In many corporate offices, in company cafeterias, and around dining room tables, the financial lockdown is impinging on plans.

Many commercial "loans are basically frozen due to the credit crisis," said Vicki Sanger, who is leaning on personal credit cards bearing double-digit interest rates to finance building roads and sidewalks for a residential real estate development in Fruita, Colo.

With the economy already suffering the strains of plunging housing prices, growing joblessness and the new-found austerity of debt-saturated consumers, many experts fear the unraveling of the financial system could pin the nation in distress for years.

Without a mechanism to shed the bad loans on their books, financial institutions may continue to hoard their dollars and starve the economy of capital. Americans would be deprived of adequate financing to buy houses, send children to college and launch businesses. That would slow economic activity further, souring more loans, and making banks tighter still. A downward spiral.

Fear of this outcome has become self-fulfilling, prompting a stampede toward safer investments. Investors continued to pile into Treasury bills last week despite rates of interest near zero, making less capital available for businesses and consumers with poor credit records. Stock markets rallied exuberantly for much of Thursday as a bailout deal appeared in hand. Then the deal stalled, leaving the markets in gyration mode before edging up on Friday.

"Without trust and confidence, business can't go on, and we can easily fall into a deeper recession and eventually a depression," said Andrew Lo, a finance professor at MIT's Sloan School of Management. "It would be disastrous to have no plan."

The Bush administration hit that message relentlessly last week. On Capitol Hill, Treasury Secretary Henry Paulson warned of a potential financial seizure without a swift bailout. Federal Reserve Chairman Ben Bernanke - an expert on the Great Depression - used words generally eschewed by people whose utterances move markets, speaking of a "grave threat."

In a prime-time television address on Wednesday night, President Bush, who has described the strains on the economy as "adjustments," put it this way: "Our entire economy is in danger."

The considerable pushback to the bailout reflected discomfort with the people sounding the alarm. In the aftermath of the Iraq war, President Bush carries a reputation in some quarters as someone who warns of deadly threats - real or not - when it suits his agenda. Paulson, a creature of Wall Street, asked Congress for extraordinary powers to take bad loans off the hands of major financial institutions with a proposal that ran all of three pages. Subprime mortgages have been issued with more paperwork than Paulson filled out in asking for $700 billion.

"The situation is like that movie trailer where a guy with a deep, scary voice says, 'In a world where credit markets are frozen, where banks refuse to lend to each other at any price, only one man, with one plan can save us,' " said Jared Bernstein, senior economist at the labor-oriented Economic Policy Institute in Washington.

Bernstein never bought the method. And yet, the more he looked at the data, the more he became convinced the economy was indeed in peril. "Things are scary," he said.

During the first three months of the year, the outstanding balance of so-called commercial paper - short-term IOUs that businesses rely upon to finance their daily operations - was growing by more than 10 percent from a year earlier, according to an analysis of Federal Reserve data by Moody's Economy.com. Between April and June, the balance plunged by nearly 10 percent, compared with the previous year.

Last week, the rate charged by banks for short-term loans to other banks swelled to three percentage points above the most conservative of investments, Treasury bills, with the gap nearly tripling since the beginning of this month. In other words, banks are charging more for even minimal risk, making credit tight.

Suddenly, people who have spent their careers arguing that government is in the way of progress - that its role must be pared to allow market forces to flourish - were calling for the biggest government bailout in American history.

"We are in a very serious place,'" said William Beach, an economist at the conservative Heritage Foundation in Washington. "There is risk of contagion to the entire economy."

Even before the stunning events of recent weeks - as the government took over the mortgage giants Fannie Mae and Freddie Mac, Lehman Brothers disintegrated into bankruptcy, and American International Group was saved by an $85 billion government bailout - credit was tight, sowing fears that the economy would suffer.

The demise of those prominent institutions and anxiety over what could happen next amplified worries considerably.

"The problem is so big that if somebody doesn't step in, it will cause a panic," said Michael Moebs, an economist and chief executive of Moebs Services, an independent research company in Lake Bluff, Ill. "Things could worsen to the point that we could see double-digit unemployment."

Last week, Moebs said he heard from two clients, one a bank and the other a credit union in a small city in the Midwest, now in serious trouble. Both were heavily invested in Lehman Brothers, Fannie Mae and Freddie Mac.

"One is going to lose about 80 percent of their capital if they can't cash those in, and the other is going to lose about half," Moebs said.

The credit union is in a city in which the auto industry is a major employer - an industry laying off workers. Yet as people try to refinance mortgages to hang on to homes and extend credit cards to pay for gas for their job searches, the local credit union is saying no.

"They have become very restrictive on who they are lending to," Moebs said. "They can't afford a loss. Their risk quotient is next to zero. You have a financial institution that really can't help out the local people."