Party think-ins have a peculiar place in the Irish political panor­ama – if they have a purpose, particularly in these times, it might be to engender a sense of solidarity and set a mood of tough-minded diligence and calm.

This year's team-building exercise for Fianna Fáil was no different from any other – luxury rooms in a luxury hotel with great food. The one exception, of course, was that it took place against a background of what can only be described as international financial insanity.

As members gathered at the Clayton Hotel in Galway there was global shock that one of the world's biggest banks, Lehman Brothers, had gone under, that a second, Merrill Lynch, had been taken over by Bank of America, that the world's biggest insurer AIG was on the brink and that Wall Street was febrile enough to crash.

Some sober reflection amidst the team-building at the think-in might have been expected but instead, Fianna Fáil, ably led by its most senior figures, seems to have partied with gay abandon. Its members went in reading headlines such as "Nightmare on Wall Street" and "The Banking Apocalypse" in that day's papers and woke up – white-faced and delicate by all accounts – to headlines such as "Battle of Ballybrit Bar takes its toll on soldiers of destiny and party people" and "Singing Taoiseach brings the house down". It was hardly inspiring to those who lost fortunes in pension funds and savings plans.

The rest of the week – in which every hour seemed to bring more momentous economic news – seemed to be one of catch-up for the government.

Once again, instead of attacking the agenda, they have struggled to keep pace.

Now vulnerability probably isn't a word that often creeps into our phlegmatic Taoiseach Brian Cowen's vocabulary, nor that of Tánaiste Mary Coughlan, who is mindful of the needs of those "moving out of work". But it would serve them well to start thinking about that anxious state of being – and how to steady the nerves of a lot of very vulnerable people in every strata of society here today.

That vulnerability is being felt most keenly at the moment by every bank in the country, as well as by every investor, large and small. Minister for finance Brian Lenihan insists our banks' fundamentals are sound (as were our economy's, apparently) but at the moment, nobody is listening.

As Fianna Fáil recovered from their 'bonding exercises' in Ballybrit, Joe Duffy's listeners were working themselves into a frenzy on Liveline, and queues actually formed outside banks as customers sought to divide up their nest eggs so they would be covered by the deposit guarantee.

The government allowed anxiety bordering on panic to fester. On Friday Lenihan said he was willing to review the statutory guarantee. By yesterday, he had increased it to €100,000 – after possibly inevitable rumour and instability had taken hold.

The next immediate step is for the government to facilitate the merger talks between Anglo Irish Bank and Irish Nationwide, a move that will give both institutions some breathing space and also a means of reducing costs.

The shares slide has been halted, temporarily at least, but that respite cannot hide our banks' huge exposure to commercial development debt. In the United States, the Treasury has come up with a plan to isolate the "toxic debt" that has convulsed the banking system there.

A similar root-and-branch review of debt here needs to be carried out so that banks can begin a systematic – and this time more closely regulated – era of reconstruction.

The so-called Masters of the Universe made a fortune on the back of the laissez-faire economics of the past decade, and there is an element of glee that the fat cats of the city have come so badly unstuck. So do "the little people". It is unfortunate the profits were private and the debt is now national, but the blame game is pointless and exhausting.

Senator Terry Leyden, fresh from the revelries of the think-in, described Fianna Fáil as "the Irish party, the party people, the party of the people". The attitude was redolent of old Fianna Fáil. Sure it was all a bit of fun while it lasted – the think-in and the boom – but unless this government gets serious about how we react to this spectacular bust, the party will be over for them too.