Whether the next president is named Clinton, Obama, or McCain, the new chief executive will face an economic challenge unlike any since 1933. The new president will need to reject an entire failed paradigm of how the economy works and of government's role in it.

Since last summer, our private credit system has been unmasked as a series of interconnected Ponzi schemes. The reigning theory was that if government stepped aside, financial innovations would produce reliable, self-regulating prosperity. Instead, we got toxic financial bubbles, whose popping is now infecting our entire economy as credit contracts, while an administration still devoted to free markets watches helplessly.

Many senior people inside banking, business, and government regulatory agencies are more alarmed than they will say publicly. However, no official of the Bush administration will acknowledge how serious this financial crisis really is. Nor do most Democrats want to sound like Chicken Little -- for the financial economy is a confidence game and nobody wants to be the Cassandra who triggers the crash. So for now, policy elites are publicly treating all this as just a modest bump in the road.

What would Clinton or Obama do? Paul Krugman has relentlessly criticized Obama as too conservative. Seconding Krugman from the opposite quarter, Columbia University professor Jagdish Bhagwati, dean of academic free-market scolds, recently wrote in the Financial Times that Clinton has dangerous protectionist leanings, while Obama is the better free trader. Bhagwati lauded Obama's chief economic adviser, Austan Goolsbee, as "a valuable source of free-trade advice over almost a decade." But "Mrs. Clinton's campaign boasts of no professional economist of high repute. Instead, her trade advisers are reputed to be largely from the pro-union, anti-globalization Economic Policy Institute and the AFL-CIO union federation."

This surely came as news to EPI and the AFL-CIO, which have gotten courtesy meetings and modest policy gestures but nothing more. And it doubtless brought smiles to the faces of Gene Sperling, Robert Rubin, and Roger Altman, the actual Clinton economic team. None is an academic, but two are leading Wall Street grandees.

What a choice! With one candidate, we get advisers who arrive at conventional economic wisdom via failed academic models. With the other, we get the same bad policies via Wall Street.

After the Great Crash, it took three agonizing years before the nation had the good fortune to elect Roosevelt, and a decade until the New Deal and the economic stimulus of war finally ended the Great Depression. This time, we are in both better and worse shape. On the plus side, the right did not succeed in repealing the entire New Deal. Thanks to deposit insurance, Social Security, a more activist Federal Reserve, and federal spending of nearly 20 percent of gross domestic product, government can still play much more of a stabilizer role today than in 1929.

On the minus side, the bipartisan right did succeed in repealing far too much financial regulation, hence the current credit crisis; the U.S. is in hock to foreign creditors; the dollar is plunging; unemployment is rising; commodity prices are soaring; stagflation looms; trade policy serves financial elites rather than the nation; and the private financial system may need to be recapitalized, either by foreign governments that share few of our values, or by U.S. taxpayers.

Because of globalization, domestic recovery policy is constrained. As we all learned in high school, Roosevelt "took America off the gold standard," so that global deflationary pressures would not prevent FDR from using big deficits for domestic recovery. Today, opting out of global financial downdrafts is limited by our reliance on foreign borrowing.

Most seriously, we are still in thrall to bad ideas. A recovery program will require re-regulating capitalism nationally and globally. It will require massive public outlay. But these views remain at the margins of mainstream debate.

Which candidate is more capable of rejecting 30 years of failed free-market delusions and advisers like Rubin and Goolsbee? Obama, praised by Bhagwati, damned by Krugman, and rejected by many working-class voters in places like Ohio, is nonetheless still a work in progress. He seems temperamentally far more open to dramatic change. Clinton, by contrast, has been criticized as both a hopeless centrist and as an opportunist weather vane. But she's no fool, and even a weather vane shifts with the gathering winds. Either Democrat would need to break radically with the elite consensus -- or face a collapsing economy and a failed presidency.