Are we experiencing irrational despair?

Alan Greenspan warned us during the tech bubble that we were in a period of irrational exuberance.  But what is the opposite of that?  Are we now over reacting to the downturn?  The solvency of some of the world's largest companies is now in question but these 'fundamentals' are themselves based on the performance of even deeper fundamentals - i.e. consumer demand.  And consumer demand is itself a function of employment levels.  Paul Kedrosky points to a small glimmer of hope in layoff numbers that give me some hope.

I'm not saying that we are out of the woods, or that 09 will not be a total blood bath, or that the banks won't go belly up but it is easy to miss what might be early indicators of a possible turnaround in the face of the barrage of bad news we've seen lately.