As the Bush administration makes its way out of the White House, it leaves behind the most precarious economy in U.S. history since the Great Depression. The current crisis is clearly emblematic of the faulty and enabling economic policies of the past eight years, but beyond that, the deregulated markets of investment banking have been shocked dramatically due to some major risk-taking on behalf of Wall Street and Main Street respectively. Alarmed and well aware, the world is literally counting on the American economy, and many are scared out of their wits. On the verge of Barack Obama’s new presidency, both the White House and the global economy are bound for some substantial changes.

Now, the study and practice of macroeconomics has never been a science, and it never will be. For all the mathematics and strategy involved, the global economies of the world are nothing but a universal social construct—virtual machines that control and develop wealth, but only if managed correctly. Gross, complicated and highly sophisticated, the principles of capitalism are being redefined for the twenty-first century, and the system of checks and balances that has enabled humanity to progress in every material sense has manifested into a monster of consumption—and it needs to be tamed. We’re all to blame, because we’re all living this reality, but the liberties of credit and the contractual nature of debt can seem surreal in times like these. It is, as they call it, a “credit crisis,” and the world is suffering from a lack of accountability. Overwhelming debts across the entire social spectrum remain at the heart of this economic malaise, and the payback options are limited. Experts may have a better understanding of the detailed factors at play, those economic or political, but they all suggest one thing: handle what’s yours and let the bigger picture unfold as it may. There’s no use in personalizing the macroeconomics of globalization. It’s going to be a rough ride, and all we can do is brace ourselves.

That said, the American economy is renowned for its ability to endure hardship, proving time and time again that it can handle the self-inflicted pains of its volatile free markets. However, the role of government is no longer secondary, and call for regulation is paramount in all this economic turmoil. Washington has literally taken its stake of assets, and now has to manage a good portion of the financial sector accordingly. Though the Treasury has been known to get its hands dirty during the roughest periods of Wall Street mayhem (bailing out “vital companies” like Lockheed in 1971, Franklin National Bank in 1974 and Chrysler in 1979), this period significantly marks a change in American capitalism, according to Dr. Luigi Zingales. A research fellow for the National Bureau of Economic Research and a professor at the University of Chicago’s Graduate School of Business, Zingales has studied the actions of international governments and economies very closely. In his view, the most recent move to take part-ownership of the private financial sector—what some may call “nationalizing the economy”—is the first step in dividing this economy from its free market principles, aiming to alter the negative outcomes. “This will create enormous distortion,” says Dr. Zingales. “I think the decision to bailout AIG is the end of American capitalism as we know it.”

“It’s clear that there is no nice solution out of this, and everything that’s going to be done from this point on is somehow violating the principles of American capitalism,” said Dr. Zingales from a Webcast discussion with other leading economists of the Chicago school. They’re all seasoned experts, but they still question each other like students. They are, after all, academics—and the first to remind you this is not a science. Critically explaining the appeal of more government bailouts, they all agree on the terrible long-term effects. The bailouts of the seventies come to mind, and how they were felt throughout Reagan administration.

“The bazooka approach of Hank Paulson [to inject such a massive amount of money into the economy] is basically an effort to shut everyone up, and get people back to work without worrying too much,” says an undisclosed source from within the Lehman Brothers survival camp. “This crisis is a matter of liquidity [credit flow], capital [in this case quickly eroding assets] and confidence [the risk factor and how we manage it]—all of which are extremely hampered right now.”

According to the same source, the only way you can stop a downward slide in confidence is to inject a ridiculous amount of capital into the economy, so that nobody questions whether it’ll work or not. Still, despite the massive injections, everyone is asking, “If the bailout capital isn’t enough, then what’s next?”

Dr. Zingales notes that undoubtedly “there will be some massive regulation of Wall Street, and it will be done in the interest of those who made the mistakes in the past—not in the interest of protecting the American people in the future.”

Avoiding the negative spiral seems impossible, but what exactly the new administration will do to best situate the American people for the future may be a new horizon in economic planning, much like Franklin D. Roosevelt’s New Deal. Experts from left and right are talking their heads off, both with political and economic reasoning, but trust is the name of this game, and the results of such a trial-and-error period has yet to be determined. The G-20 summit meeting—urgently scheduled at the White House this month—may reveal some common agreement on what needs to be addressed internationally, but mastering a cohesive economic regulation plan across the board is unlikely.

“All the economies have to realize that they are all facing a major economic downturn. They all have to work together to get out of it—and not turn to nationalistic solutions,” says SFSU economics professor Don Mar. “Increasing regulation of financial markets and holding equity positions in financial institutions may be interpreted as an extension of the thirties.”

Not far from the hysteria of those crash-and-burn days, the Treasury Department of the Bush administration has worked more like a scientific mad-lab than the supposed moderator of economies. These may be extraordinary times, and indeed, extraordinary measures are being taken, but the most recent actions haven’t controlled much of anything.

By paying out almost $800 billion in cash (and counting) in a matter of weeks, the Federal Reserve may have made its last effort to bail out Wall Street, but it’s surely not the last action we’ll see. The Obama administration is forced to deal with the reality of a Federal Reserve going broke. They can print more bills if they like, but that would only cause massive inflation. Either way, prepare and hold on for the ride.