Hold on Tight

Paul Krugman gives us an assessment of the significance of the bankruptcy of Lehman Bros. He starts:

Will the U.S. financial system collapse today, or maybe over the next few days? I don’t think so — but I’m nowhere near certain. You see, Lehman Brothers, a major investment bank, is apparently about to go under. And nobody knows what will happen next.

and ends:

And so here we are, with Mr. Paulson apparently feeling that playing Russian roulette with the U.S. financial system was his best option. Yikes.

Update: The Washington Post's story gives an idea of the complexities of this mess. Not for the faint of heart.

Another Update: From Slate, in an article called "Nightmare on Wall Street".

The NYT says Sunday was "one of the most dramatic days in Wall Street's history" that will "reshape the landscape of American finance." The WSJ agrees and notes that the "American financial system was shaken to its core" yesterday, an assessment that is easily backed up by all the panicked statements from Wall Street insiders, who are bracing for bad news when the markets open today. "These are the most extraordinary events I've ever seen," said the co-founder of the private equity firm the Blackstone Group. "We are in a hysteria," a banking analyst tells USAT. "This is frightening as hell," another analyst summarizes to the LAT.