Election Day. Pity the poor fellow who wins.

A Swiss banker wrote to tell us that according to his proprietary indicator of World Economic Health "conditions are shown to be some 2.5 times worse" than the last recession which occurred in the 1990s.

We would say that they are worse than any we can recall. First, we have never seen such a violent, worldwide correction. Second, we have never seen such a foolhardy effort on the part of the world's governments to prevent a correction.

It's a war. It's worldwide. It's going to catch almost everyone in the crossfire - business, investors, consumers, and retirees. And it's going to end in a worldwide depression. (We're going to change our designation of this coming depression to WDI - Worldwide Depression I - to make it easier to remember.)

But wars take time. Most likely, Mr. Market's blitzkrieg of September and October will give way to a calmer winter campaign. It may even appear that we have entered another period of peace in our time…like the "Great Moderation" the world enjoyed for so many years. If so, dear readers are advised to use this as another opportunity to get out of stocks and other speculative positions.

The time will come to buy back into the stock market…but maybe not for a long time. The average dividend yield of the Dow stocks has risen (because prices have fallen) to 3.7%. When we can get a safe dividend yield of 6%, it will be time to buy back into the stock market.

Yesterday, the Dow and gold both held steady. Oil slipped $3.90 to $63.91. And the dollar rallied to $1.26 per euro.

For the moment, Mr. Market is winning this war…and Mr. Market likes cash.

"I called my mum over the weekend," said an English colleague. "I explained that with her old savings account she had outperformed practically every investor in the world in the last quarter. She seemed quite happy about that. "

Eventually, Mr. Government will have his day. Governments' attempts to stop the correction…and re-inflate the credit bubble…will eventually create another bigger, badder crisis - a monetary crisis. Then, cash will be trash. When that happens, you will want to have gold coins in your safe, not pieces of paper. You'll want to be looking at images of Canadian maple leaves and American buffaloes…not dead, green presidents. Yes, when the shooting stops, and the dust settles, the last thing standing will be gold.

So why not stock up now - when the price is low? And, even better, you can get the precious metal for just a penny per ounce…get all the details here.

But that day is somewhere in the future. Here in the present, cash is king and the dollar is golden, as Mr. Market blasts away at the whole structure of the global economy.

Chinese manufacturing just suffered its worst contraction on record, according to today's paper.

America's factory index is also at a record low.

In China, manufacturing is critically important. Without it, hundreds of millions of people will lose their jobs. What will happen when Chinese factories go silent and Chinese workers go hungry? We don't know…and we don't even want to know…

In America, factories are less important. The U.S. economy depends on the slurp consumption, not on the hum of factories. Of course, if they're going to consume, Americans need money. And there's the rub; they don't have any. They have no savings. Credit is getting tight. And now…whoa!…the job market is tightening too.

As a result, U.S. consumer spending is not just declining…it's collapsing.

Auto sales, for example, are running at their slowest rate in 17 years.

Circuit City says it is closing 155 stores.

And oil consumption in the United States is slipping more than analysts believed possible - down 9% from last year.

So you see, dear reader, markets work. Raise prices and, ceteris paribus, you will reduce sales. Increase production and, ceteris paribus, you will lower prices. Bring on a correction and people will change their feckless ways.

But one scam gives way to another. During the Great Moderation we were assured that our financial authorities had found the magic formula; henceforth, enlightened economic management, along with sophisticated, risk-dispersing financial instruments, would practically eliminate recessions and crashes. There was no need to save for a rainy day, we were assured; because it would never rain! But now we have a downpour…with markets crashing and the world facing its biggest slump ever. And now we are told that markets have failed. Now, we need Barney Frank, Ben Bernanke and Hank Paulson to run our financial system.

Wait a minute…we don't recall Ben Bernanke warning that the world faced a meltdown when he took over at the Fed in Feb. 2006. And wasn't Barney Frank the chairman of the House Financial Services Committee even as Wall Street was running amok, inflating the biggest asset bubble in history? We don't remember him holding hearings about the dangers it presented until after the thing blew up. And wasn't Hank Paulsone the head of one of Wall Street's most go-go, derivative saturated, billion-dollar-bonus-driven firms while all of this was going on?

Well, never mind…

But now we are supposed to believe that markets don't work…and that these well-meaning public servants are going to save us from the evils capitalism…and that bureaucrats will be able to fix prices and allocate capital better than Mr. Market.

Deception gives way to hallucination…correction is followed by depression.

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.