This economy and stock market feels like you're on a toboggan and sliding down a snowy hill way too fast. And there's a street coming up at the end of the hill that you might slide onto. You can't decide whether to ride it to the end or bail out. (Can't you tell I'm a far-north Yankee in origin?)
If you were heavily invested in stocks when the downturn hit, trying to get the best returns possible, then this would be a really scary ride. In addition, if you are heavily indebted, have an upside-down mortgage, and/or have a job that might be going away, this is indeed a very frightening time.
However, for young people, like my '20s children, who have almost no assets or debt yet, they might actually benefit from lower housing prices in the future, and a new beginning. (But maybe not, depending on what lessons we learn and changes we make.)
In my case, I mostly got out of stocks late last spring in my personal investments, because I believed the prediction of the contrarian economists that things were about to go very bad. Also, my pension portfolio is controlled by others and was fairly conservatively invested so as to cushion the fall. Fortunately, my debt levels are low and my job is fairly secure. There is almost nothing I can do now except think about possibly working a bit longer before retiring.
As a country and even as a world, we are in uncharted waters here. All hands on deck. Keep yours eyes open. Be cautious and prudent, and don't make any rash decisions. Cry a little, go see a good movie, listen to some good music, exercise. Vote for the best Presidential Candidate (Obama). Keep the faith, pray for the national leaders, and love one other.