Rachel Maddow just asked perhaps the most insightful question of this bailout to date: Is this economic crisis global warming or the Iraq War? Is it a real crisis that builds slowly that people fail to acknowledge, or is it a bunch of hype and hysteria over what is, in the end, nothing.

Laura D’Andrea Tyson says that this credit crunch is real and real bad, and your job is at risk. Its not a bail-out, but a rescue of a broken market.

Therein lies the rub. I think there are two fundamental issues that have doomed the bailout bill earlier today.

First, this is a really complicated mess, and no one understands what is actually going on. Who among you actually understands credit-default swaps, or the leveraging of commercial paper for mortgage-backed securities? Not me. Probably not you. One of the major difficulties here is that there is no story to explain what is happening, leaving no reason to justify the extraordinary actions necessary to save the economic markets. There’s a lot of assigning of blame, but there’s little explanation of what actually is the problem. I’m not saying that there needs to be a blue-ribbon commission producing a report. Rather, what is needed is a narrative that makes sense of what is going on in such a way that people can actually understand what is happening and that justifies a response. All we have now is a series of bank failures, the biggest drop in the Dow ever, and a back and forth of Presidential politics.

So what has actually happened? Two items have broken through: 1) people can’t pay mortgages and 2) wall street bankers made some poor bets. Neither of these really sounds all that drastic, and neither of these really calls out for action. People are annoyed with others who borrowed over their heads when they were responsible, but its hard to blame families for tough economic times. No one really has any sympathy for Wall Street.

The massive problems that remain–the credit crunch, the insolvency of key financial instruments, the potential lack of cash for business operations, this is much more significant but much less of the story. If a rescue operation is going to have any chance of success, its proponents need to develop a narrative on the crisis before they can sell the solution.

Second, this is a “bailout.” Of Wall Street, no less. No one likes to bail-out fat cats who make poor decisions. Except that at this point its far beyond a bailout, its rescue of a broken financial system by extensive nationalization, regulation, and government intervention. This intervention needs another frame. FDR, who has re-emerged as everyone’s favorite President these days, was an expert at this. The New Deal socialized large parts of the economy. Lend-Lease paved the way for entry into World War II. But Roosevelt was expert in telling the American People that, when your neighbor’s house is on fire, you give them the hose now and worry about payment later.

This is more than a bailout, its a rescue of a broken system on the verge of collapse. Except that you wouldn’t know that from the event itself. If Congress and the Administration are going to rescue the economy, they need a plausible narrative of what is going on to explain the seriousness of the problem and to form the basis of a political coalition. Then they need to start talking about a government rescue to save the economy, and drop all this Wall Street bailout jargon.