When the fire started, they told us not to worry. They told us to remain calm. They said they had it under control.

But a full-fledged economic conflagration eventually brought the world to its knees. Commerce ground to a halt, banks hoarded cash, century-old financial institutions buckled.

Deprived of its warm, lubricating bath of credit, the financial system has suffered many casualties. A few of the worst offenders -- AIG (AIG), Fannie Mae (FNM), Freddie Mac (FRE), Citigroup (C) and General Motors (GM) -- received government lifelines to stay in the game. Others -- including Bear Stearns, Lehman Brothers, Countrywide, IndyMac, Washington Mutual, Wachovia and Merrill Lynch -- weren’t so lucky: They were swallowed up, hacked off or shut down.

Despite their best attempts, central bankers -- whom many blamed for the problem in the first place -- couldn’t contain the raging inferno of bad debt, fear of bad debt, and fear of fear of bad debt.

When President-Elect Obama takes office in 3 short weeks, he'll have his work cut out for him.

Many believe the unraveling of decades of prosperity based largely on cheap and easy credit has only just begun. The subprime mortgage debacle, a symptom of a much wider debt addiction afflicting the country as a whole, is just the tip of the iceberg. Confidence has been lost, fear abounds, and our financial future looks bleak. The American empire, they say, is crumbling.

Others are touchingly optimistic. Amidst widespread invocations of the Great Depression, many see a country not on the precipice of oblivion, but merely confronting its greatest challenge. We've faced downturns before, and we will face them again. Americans are resilient folks: We thrive on adversity, band together during trying times and will, as we always have, persevere.

Meanwhile, the Federal Reserve and Treasury Department aren’t sitting idly by hoping for the best. While some criticize both their motives and their actions, officials have vowed to use every tool at their disposal to protect the economy. The Fed has ballooned its balance sheet to over $2 trillion and has promised to do even more, while the Treasury is begging Congress to release the second half of its $700 billion Troubled Asset Relief Program, or TARP.