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What is a basket case?

What is a basket case? Here are some definitions.

Noun
  1. (offensive) One made powerless or ineffective, as by nerves, panic, stress or exhaustion.
  2. An institution or country in a bad condition or difficult situation (economically, financially or otherwise)
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I don't want my husband's friends talking about how his wife is a basket case.
Yeah, I'm all cool and collected and efficient when I'm helping a friend pack, but when it's me I'm a basket case.
How, exactly, does a country in such a prosperous position end up a basket case?
One of the country's top economists has rejected the popular view that the economy is a basket case and is headed for trouble.
Just before my injection, I became an emotional basket case and made a fool of myself.
The company is struggling against its competition but it is no basket case.

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