"This is like the advice you get from the doctor who says you should quit smoking. You know he's right. But if you don't, you're not going to die tomorrow, and you're not going to die next week. But at some time, it's probably going to get you."

That was Robert Brusca, chief economist at Fact and Opinion Economics in New York, explaining to the Associated Press why a good portion of America isn't on board with the $700 billion bailout plan that failed to pass the House vote yesterday.

It's an apt analogy. Americans understand the significance of the consequences of this credit crisis. They know they aren't immune to it—their bank could go under (if it hasn't already), they might not be able to get a loan to pay for college or a new car, they could lose their jobs or a good chunk of their retirement money. They might suffer financially for years to come.

But until they get that lung scan back that says "cancer," they are likely to keep right on puffing away.

If the Senate fails to revive this bailout bill, and if Congress recesses in defeat until after the next President is sworn into office, what might happen to the economy and to the credit markets?

In short, it's ugly.

This much we know: More banks will fail, and lending will continue to be squeezed. If consumers can't get loans, the housing downturn will persist and personal spending, which is the backbone of the economy, will slow to a crawl.

But overnight lending is also the way many companies subsist, by using it to meet payroll and other operational obligations. The financial pain will quickly spread to the corporate sector, which will directly impact employment and economic growth. The unemployment rate is expected to surge from 6.1 percent today to 7.5 percent or higher next year.

Chief executives in virtually every sector of the economy are fearful. Microsoft chief executive Steve Ballmer can predict how the crisis will impact the software giant, as corporate and consumer spending begins to slow. "I think one has to anticipate that no company is immune to these issues," he told Reuters.

Others are already feeling it. "Our sales have been impacted as our customers have been hurting for liquidity," Office Depot chief executive Steve Odland told Bloomberg. "The global economy is at stake here. The ripple effect has been far and wide and action needs to be taken.''

Indeed, a new survey of retail C.F.O.'s by BDO Seidman shows that 37 percent plan to reduce their planned inventory purchases in 2008, and 36 percent say they have closed or will close stores this year.

So consumer and business lending dries up, spending stops, and the lights go out at many corporate headquarters. Felix Salmon cites a laundry list of likely consequences to the failure of a bailout bill, ending with this one: We will have the Great Depression of the 2010s.

Scary? Yes. Possible? Yes. Certain? No.

Even if this Congress fails to act, the Federal Reserve could continue pumping liquidity into the markets and orchestrating bank buyouts, as they did with the Washington Mutual and Wachovia acquisitions.
 
The coming months would certainly be painful ones, but the markets would look forward to a new administration and a new Congress to start over with potential solutions in January. What can't be fixed now might still be fixed later.
 
Everyone knows they have to quit smoking. It's just a question of when.