Article explaining why Paulson, Bernanke panicked

This is a must-read New York Times article describing how the panic in the financial system after Lehman's bankruptcy on Monday Sept. 15 spiraled out of control, causing Paulson and Bernanke to go to Congress Thursday Sept. 18 warning that the "economy might not exist" by the next Monday.
There was a run on money market accounts, and a number of hedge funds were terrified of having their assets "locked up" in any further investment bank bankruptcies.

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graph of September Madness

Sept. madness

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I found this on Mankiw's blog and I don't know if you're supposed to laugh or cry....but I really would like to see a comparison of Standard Oil acquisitions in the 1800's as a comparison.

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the article still does not explain

beyond try to stave off bankruptcy for insolvent institutions....how exactly this is going to relieve the credit crunch.

If I was placing bets this is going to buy just a little time and will dump this entire mess, probably worse, onto the next administration, now minus $700B which surely Paulson will spend before out of office.

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Correctemundo

The actual triggers of the Fed's/Treasury's panicky "rescue" could have been taken care of without the $700 billion bailout.

Prof. Paul Krugman is already predicting there will be a second installment before January 20. I don't suppose it would do any good to petition Congress to get to work now on a more reasoned, thoughtful approach?

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Article explaining why

Or the fix is in, why else would an outgoing administration pour so much power onto a lame duck secretary - that could end up in the hands of the other party?

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