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

The protestations from on high are that, underneath the disaster, the fundamentals are still strong, that we'll work through this because we're Americans. "Fellow citizens," Bush fumfered Friday, "we can solve this crisis—and we will." Unfortunately, his reassurances seem about as calming as the scene from Airplane in which the flight attendant urges everyone to remain calm while all hell breaks loose. We have no Churchills today, and our financial leaders all seem to have fled to a bunker. On CNBC, Tyler Mathisen practically begged a name-brand CEO—anyone—to come on the air and speak to the American people.

For now, we have to seek solace in small positive signs: decent earnings from IBM, a week going by without a major financial institution failing. The most crucial indicator of an end to the rising fear may be, counterintuitively, more of it. Students of bubbles note that investor sentiment is always most bullish when a market is about to hit a top and most bearish just when it's about to bottom. (Business Week’s 1979 cover story on the "Death of Equities" signaled the start of a long-running stock-market boom.) But when there's nobody left to lose confidence, when Jim Cramer, the ultimate stock guy, throws in the towel and urges people not to buy stocks again until 2013, that sure smells like capitulation.