Simply, there is not enough income to pay back debt. Put differently, rampant consumption (reactor heat) has surpassed tangible production and formation of capital (cooling water) beyond the collective means of America. The Paulson Plan shift of debt from the private sector to the government is a mere short-term tactic, akin to a poor attempt to cure cancer with an aspirin. This government “rescue” is merely a quick use of unique government powers as the only game left in town--print money, issue IOUs and fabricate quasi-money a.k.a. credit. But that too is not limitless. For now, the ordinary citizen shall remain in debt. As such, the usual epic “leadership” tale of Batman vs. Saddam, or Superman against bin Laden, cannot fog up the scene. Rather the landscape begs true transformation and a complete, admittedly painful, change of views and methods.

The wake-up call must come from the ordinary citizens themselves. Alas, they bump along the bottom in this tornado. It is not pretty, and certainly it is not pleasant. It needs, and will take, time. But all have no choice but to change their minds: the “must have it now” mentality must change to a “do I really need it” thinking in this de-leveraging exercise. This change will kill the basic consumer-driven economic doctrine in practice in the U.S., albeit that people must remind themselves that the recovery from the Great Depression took more than a decade and a fundamental change of perspective was made.

In this massive collapse, three immediate questions arise: Should I trust bankers with my money? Do I trust the politicians? How can it be done differently? (Otto von Bismarck, the German chancellor, once quipped that one ought not to ask what goes into politics or sausages!)

A strong shot of collective realism, and not political leadership, is urgently needed. A complete change of mindset and a paradigm shift is unavoidable (and dare I borrow the term “Clean Break” from American neo-conservatives as a lesson from the tattered Project for the New American Century?). It is silly and dangerous to pretend a quick fix for these problems are nestled in stale, old ideas.

First of all, this is a different kind of systemic collapse than the Great Depression that Chairman Bernanke is trying to emulate in statistics. The hype, bubble & burst of asset valuations in 1929 was about obsessive over-investment in real assets (railroads, buildings, roads, steel mills and machinery, etc.) Our contemporary problems are rooted in a consumption-driven fanaticism and a herd behavior phantasm (on both Wall Street and Main Street) that encouraged borrowing against saving and holding hard and essential assets (homes). In turn, borrowings were spent on imported flat screen TVs from China, or on a night out in Vegas or the economically beneficial Britney Spears mania.

Second, America in 1929 was not a debtor to foreign, developing countries as it is today. The U.S.’s total trade deficit now exceeds its exports of technology and innovative services. Thirdly, this is simply too large of a net loss and needs a lot more money than any other bank bust in history. There are not enough financial resources in the world to set up a reverse Bretton Woods model to route money back towards America. Europe and Japan are suffering from secondary fallout of this implosion, the $4 trillion aggregate cost of which will exceed the (theoretical) present value of all oil reserves in Saudi Arabia.

The Fed-Treasury duo are lodged in old dreamy ideas and do not realize that they are held hostage by giant finance houses and their short-sighted plans. The Washington team wishes to repeat the same routine that got us all to this point—free and unregulated markets, more lending, the Greenspan doctrine of a few giants in charge of managing the trickle-down scheme, and a narrow window of circulating more, fresh cash via the same old channels without new rules.

But is it not time for a reality check? Some bank giants are now large enough to seriously impact, but not necessarily aid, the economy of their home country. The total assets (i.e. loans) of Bank of America, for example, are $1.71 trillion (about 13% of U.S. GDP) and total liabilities (deposits) are $1.55 trillion (some 11.9% of U.S. GDP)—all at the whim and disposal of one imperial CEO and the usual sheepish board of directors. A bad judgment call, or a bad but fashionable deal leading to reduced asset values of, say, a realistic 10% in these markets, can spell out the difference between weak growth and deep recession in America.

This super-sizing is more amplified, and frightening, in European countries where the assets of the national banking champions easily exceed the national GDP and where the financial sector is proportionally larger than any other activity in the local economy. HSBCs asset exposure is about 100% of the British GDP while assets of the Royal Bank of Scotland exceed 126% of the GDP of the same country. The assets of the Dutch ING equate to some at 290% of home GDP and the sum of assets on the books of the Swiss UBS and Credit Swiss are a staggering 746% of the Swiss GDP. In other words, they are supra-national creatures where home governments are simply helpless and not able to rescue these firms. So, give any of them a twitch half the size of, say, the AIG, Fannie Mae or Freddie Mac malfunctions and watch them all pancake down and take their home government with it. One who dares to revalue those lovely assets (courtesy of Wall Street sub-prime) based on a true marked-to-market valuation might well be in for a very scary Halloween!

So, let us borrow the September 12th, 2001 headline of Le Monde in France and rewrite it: today, we are all British or French (of the 1970s era); Brazilians or Mexicans or Israelis (ca. 1980s); or Koreans or Poles or Bulgarians or Czechs or Russians or Thais and Malaysians (of ca. 1990s); or perhaps Turks or Argentines. But those were paltry sums when compared with current events in America. Alas, their people led themselves out of their own historical problems after learning a very expensive lesson. Americans have no choice but to follow the same path to carry themselves to the end of this painful beginning, without any foolish rhetoric or dramatic game shows to shift blame onto others. The Big One is once again a uniquely American product.