Twenty-one years ago this month, I experienced something I had hoped I would never live to see again. But lately, we have been in what can be described without much exaggeration as a stock market crash.

After the recent lows on October 10, the blue chip Standard & Poor's 500 index had plummeted more than 30% in two weeks. That's almost unheard of.

It happened in 1987, when the market dropped 31.5% in two weeks. Other than that incident, though, you have to go back to the 1929 crash to find such a severe decline in such a short period.

A collapse of this magnitude raises serious questions. Have the bailout efforts of the world's governments failed? Is the global economy headed into a depression a la the 1930s? (See also: "How to Keep Your Money Out of Harm's Way.")

Perhaps, but we shouldn't jump to conclusions. Congress passed the biggest financial rescue package in history not too long ago, and the money hasn't even started to flow yet. When cash replaces the frozen mortgages on lenders' books, the system should begin to thaw.

What's more, the Treasury has already guaranteed the vast majority of money market funds, while the FDIC recently boosted the limit on insured bank deposits to $250,000 ($500,000 for joint accounts) through December 31, 2009. So there's no need for investors to panic about the safety of their cash reserves. (See also: "How the Bailout Affects You & Your Money.")

A Significant Reversal

Recent market action has allowed us all to breathe a little bit easier. For a while last Thursday morning, it looked as if we might have two calamitous days in a row. Industrial production for September, reported before the opening bell, was horrible (biggest monthly decline since 1974).

Then, at 10 a.m. ET, the Philadelphia Fed came along with an equally shocking report on factory activity in the Middle Atlantic states: worst monthly drop ever. So the stage was set for a huge market decline.