"We Have Not Turned the Corner. In Fact, We Can't Even See the Corner Right Now."

In an essay opening the February 2 Newsweek cover package, "I Got It Bad (And That Ain't Good)" (on newsstands Monday, January 26), Newsweek International Editor Fareed Zakaria writes that President Barack Obama will have to quickly start planning for a set of more extraordinary measures to pull the United States out of its current, unsustainable economic condition.

"The American financial system is effectively broken. Major banks are moving toward insolvency, and credit activity remains extremely weak. As long as the financial sector remains moribund, American consumers and companies -- who collectively make up 80 percent of GDP -- will not have access to credit, and economic activity cannot really resume on any significant scale. We have not turned the corner. In fact, we can't even see the corner right now," he writes.

"President Obama faces a terrible dilemma. He needs to act quickly and on a massive scale," Zakaria writes.

Without large scale action, the financial system will keep bleeding, but the American public believes that we have already spent far too much on bailing out the banks.

Zakaria argues that the economic fact is that we have not spent enough.

"This current crisis has resulted in a deep erosion of American power that we have not fully understood. Even in the depths of the Iraq War, when much of the globe was enraged by George W. Bush's unilateralism, people everywhere believed that the United States had the world's most advanced economy and that its capital markets in particular were the most sophisticated and developed," he said.

That system is now seen across the world as a sham, and the attitudes of officials and businessmen range from shock to rage at what they see in the United States.

"When he began his run for the White House, Barack Obama thought he could restore American power and leadership by righting our foreign policy, winding down the Iraq War, closing Guantanamo, ending torture. These are all important policies, and I am glad that he is pursuing them. But right now, the most important way for him to restore America's credibility and influence in the world is to rescue the American model," Zakaria writes.

Also in the cover package, Senior Editor Daniel Gross writes how more and more companies and firms are deciding to forgo the work of restructuring their finances, and instead selling off their inventory and closing.

"Rather than soldier on, many operators have opted to simply fold, returning money to investors. Companies, homeowners and money managers willing to quit rather than fight is both a symptom of the nation's deep economic woes and emblematic of the challenge the Obama administration faces," Gross writes. "Our 'Yes, We Can' president is going to have to fix a 'No, We Can't' economy," Gross said.