Three years ago, we faced a crisis with urgency. Today, we face a crisis of urgency.

REUTERS

Here we go again.

The markets tanked Thursday morning and closed down more than 400 on news that ... well, take your pick. Home sales fell. Germany's growth stopped. Europe's dithering continues. Double-dip risks linger in the U.S.

The straw that broke the market's back today might well have been this "catastrophic" manufacturing report from the Philly Federal Reserve. Manufacturing activity plummeted from a slightly positive reading of 3.2 in July to -30.7 in August, its lowest level since March 2009.



No matter what happens for the rest of the day, the morning's nosedive will revive talk about a double dip. For a good but pessimistic summary of why we might already be living in negative growth today, read this.

Here's the upshot. Everybody is slowing down at the same time, and policymakers are too nervous to do something big about it. The U.S. economy bounced in 2010 as businesses replenished their inventories, but it never achieved escape velocity. Total government growth helped the private sector for more than a year. But now total U.S. government is shrinking faster than any industry, and business weakness has been laid bare.* For a year and a half, the U.S. economy was on crutches. Now the crutches are off and the economy isn't strong enough to stand on its feet -- much less withstand the one-two body punch of high gas prices in Q1 and the collapse of Europe.