The Financial Crisis

It has been all over the news: The Financial Crisis. There are lots of news stories covering small pieces of the story. What I haven't seen is any good coverage of the whole big story. This is the best article I've found that really explains the history of what happened, why the bailout plan might work, and what might happen next. It's a good read, but it's scary stuff.

Here's the scariest part:

Note that the outstanding overhang of credit default swaps alone is estimated to be between $45 and $60 trillion – three to four times the size of our annual gross domestic product. The requested $700 billion, although the single biggest appropriation request in U.S. history, was miniscule when compared with the toxic waste problem as a whole. Mr. Paulson’s proposed solution was to cost just 1% of the size of the problem and was aimed only at a small part of that problem. (It is unnerving to realize that the U.S. government – the “beast” we have been starving for so long – may now lack the borrowing capacity to solve the problem as a whole. We need to get our financial house in order.)