going for us in this latest economic decline, and chief among them is Fed Chairman Ben Bernanke, who wrote the book on what led to the Great Depression. That's when the Fed tightened the money supply instead of injecting liquidity into the economy's banking institutions -- and then FDR raised taxes.
Bernanke and his economic partner Treasury Secretary Hank Paulson aren't going to make those mistakes. Last week's half-point interest-rate cut will be followed by others, while the Fed and Treasury continue to make money available to keep the nation's lending arteries open until we can work our way out of this trouble.
In the meantime, the Treasury and the Federal Housing Administration have been pushing to renegotiate subprime mortgage loans at the rate of 200,000 a month for creditworthy homeowners who are trying to stay in their homes.
Then there are the underappreciated Bush tax cuts that have helped make our economy more resilient than it otherwise would have been. They helped us bounce back from the 9/11 terrorist attacks when the economy stopped breathing and recover from one financial breakdown after another, natural disasters and now the subprime mortgage and credit debacle.
There are a few other fundamentals at work here that will help us out of this economic hole, like relatively low interest rates, plunging oil prices that are cutting the price of gasoline at the pump, and a real-estate market that is showing glimmers of a comeback.
Pending home sales increased by an unexpected 7.4 percent between July and August, pushing the National Association of Realtors index of pending sales to 93.4 from an upwardly revised reading of 87. That's the highest number since the summer of 2007, and a sign that homebuyers are returning to the market to take advantage of bargain-basement home prices.
Nevertheless, the national mood of gloom and pessimism runs deep as Paulson and his Treasury associate, Neel Kashkari, try to fix this mess.