There was a time not so long ago when government officials debated which institutions were "too big to fail." Now they're learning the lesson that the global economy is "too big to control."

It is the height of conceit for government and corporate officials to spend their time, and our money, debating priorities for rescuing constituencies. History says they'd be better off standing aside and not trying to turn back the tide.

But like a modern day King Canute, who 1,000 years ago tried to command the sea to turn back, our leaders believe they can stem the inevitable power of nature that has been unleashed, in part by their own actions.

The broad-based Dow Jones Wilshire 5000 index is now down 53% from its high of Oct. 9, 2007. To put that in perspective, the decline roughly matches the percentage drop that took place from March 24, 2000, to the low of Oct. 9, 2002.

That decrease represents $10.4 trillion in market value that has disappeared. And it clearly demonstrates the futility of throwing money at the problem, even $25 billion more to rescue the auto companies. Surely, the illusion of control must now disappear, to be replaced by the reality of working together and using modern technology to manage the impact of the devastation.

There might have been an opportunity two months ago to divert the path of destruction, but Congress missed the moment. Even with lobbyists throwing money at them, and corporate executives coming begging to them, the illogical belief that political decisions can stem the economic tide must be seen for the farce that it is.

Reality check

So where does that leave ordinary Americans, worried about their houses, their jobs and their eventual retirement? It

should

leave us all with a greater respect for our economic system, which has created a better standard of living for more people than any system ever tried. But we never seem to learn from history. Now we must face a new, and humbling, reality.

  • The stock market: Current business may be bleak, but there is value in our economy. At some point, buyers will step up. The market is not going to zero. That's sad consolation for those currently living on their investments, but great opportunity for those who won't use their retirement plans for years ahead. In the meantime, families, friends and our society will need to reach out a helping hand to those who become impoverished, despite their best investment intentions.
  • Jobs: America barely remembers the double-digit unemployment rates of the early 1980s, much less the 25% unemployment rate of the Great Depression. Now, for each individual worker, there will be uncertainty and fear, devastating for the confidence that is required to grow the economy.
  • Housing: Freddie (FRE) and Fannie (FNM) are staying evictions, recognizing there's no point to selling those houses at huge losses, while people search for homes. No doubt, we'll turn technology to our use in creating real solutions, once the bickering subsides over who has the best plan.
  • Retirement: Don't even think about it now. If you have a job, be thankful and keep working as long and as hard as you can. Sadly, those who saved and invested will now be in little better position to retire than those who lived only for each day.

The only way out of this dilemma is through economic growth, which will create profits and jobs and a rising stock market. That will take new national leadership and sound economic policies. And it will take a bit of humility, for our elected leaders and for all of us who participate in our free enterprise system.

We cannot control the mass emotion that generates economic cycles, any more than we can control the power of nature. We can only acknowledge, prepare and ultimately help rescue those who get in the way. And that's The Savage Truth.

Terry Savage is an expert on personal finance and also appears as a commentator on national television on issues related to investing and the financial markets. Savage's personal finance column in the Chicago Sun-Times is nationally syndicated. She was the first woman trader on the Chicago Board Options Exchange and is a registered investment adviser for stocks and futures. Savage currently serves as a director of the Chicago Mercantile Exchange Corp.