We know there are uncanny similarities to the beginning of the Great Depression: As in the late 1920s, credit has locked up everywhere because lenders cannot estimate the value of a borrower's assets. We know that, in effect, an American pyramid scheme ran out of bottom - but today it is homes, not stocks, that are deflating. We know that some people, especially in financial services, made fortunes from the pyramid while it lasted, while the middle class borrowed wildly to keep up; and that growing inequalities in income today are not only a disgrace, but a macro-economic problem.

In the short term, there is not enough buying power stored up in the less well-educated part of the middle class. In America - as in Israel, for that matter - incomes have been eroded as simple manufacturing jobs have been replaced by new forms of automation or have migrated to lower-wage places in the global economy. Most ordinary households have taken a hit with the stock market plunge. If (as a result of the plunge) businesses cut back and unemployment rises sharply, there will be, as in the early 1930s, a further spiraling down of the consumption that prompts growth.

But we know other things, too, and Israeli businesspeople and economic writers should know them in their bones. Why are so many Western pundits forgetting them now, of all times?

b We know that the speed of moving information and capital today is unimaginably faster than in the early 1930s, or even the 1990s. We don't rely on shortwave radios, surface mail and gold.

b We know that the barriers to entering new business are unimaginably lower: that in the U.S., for example, about 60,000 new businesses were created annually during the 1950s, whereas a million a year are created these days. Will not, say, some of the young masters-of-the-universe from Lehman Brothers now be looking to produce something more tangible (and fulfilling) than derivatives?

b We know that product development cycles, once a decade long, have now ­- in an age of global networks for prototyping and component sourcing ­- been reduced to a few months.

b We know that U.S. productivity -­ constant dollars per worker -­ has grown from about $71,000 a year in 1998 to some $85,000 today; so the "all-in price" for manufacturing in the U.S. is, given the weakened dollar, starting to look like China's in many cases. (Ikea, for example, recently announced that it would manufacture goods for the American market in the U.S., not China.)

b We know that trillions in capital has been accumulated by Asian and Middle Eastern sovereign wealth funds, and that the newly minted MBAs now running them have no way to earn acceptable rates of return for their government bosses unless they continue investing in Western economies.

b We know that, because governments have studied the Great Depression, they are acting with dispatch to shore up banks and new lending. We know that most Western governments have been prepared to provide unprecedented levels of coordination; that, within a week, U.S. Treasury Secretary Henry Paulson learned from U.K. Prime Minister Gordon Brown to take equity in failing banks

b We know that, if we can keep up more or less current levels of employment, we can retard a new cycle of mortgage defaults, and thus allow the government, and the financial institutions it will own, to eventually redeem much of the paper it is acquiring at fire-sale prices.

b We know, correspondingly, that new growth is the best antidote to "toxic" mortgage assets, and growth will not be hampered by an absence of capital, skill or government activism; that, in addition, capital markets have become responsive in ways that could not be hoped for in the 1930s to the business plans of entrepreneurs who, steered by intelligent public policy, will provide new services in health care, education, green transportation and so forth.

b We know, in short, that even if we do have another "depression," its half-life can be months, not years; that the same (astonishing) information networks that allowed not-sufficiently regulated financial services corporations to get us into this mess over a period of months, not years, will allow new investments to fund innovations in months, not years.

What all of this points to is the most important U.S. election since 1932, since new growth will hinge on the U.S. government's becoming not only the global economy's insurer of last resort, but the regulator-investor of first resort. The key to avoiding a global catastrophe is a new American administration that will propose, and have broad support for, timely investments in health-care efficiencies, energy infrastructure, education, roads, trains and bridges (to somewhere) ­- thus stimulating the economy and sustaining reasonably high levels of employment -­ while taxing exorbitant wealth, winding down costs in Iraq, and working actively to resolve old conflicts within a repaired Western alliance.

Oh, there is something we don't know: How many people, plausibly terrified by this crisis, barely educated and thus anxious not only about unemployment, but unemployability - people fattened by fast food, narcotized by junk television, incited against the "liberal mainstream media"; people hungry for a father who will sacrifice for them; people unsettled by sexual teasing, consoled by cultish religion, suspicious of "others," raging at "New York" - all in all, people who think like 1930s European mobs, but who also think "history" is for elitists, will be bringing their panicked prejudices, not cool-headed interests, into the polling booth?

Bernard Avishai, a former editor of Harvard Business Review, is the author of "The Hebrew Republic: How Secular Democracy and Global Enterprise Will Bring Israel Peace at Last" (Harcourt). He blogs at www.bernardavishai.com.