The New York Times, Washington Post, Los Angeles Times, and Wall Street Journal lead with yet another horrible day for stocks that sent one clear message: Investors are freaked out. Another grim milestone was reached yesterday as the broad Standard & Poor's 500-stock index plunged 6.7 percent and reached its lowest level since 1997. The NYT puts it in context and reminds readers that 1997 was "before the dot-com boom, the Nasdaq market bust and the ensuing bull market that drove stocks to record heights." The WP highlights that this latest downward spiral comes after a few weeks when it looked like things could get better, but now there are fears that the recession will be longer and deeper "than even many pessimists had expected." The LAT points out that those who followed the all-too-common advice of not selling when the market is down have continued to lose money at a terrifying rate, and now many are throwing up their hands and giving up before they lose more.

USA Todayleads with a look at how states are being forced to impose higher taxes on employers and reduce benefits as the number of people filing for unemployment has reached a 16-year high. Funds to pay for these benefits were down in 32 states compared with last year. Yesterday, Congress passed an extension of unemployment benefits after it became clear the White House would support such a measure.

The S&P 500 is down 52 percent from its high reached a little more than a year ago, which marks the "sharpest decline since the Great Depression," notes the LAT. The WSJ points out that if the index were to finish the year with yesterday's numbers, it would mark "the worst annual percentage drop in its 80-year history." The Dow Jones industrial average is a bit more insulated from financial stocks, so it didn't plunge as far, but it still fell 5.56 percent to close at its lowest level since March 2003. The credit markets continued to suffer a thrashing as investors ran as far away as possible from corporate and mortgage bonds. Investors continued to seek safety in the warm embrace of ultra-safe U.S. government securities. Demand for short-term Treasury bonds was so high that investors were, once again, essentially paying the government to hold onto their money, and the LAT notes that the yield on two-year Treasury notes fell below 1 percent for the first time. Commodity prices responded in kind, and crude oil closed below $50 a barrel for the first time since 2005.

There was some fresh grim economic data yesterday, including news that weekly unemployment claims reached a 16-year high. But as the WP highlights, "[T]he misery on the financial markets had no single cause." Investors are quite simply in full panic mode because they don't know when the pain is going to stop, and many have decided it's better to just watch from the sidelines rather than see their entire wealth disappear. "We'll have a whole generation of people whose retirement plans have been wiped out," one expert tells the LAT, which points out economists are worried that the market losses have been so great that it virtually assures a long and painful recession is ahead. As people see their nest eggs disappear, they're likely to cut back on spending and fuel the vicious cycle.

Investors are also panicking because of the uncertainty of how much the government can do to solve the problem. The WSJ points out that since the government decided to pump money into nine major financial companies, their stocks plunged an average of 46 percent. There's no better example than banking giant Citigroup, which received $25 billion from the government last month but saw its stocks plunge 26 percent yesterday, its worst one-day percentage decline ever. Citigroup shares have lost half their value this week, and its board of directors will have a meeting today to discuss the company's condition. Executives are apparently considering auctioning off pieces of its business or perhaps even just selling the whole company, notes the WSJin a separate front-page piece.

Most important of all, though, investors are wondering: Who's in charge here? As markets plummet, unemployment increases, and those close to retirement wonder how they'll make ends meet during their golden years, lawmakers in Washington spent the day bidding farewell to the longest-serving Republican senator, and Democrats devoted time to an intraparty leadership scuffle. At the same time, Treasury Secretary Henry Paulson basically implied  a few days ago that further action would have to wait until President-elect Barack Obama's inauguration. Yes, it's transition time, but apparently no one got the memo that a financial crisis can't be put on hold until all the pieces of the new administration and Congress are in place.

Things are developing much more rapidly than anyone thought possible. As a separate front-page piece by the NYT's Floyd Norris points out, in late October the Federal Reserve thought the unemployment rate could rise to as high as 6.5 percent this year, and a few days later it turned out that rate had already been reached. And think about everything that has happened since Lehman Bros. collapsed. Now, investors are looking to Washington for answers, and all they get back is a message to wait. The NYT's Norris says that "Obama may have missed an opportunity to exert leadership" when he resigned from the Senate so soon after winning the presidency.

The NYT's Paul Krugman takes up this issue and points out that "the emergence of a power vacuum at the height of the crisis" is one disturbing way in which 2008 is starting to look like 1932. Although the deterioration of the economy appears to be picking up speed, "economic policy, rather than responding to the threat, seems to have gone on vacation."

That's not to say everything that has been going on in Congress has been insignificant. The LAT and NYT front news that House Democrats ousted Michigan Rep. John Dingell from the chairmanship of the House energy and commerce committee and installed Rep. Henry Waxman of California. Dingell is the longest-serving member in the House, and removing him from his favored post after an intense two-week campaign by Waxman was highly unusual for a place that usually values seniority above all. The news was a clear blow to Detroit's Big Three, as Dingell was a reliable ally who has long been criticized for blocking regulatory efforts. Having Waxman at the head of such a critical committee will in all likelihood make it easier for Obama to get his energy agenda through Congress.

Speaking of seniority, one of the reasons that Sen. Hillary Clinton is allegedly interested in leading the State Department under Obama is frustration at her relatively junior status in the Senate. But Democratic leaders may be trying to work around that, notes the NYT. Senate leaders are apparently ready to give the former first lady some sort of leadership role in the Senate, which is part of the reason why she hasn't decided whether she will, in fact, join the Cabinet. An Obama adviser said that Clinton's nomination is "on track" and that the announcement is expected after Thanksgiving. Still, the Senate majority leader is apparently looking for a leadership position that Clinton could take on in the Senate that would have enough stature to appeal to the former first lady.