It's a pretty serious correction when big time Wall Street banks start dying.

Enron was a fundamentally different problem. This is an actual systemic crisis in the heart of the capitalist infrastructure.  It's about as serious as it comes (especially since it's not fully understood) and unless the Fed manages to shore things up with their emergency moves it has the potential to turn into a full scale meltdown. At this point they have changed the rules so that FDIC backed money (e.g. the money you and I put in banks) can be used as leverage to secure more money to cover the toxic shitpile. To me that reads like a sign of desperation, and with AIG looking like it's going to collapse I can understand why. Things have the potential to really come apart over the next few months. Things like that are rare so probably they'll muddle through, but the risk is huge here.

bump for more greenspan

http://www.guardian.co.uk/business/2008/oct/24/economics-creditcrunch-federal-reserve-greenspan

This New York Times article from 1999 puts it into perspective:
http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260

The title alone pretty much sums it up.  "Fannie Mae Eases Credit To Aid Mortgage Lending"
Some highlights include:

• "the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders"
• "Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits."
• "banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates"
• "banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates"
• "But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's."

Remember, this is from an article written in 1999.  Informed people knew what could happen, but many people only care about the short term.