Polls taken last year showed that ordinary American citizens, unlike the smart money on Wall Street, were losing confidence in the economy. The malaise finally hit the blue-chip crowd on Oct. 19, when the Dow Jones average dropped 508 points. Now the shaken financial community, like the survivors of the Los Angeles earthquake, is braced for another shock.

Not everyone on Wall Street is so honest and responsible as the chief investment strategist of Morgan Stanley, Byron R. Wien, who told The New York Times, "I rationalized a lot of the excesses, and I was wrong."

With a few honorable exceptions, Wall Street spent five happy, dissolute years with excess, too much borrowing, too much foreign capital, too high stock prices, not to mention the excessive greed of the leveraged buy-outs and the insider trading of the Boeskys and the Levines. Even people who think that Bear Stearns is the name of a southern football coach understood that eventually the iceman cometh.

Now that it has all come apart, Wall Street is clamoring for relief from Washington. Debt reduction is imperative, they cry.

Wall Street is looking to Washington to bring about a return of sacred profits. Washington, until President Reagan, was never popular on the Street. It was seen as a source of taxes, regulations, investigations and the pampering of the world's losers, that is, the disbursement of millions in welfare that could have so much better been invested in mutual funds.

But now the financiers have to be content with the sight of a group of men, who should have met a year ago, sitting down in a room in the Capitol to bring about something that the law makes inevitable. They are agreeing on cuts in the federal budget that are mandated by Gramm-Rudman-Hollings law. Their goal is something between $23 billion and $30 billion, which is paltry in light of the trillions that have been borrowed, lost or are still at risk.

Wall Street, which craves stability for itself, would like multiyear deficit cuts. A Democratic Congress, which in the last week has been hearing that its party cannot lose the next election, is hardly eager to oblige.

Besides cutting the deficits, the conferees are being urged to raise taxes. But some eminent economists say this is the worst thing they can do, that the economy needs more than anything lower interest rates, a stimulus. They remind us that deficit-cutting and tax-raising by Herbert Hoover in 1929 blighted a generation.

Much is being made of the "economic summit," as it is reverently called, mostly because of the president's resistance to the idea.

Since the crash, Reagan, who used to cite the roaring market as evidence of the marvelous state of things in the country, has been singularly indifferent to its current pain and confusion. "There is nothing wrong with the economy," he said over the roar of the helicopters on Black Monday.

Political-economic analyst Elliot Janeway, one of the few who warned about the coming calamity -- he was ignored because of his reputation as a "doomster" -- observed in his newsletter, "The stock market is not . . . a casino anchored off the southern coast of Manhattan Island. It is a vital artery of the economic and financial mechanism -- no longer just the United States but of the world. So long as as it remains sick, the economy cannot be 'sound.' "

But the president, who has had many difficult personal problems to contend with, has not changed his view of the passing nature of the crisis.

He is deaf to calls to convene an international economic summit -- the real thing, not the banquets-and-gondola photo-ops of the last seven years, from which come statements on terrorism or other matters far from their fateful fiscal interdependence and the need for ground rules.

The public is taking the unnerving news with notable calm. A new Washington Post-ABC News Poll shows that people do not expect that "Brother can you spare a dime?" time is coming around again or that they will be personally affected.

They agree for the moment with the president that the reeling market does not bespeak a mortally wounded economy. They see the coupon-clippers getting their comeuppance and overpaid Yuppies having a date with reality.

But millions of inadvertent investors may be the real casualties. Those who paid into their pension funds in the hope of a peaceful old age find that their money has been gambled away in collapsing mutual funds.

Next thing you know, the Republicans will be telling them that money isn't everything.