I certainly agree that this is a big deal and if I implied otherwise I retract that impression. Lehmans collapse is huge as is the possible collapse of AIG.

However if you were watching the talking heads you would think that every bank in the country was ready to collapse and that everyone was going to lose their money.

Yes we have major problems but if you compare the number of banks and institutions in trouble or potential trouble versus those who are not in trouble, the not in troubles are in the massive majority.

It won't be pretty but I am pretty sure the US economy will still be around in 50 years.

But I do. Others have said, correctly, that this is the REAL main, most important issue facing the US in the next administration.

In the end, leaving or removing the troops from Iraq will have almost no day-to-day impact on the majority of the country. This, however, could effect just about every single US resident.

It looks like you may be right. Obama has started the week precisely on that note . . . linking McCain with Bush actions (or inactions) that have led to this situation.

http://news.yahoo.com/s/ap/20080915/ap_on_el_pr…

Elrod, I hope you are right in believing all will be fine. The Bush Fed on Sunday was scrambling like a procrastinating student at the last moment to pull something together before the Asian markets opened, to avoid a full-scale bloodletting. Not smart.

The scale of this hit must SURELY divert this election back to reality and real issues.

There are reasons why the country didn't collapse during the Great Depression and it looks like they are hell bent on not heeding those this time.

Funny, but I was just debating with someone the other day about whether the economy is the worst it's ever been since the depression (activated more by the term “the worst”, which always gets my devil's advocate going. Plus, anyone who talks about the economy as a whole and doesn;t know what terms like GDP means kinda get me started too), and then I read this today:

Greenspan says US in a once in a century financial crisis http://www.breitbart.com/article.php?id=0809141…

Well, I guess we'll know most of the fallout over the next week or so.

Patrick,
The reason BofA is relatively strong is that it had not involved itself in investment banking up to this point. As a retail bank with relatively little exposure to the mortgage market Bank of America could avoid some of the trouble up to now.

The question now is whether or not BofA can manage these troubled assets they've taken over. My guess is they will do fine. During the Great Depression a handful of banks took over the bad assets of failing banks and persevered.

The bigger problem for the financial markets are the credit default swaps that help insure against corporate losses. Like mortgage-backed securities, these credit default swaps have the effect of linking assets across multiple financial institutions at once. So, if one major house fails, other banks stare at their respective navels and pull back from any expansive investment or lending. The effect is a dry-up of liquidity and a recession.

We'll know by later this week if the global financial system can absorb this shock.

The fact that it is still falling . . .despite spikes across the country in anticipation of the hurricane, and production offline in place . . . is testimony to how supply and demand had little to do with the high price in the first place.

Yes, I agree, the economic news from Wall Street sounds “doubleplusungood”.

I continue to be amazed that . . . as the banking meltdown continues . . . the Democrats and Senator Obama are not making it the centrepiece of their campaign.

Instead, we keep talking about lipstick, pigs and email. Surreal.

The amount of hyperbole being thrown around on CNBC is breathaking. Stuff like “the largest shakeup in the history of the US financial market” and “recession for the ages”. They've been wrong before, of course, but it certainly sounds doubleplusungood.

What's puzzling to me is how oil keeps falling – still down sharply falling below $100 a barrel despite a quarter of the US production currently offline and price spikes around the country. (Still in the $3.50 range around here, but the one station on the east end of town on the road to Houston jumped up to $4.40 this past afternoon because his supplier was charging that much. Anomaly, or a sign of things to come?)