Consumers are more depressed about the economy than ever before. The University of Michigan's famous Consumer Sentiment Index fell to 57.5 this month from 70.3 just one month ago! The drop is the single largest in the history of the survey as consumers are finding themselves saddled with debt and unable to pay their bills while costs continue to spiral higher.

The same measure averaged 85.6 last year, but began a steep decline as the economy deteriorated. Tightened credit has led to a further decline in the three-year real estate recession that has caused all of the problems. More and more Americans are finding themselves paying a mortgage on a house that's no longer worth as much as they are paying. Many have therefore stopped.

Foreclosures also continue to rise as Americans simply cannot afford to keep making their housing payments. Banks can't afford to foreclose on these houses fast enough as their own problems continue to mount. Investors who funded these mortgages are no longer interested in making loans. And the market has essentially stopped dead in its tracks.

Government interventions have attempted to free up the market by injecting cheap cash that banks can loan to start making higher interest loans again. However, banks remain nervous as consumers continue to default, even with the cheap credit. The two largest institutions, Fannie and Freddie, are both now owned by the government. There's no end in sight.

However, the storm is always darkest before the sun shows. This terrible economic environment has created a lot of opportunities for investors. U.S. stocks are cheap and many great investors like Warren Buffett are finally stepping up to the plate. Meanwhile, housing prices are at record lows for those looking to buy a new house and lending rates will be cheap when the market reignites.

Consumers should focus on settling their debts now while banks are in trouble and eager for any resolution. They should also be looking at acquiring stocks on the cheap and saving for their future. Now may be a time to rebuild instead of a time to mourn...