How anxiety and terror are making the financial catastrophe worse than it needs to be.

The technology that transmits odors and fragrances digitally is still in the very early stages of development. But on Monday, Oct. 6, the whiff of fear emanating from the television was overwhelming. James Cramer, CNBC star, ex-hedge-fund manager, mascot of the 1990s tech boom and the recent bull market, was throwing up his hands. "There's always a bull market somewhere" has long been one of his signature lines. But Cramer admitted to the Today show's Ann Curry that "somewhere" was now nowhere to be found. "Whatever money you may need for the next five years, please take it out of the stock market right now, this week," he pleaded. "I do not believe that you should risk those assets in the stock markets."

In the ensuing days, many investors—professional and amateur alike—took Cramer's advice. As a series of global convulsions shook markets from New York to Tokyo, and all points in between, the stock markets plummeted, with the S&P ending the week down 18.2 percent, and down 42.5 percent for the year. Amid a broad-based, expanding credit crunch, and rising concern about fundamental economic weakness, no sector or region was immune. "The U.S. and advanced economies' financial systems are now headed toward a near-term systemic financial meltdown," says Nouriel Roubini, professor of economics at New York University and a longtime bear who has been vindicated in spades. There have been, and are, plenty of reasons for investors to freak out: the failure of banks; the demise of institutions like Lehman Brothers; the necessity for repeated, spastic government interventions. Nearly every economic indicator in the past few weeks, from auto sales to employment, has been negative.

The stock of General Motors sunk to its lowest level since 1950.

Banks are refusing to lend to one another. The traditional safe havens of investment, such as municipal bonds and money-market funds, have buckled. The trumpets of leadership are so uncertain, they sound like kazoos.

"The only thing we have to fear is fear itself," Franklin Delano Roosevelt proclaimed at his first Inauguration in March 1933, amid the worst prolonged financial crisis in the nation's history. Yes, the banking system was a shambles and unemployment stood at 25 percent. But conditions would certainly improve over time, and a change in attitude would help. In recent weeks, as the comparison between today's financial crisis and the Great Depression has grown commonplace, it's become clear that fear itself is Wall Street's greatest fear. "Anxiety can feed anxiety," as President Bush put it. We see it manifested in many ways: in the plunging Dow, in spiking interest rates, in James Cramer's frenzied pleas, in the shell-shocked silence of traders on the 5:01 p.m. New Haven-line train out of Grand Central Terminal.