In past decades we've seen oil price hikes, hurricanes and floods, recessions and a catastrophic attack on New York and Washington.

But what might be called the "irrational exuberance" of the housing and credit markets of the past few years stands to do as much or more damage, if unchecked, than those other disasters.

First, mortgage holders Fannie Mae and Freddie Mac had to be rescued. Then, over the weekend, "the American financial system was shaken to its core," as the Wall Street Journal put it, with the bankruptcy of Lehman Brothers Holdings and the announced fire-sale purchase of Merrill Lynch & Co. by Bank of America.

With the interconnectedness of world financial markets, and the herd mentality that tends to take over at times such as these, some feared the contagion could spread to other firms. U.S. Treasury Secretary Henry Paulson and other federal regulators worked with Wall Street officers over the weekend in what has been called a marathon effort to save Lehman Brothers from bankruptcy.

The feds avoided the temptation of another bailout, thankfully. But it will take a delicate mix of public and private first-aid to stanch the bleeding after the two big Wall Street investment firms hit rock bottom over the weekend.

"Art Hogan, chief market strategist for Jefferies selling; it's buying. It must know something about the soundness and resiliency of the American spirit.

That's the kind of confidence we'll need in the days and weeks ahead.