WASHINGTON — The U.S. economy appears to be caught in a cycle of recurrent panic attacks. So many things have gone wrong, and so much anxiety has accumulated in the financial system, that nothing seems safe.
As a result, no sooner has one crisis seemed to recede than another has popped up, to be followed by another and still another.
"We've gotten to that classic point in a financial crisis where it's gone on for long enough we know there are losses. We just don't know where they are," said Joseph R. Mason, a financial economist at Louisiana State University in Baton Rouge.
"The only way to find out is for investors to push every institution toward failure and see which ones keep operating," Mason said.
About the sunniest assessment that analysts will offer is that if the current crisis holds to historical patterns, it could end as unexpectedly as it began.
"Most panics are like summer storms," said David A. Moss, an economic historian at Harvard University. "They come up abruptly, are erratically intense, then suddenly dissipate."
The cycle started last summer with the near collapse of two Bear Stearns Cos. hedge funds specializing in exotic mortgage-backed securities. What followed was a succession of panics that went so far that even the mainstays of the U.S. mortgage market -- Fannie Mae and Freddie Mac -- had to be propped up by the Federal Reserve.
And a series of other crises are tugging at such disparate threads of the nation's financial fabric as credit cards, student loans, municipal debt and even money market funds.
Last week held true to the storm pattern Moss described. After another round of potentially catastrophic developments in the housing, financial and energy markets, the system pulled to the brink, caught its breath and took a turn for the better.
Oil prices not only halted their upward rush, they fell back a remarkable $16 a barrel in the space of a few days. And after a frenzy of concern about the banking system, markets suddenly calmed when three major institutions -- Citigroup Inc., Wells Fargo & Co. and JPMorgan Chase & Co. -- reported better-than-expected results.
Few economists think the storms are over, though.
"This thing simply hasn't run its course," said veteran banking consultant Bert Ely of Alexandria, Va. "We have a multiple-chapter housing saga that could go on well into the next decade."
