Meanwhile, federal regulators seized IndyMac Bancorp, a $32-billion mortgage lender based in Pasadena, in what regulators called the second-largest bank failure in U.S. history. And the already battered stock market took another sharp dip.
The fact that experts keep pushing back the date when conditions may improve and the failure thus far of any national leader -- including either of the major-party presidential candidates -- to offer a convincing vision of how America will make its way back to sustained prosperity suggest that the current crisis will probably be very different from other recent economic bad patches.
So may Americans' reaction to it.
Even the Bush administration, which took office arguing that the Social Security crisis could be solved, in part, by tying some of retirees' future benefits to Wall Street, has begun advocating more government regulation of financial markets. When Fannie Mae and Freddie Mac, which are government-chartered but investor-owned, began to teeter last week, the administration quietly went to work on possible government action.
"If the pendulum swung away from government toward much greater confidence in markets during the last generation, the pendulum is clearly swinging back again now," said Daniel Yergin, whose 1998 book with coauthor Joseph Stanislaw, "The Commanding Heights," chronicled the worldwide spread of the free-market credo.
"Everything is weighing in at the same time, and that affects how people view markets and government," Yergin said.
"Nobody in this country really believes in unfettered free markets, and nobody really believes in socialism," said UC Davis historian Eric Rauchway, but economic crises of the past have produced constituencies favoring the reining in of markets and regulation of the economy -- constituencies that ultimately grew large enough to produce change.
Consider just a few of the things that are pushing people in that direction now:
The price for a gallon of regular unleaded gasoline has nearly doubled in the last year, while that for a barrel of crude oil has more than doubled, cutting short Americans' love affair with gas-guzzlers and driving the nation's trucking, auto and airline industries into deep trouble.
Most mainstream economists assert that these increases are simply the logical outcome of booming global demand meeting limited global supply.
