In this case, it's the economy that's under water—and people are losing their houses due to foreclosures, not flood waters.

The government was behind the curve from the start, these experts say. Communication was poor and organizational efforts were slow and often ineffective.

"The government acted as if it was initially on top of it and knew it was doing the right thing," says Jonathan Bernstein of Los Angeles-based Bernstein Crisis Management. "It came out later that they clearly didn't."

No one escapes blame either. Congress, President Bush, Fed Chairman Ben Bernanke, Treasury Secretary Henry Paulson and even House Leader Nancy Pelosi—all made key mistakes, the pros say.

"As a result," Bernstein says, "far more damage occurred than if they had been honest, organized, compassionate and understood the threat and didn't get into a position to respond to it before it was too late."

First and foremost, the government was unprepared, even if the crisis was unprecedented and snowballed in ways no one could ever imagine.

"The administration didn't seem to have a plan prior to this," says Neil C. Livingstone, Chairman and CEO of ExecutiveAction, which represents CIS countries, large companies and sports and entertainment figures. "Surely someone should have been tasked with some contingency planning."

He says Exxon was heavily criticized for its handling of the Valdez oil spill in the early going because its executives "did not seem engaged."

The government has been paying for that critical misstep at the start and has since compounded the problem.

"When you are slow to respond to a crisis, you get deeper in the hole, and the longer it takes to dig yourself out," says Larry Smith, a former press secretary for Sen. Dan Quayle who runs the Institute for Crisis Management, a consulting firm representing religious and educational groups, as well as companies.

That slippery slope is partly illustrated by the number of measures being used and apparent shifts in strategy, which have sometimes failed to manage market expectations, causing stock market selloffs.

"When it's absolutely predictable that there is going to be an emotional reaction that is damaging, the best thing you can do is be proactive," says Bernstein, who's clients include Fortune 100 companies.