The Urban Dictionary defines “Deer in the Headlights Syndrome” as, “A mental state of high arousal caused by anxiety, fear, panic, surprise and/or confusion, or substance abuse. A person experiencing the ‘deer in the headlights’ syndrome often shows behavioral signs reminding those of a deer subjected to a car’s headlights, such as widely opened eyes and a transient lack of motor reactions.”

One could also add a lack of desire to spend money, which is why I do not believe the government’s “flood the world with money” and “guarantee everything” strategy is going to be enough.

Frightened people do not invest. That’s why market insiders say the current round of wild market swings is driven by day traders who thrive on volatility and care about little else. Most of us are sitting on the sidelines. Nor do frightened people buy things, which is why retail sales are poor, credit card debt is decreasing, and expectations for the holiday shopping season are low enough to depress a hyena.

People will not come out of their cocoons until they have some confidence that their money is safe, not to mention their future, their job and their retirement. We are nowhere near that point. Speaking today before the Economic Club of New York, Federal Reserve Chairman Ben Bernanke gave the government a big pat on the back for acting to defrost the credit markets. The general public sees things quite differently.

The public sees a government lurching from step to step, with no clear plan. First officials assure people the housing market collapse can be “contained” and that the government sponsored enterprises, Fannie and Freddie, are adequately capitalized. Then, suddenly, they’re not and must be taken over by the government. Next the government proclaims that some banks are too big to fail and must be protected, for the sake of the overall economy. Then it does nothing as Lehman Brothers goes under. But AIG, the giant insurance company? That one gets a government takeover.

The architect of all this is Treasury Secretary Henry Paulson. He asks Congress for $700 billion to buy up troubled assets, specifically noting that he does not see a need to nationalize banks. Then he calls the CEOs of nine banks to Washington to tell them the government is “injecting capital” into their balance sheet challenged institutions in return for preferred stock.

Congratulations, fellow taxpayers. We now own a big insurance company, several banks, and enough bad paper to stretch from sea to shining sea. No wonder we’re scared.

And what’s in it for us? Secretary Paulsen’s first pitch to Congress seeking support for the package HE called a “Bailout” said it was “aimed at restoring financial markets and institutions.” So the answer, at least at first, was, “not much”. Only a revolt in Congress, in response to outrage from the public, led to changes in the legislation to provide some direct relief for taxpayers, mainly in the form of promises to try to help homeowners in financial distress work out loan modification agreements on their mortgages. Government leaders now call the efforts a “Rescue”.

Will it work? Pick your cliché. It remains to be seen and only time will tell. So far, treasury yields remain just a hair above zero, indicating a continuing credit crunch and flight to quality. Mortgage rates, which should come down, are instead rising.

I’m still frozen in the headlights and am not ready to start buying and borrowing any time soon. By all indications, you’re not either. And I interpret the recent political polls, knocking a few percentage points off the tally sheet of Republican John McCain, as indicating a big vote of no confidence in the incumbent party.

So what’s to be done? The Fed could lower interest rates even more. But cheap money is what helped get us in this fix by facilitating the housing bubble. Besides, rates cuts do not seem to be helping. Get out your old textbooks and look up, “Pushing on a String.”

I think it’s time for some good old government spending. If we taxpayers have a trillion bucks to spend, I’d rather get something physical instead of stakes in shaky financial firms and a portfolio of loans and other paper assets of unknown value. Let’s fix the roads, replace the broken bridges, get hydrogen and natural gas pumps installed at service stations and build a 21st century power grid. We have to do these things anyway, and they're big projects which need government involvement, so let’s get going. We’ll put Americans to work and have something to show for it when we’re finished.

I know this is not going to be a popular column with the rocket scientists on Wall Street. We should show some compassion and provide the appropriate retraining so they can learn how to work with their hands. I’m sure they would do the same for us.