Lehman Brothers headquarters on Sixth Avenue in New York City. Sept. 14, 2008. (Photo by Michael Nagle/Getty Images)

by Frank James
Anyone who isn't scared by what happened on Wall Street over the weekend is truly clueless or on some very heavy duty drugs.
The developments are just astounding. The rivets holding together
the nation's financial system appear to be popping out all over the
place.

Lehman Brothers is headed to bankruptcy court. Merrill Lynch is about
to disappear as a free-standing entity, rescued through an acquisition
by Bank of America. AIG, the nation's largest insurance company, is
asking the feds for a $40 billion bridge loan as it attempts to
restructure.

There is no putting lipstick on this pig. Or bull. The financial system is in meltdown.
One key fact to keep in mind is that we have witnessed an extraordinary
amount of activism by the federal government this year in response to
the deterioration in the credit markets.
The Federal Reserve has lowered a bellwether interest rate to 2
percent. The Treasury Department and Fed were midwives to an
extraordinary rescue of Bear Stearns. Fannie Mae and Freddie Mac were
taken over by the federal government. The Fed has made an unprecedented
amount of money available to Wall Street. The feds have pretty much run
out of bullets.
And still, the meltdown continues. Everyone who's expert on the
history of the American financial system says we are in uncharted
waters. That's an understatement.
The nearness of the 9/11 anniversary and the weekend's events on
Wall Street drive home one conclusion. Osama bin Ladin, try as he
might, didn't destroy Wall Street. But good old-fashioned greed seems
to be coming close.
The most famous line from the 1980s movie "Wall Street" was "greed is good" uttered by Gordon Gekko. He probably didn't foresee what would happen with credit swap derivatives. Today, he might revise his statement to "greed is good except when it isn't."
Mike
Allen of Politico writes that the unfolding financial disaster will
likely force both presidential campaigns to confront the crisis,
something they've largely avoided until now and explain in detail how,
as president, they would contend with it. We'll be watching for that.
Meanwhile, virtually none of the most-listened-to experts believe we
have hit bottom. There are still more cards to fall from the house of
cards tied to mortgage debt. Again, this is the most frightening
financial era those of us too young to remember the Great Depression
have ever lived through. It's definitely not a time for the faint of
heart.