Party politics is customarily suspended in time of war. It should have been suspended in America this weekend, with a crisis raging in the markets and confidence in the nation’s leadership on the line.

The purpose of an election campaign is to expose weakness in contenders for high office. Today the purpose should be to restore confidence in their strength.

Friday’s presidential debate between Barack Obama and John McCain was, as a result, a flaccid affair. They were clearly discomfited, like boys caught fighting during a funeral. On the economy, McCain was appeared hesitant because of his association with the Republican administration and his attempt to have the debate cancelled. Obama was calm and authoritative, but also aloof and preppy. Neither was able to answer a clear question about the financial rescue package.

On foreign affairs, McCain was able to unleash his debating style and it was more effective – assuming the viewers considered the Iraq war a triumph. He seemed happy with the old belligerence, with talk of “looking into Putin’s eyes”. Above all, he spoke with emphasis and experience, the chief contrast being with not Obama but George Bush.

Since McCain, above all, could not afford to lose, but had come to seem an old and uncertain man, “a conviction politician without convictions”, he emerged from the event, in my view, with his standing enhanced. Obama was the Obama we know: smooth, responsible but slightly ponderous, almost an elder statesman before his time.

But then these debates are overhyped, research showing them barely altering poll ratings by a percentage point. They are like Formula One races, compelling only for the possibility of a crash. They offer the hope that, for a moment, a carefully drilled candidate might drop his guard and come down to the level of ordinary mortals. It is by the character of their mistakes that we judge our leaders – and perhaps that is no bad thing.

For all this, watching the debate was like asking Mrs Lincoln about the play. Outside the chamber, a politically existential event was unfolding. Never was globalisation more vividly on show than in pictures of world stock markets hanging on every intonation and nuance of the inquiry into the $700 billion rescue package for American banking.

Gangrene in the tiniest toe – dud mortgages at the bottom of the housing market – had spread poison to the entire financial anatomy, collapsing credit and destroying the most hallowed banking institutions.

To most Americans this remains inexplicable. They understand war, but they cannot understand the credit crunch. They read about the Great Depression but cannot believe it might happen to them: that government could be so incompetent as to take them back to the mid-20th century.

The result has been one of the most emphatic populist reactions in recent history. Not since the 1890s tub-thumper William Jennings Bryan have the “little people” expressed themselves so forcefully against what Bryan derided as “the few financial magnates who, in a back room, corner the money of the world”. In e-mails, faxes and phone calls, they too have told their congressmen: “You shall not press down upon the brow of labour this crown of thorns; you shall not crucify mankind upon a cross of gold.”

The result obstructed an astonishing request for American taxpayers to donate an average of $2,300 each to bail out banks for their crassness and profligacy. They declined to do so. They certainly declined to grant the Treasury secretary, Henry Paulson, powers over their money that explicitly “may not be reviewed by any court of law or any administrative agency”.

That is the kind of power that Tony Blair or Gordon Brown might demand from a British parliament, or George Bush from Congress only in the post-9/11 hysteria of his Patriot Act. America is still a working democracy and not easily susceptible to those wielding the politics of fear.

Voters were unwilling to distinguish bankers, whom they hate, from banks, which they need. When Paulson said: “I hate the fact that I have to do it, but it’s better than the alternative,” they in effect replied: prove it. He appeared to want something worse even than a credit collapse, the evisceration of constitutional liberty.

Having been told, as a matter of faith, that the obscene wealth of Wall Street was in their long-term interest, Americans were furious last week to be asked to underpin that faith with a staggering tax bill, one that would foreclose any election promises to improve health or welfare (an issue neither candidate on Friday was able to address). To be told that this bill would be beyond scrutiny was more than democratic flesh and blood could bear.

So where now? Commentators are constantly asked how they think all this will impact on the presidential campaign. Any fool can explain why a crisis aids a Republican rather than Democrat, or perhaps a Democrat rather than a Republican. Any fool can explain that America will go for the experience of an older man, or the novelty of a younger one. The rest of the world can only watch in mute horror. What is this mighty democracy playing at?

The home of rawboned capitalism has been forced into the greatest state intervention in free markets in peacetime. Its president talks of panic, a word no leader should let pass his lips. Politicians and regulators may be driven by an enraged public to wreak vengeance on those bankers who brought them to this pass, yet they know they must not kill the goose on whose golden eggs the system relies.

We should fall back on a wider sense of confidence. By the time the scale of the collapse was apparent in Washington, the focus of authority shifted from a despairing executive to the forum of the people, to Congress. The people seized control.

This was initially bad news. Markets that had surged on first news of $700 billion in aid slumped again. Crude politics had arrived on the scene to have its day, and markets dislike that. In one of his better phrases, Bush remarked that “the legislative process is sometimes not a pretty one”.

Yet a rescue not backed by the representatives of those who must pay for it is a shallow rescue. Capitalism depends on credit, but the sustenance of credit depends on the willingness of citizens to underpin it in an emergency. A nation that once defended itself with Minutemen – ready to guard their homesteads at a moment’s notice – must consult if it wishes to mobilise them in an emergency.

Those watching Congress fight its way to a deal this weekend witness a nation publicly wrestling with its troubles. Americans are not prepared to take authority on trust. They have not repeated the gullibility they showed towards Bush’s scaremongering over Iraq. A crisis is no excuse for executive arrogance.

America can be at its best with its back to the wall: argumentative, unpredictable, certainly not pretty, yet still the rock on which western security – and financial credit – rests. This crisis is not passed. When it is, its immediate legacy will be a presidency from hell, George Bush’s final poison pill to his successor.

Yet the knowledge that all America has been involved in the rescue is a security rather than a shock. Whether Obama or McCain wins this election, he will endure agony paying for the crash of 2008. He should at least take strength from the manner of its rescue. It was executed by the mob, not the club.

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