Nearly a year into the credit crisis and four months after Bear Stearns imploded, panic has officially set in on Wall Street.

This week was a maelstrom of fear across the board. The Dow Jones industrials officially hit bear market territory, Iranian missile tests helped drive the price of oil to another record high, rumors and anxiety sent shares of Lehman Brothers so low that its name is nearly synonymous with Bear Stearns, and the two most important players in the mortgage market, Fannie Mae and Freddie Mac, appeared to be on the brink of becoming obsolete.

Investors have every right to be nervous. And the scariest part is there are no signs of abatement anytime soon. Panic only begets more panic.

The cliff dive that Fannie and Freddie shares took this week is particular cause for alarm. The government-sponsored entities borrow money at favorable rates in order to buy and repackage mortgages from issuing banks, thus freeing up the banks to make more loans. They then sell those repackaged securities as bonds and guarantee they'll be repaid.

It's nearly impossible to overestimate their importance to the function of the capital markets— they're the grease that keeps them running. They back or own more than half of the country's $12 trillion mortgage debt.

Nothing fundamentally changed at Fannie and Freddie this week. Rather, the sell-off was caused by a kind of awakening, brought on by comments by a former Federal Reserve board member, that the debts at the mortgage giants are now greater than their assets. Insolvency would likely lead to some kind of government rescue that would result in putting Fannie and Freddie in a conservatorship.

Such a scenario would leave shareholders with nothing. Fear of that becoming a reality sent shares of Fannie and Freddie reeling this week, with both of them losing nearly half their market value.

Interestingly, the Fannie and Freddie blowups are not being blamed on rumormongering short-sellers, as we've seen in the case of Bear Stearns and now Lehman Brothers. Their C.E.O.'s didn't appear on CNBC to deny the concerns and say everything is going to be all right. Rather, their sell-offs are based on a real set of particularly harrowing circumstances, and it's up to Washington to fix it.  

As the debate over just how to handle wildfire-like rumors in today's highly reactive market continues, Lehman found itself once again squarely in the center of the rumor mill this week.

At the start of the week, the energy-pricing agency Platts inexplicably cut Lehman off from trading certain oil contracts. By Wednesday, Lehman was reportedly trading on its platform again.

But Thursday's rumors, and their subsequent quashing, sent Lehman shareholders into an unstoppable selling frenzy. Pimco and SAC Capital, two institutions that trade with Lehman, denied rumors that they had stopped dealing with the firm.

That did little to allay investor concerns, providing evidence that it's not the rumors that take down a company, but the perception they create even if they are known to be false. Lehman shares tumbled another 16 percent on Friday and are down 38 percent for the week. The panic over Fannie and Freddie caused even more panic across the broader financial sector, Lehman included.

What's going to happen to Fannie, Freddie, and Lehman? Will they survive, will they die a slow and painful death, or will the end come quickly and painlessly? When will oil peak and stocks bottom out?

Even the smart money doesn't know any of these answers, so it's pointless for the dumb money to speculate.

The only thing we do know is that Wall Street needs its Xanax.