This is a very good article by John Markham of MSN Money about how we got here and the depth of the current crisis. I strongly encourage you to read the whole thing.
A snippet:
[quote]
Railroad and shipping barons of earlier times would be shocked to discover how little concern most people have exercised in the past few decades when plunking their salaries into mutual funds or individual stocks. The idea of risk-free investing, to people who really take the risks and thus understand them, is laughable.
It is only now, during this period of acute crisis, that individuals who won’t go on a bicycle without a plastic-foam helmet are coming to grips with what business risk really means. And that is why a childlike innocence is dying along with the stock market this week, making people feel as sad, helpless and angry as when they first discovered the truth about other realities of adulthood.[/quote]
Another:
[quote]
Satyajit Das, a credit derivatives expert based in Australia, told me in a phone interview Monday from Singapore that these events have "essentially destroyed the capacity of the banking system to provide funding to businesses." He added: "Investment banks have destroyed their capital by making foolish loans on a massive scale, and the chance that they will get new capital, as they did back in the spring, is low. If you are a sovereign wealth fund and give new money to Wall Street now, you look like a chump. They won’t be sugar daddies anymore. It won’t fly politically at home. It isn’t going to happen."
So who’s going to refill the capital well? You may have heard that money does not grow on trees, and neither can countries actually "print" money, since that actually involves the sale of new bonds at a time when the market is flooded with them.[/quote]
by former_user 
