Financial market conditions have now descended to the lowest point since the banking shutdown of 1932. In one 96-hour period, we saw three nearly unimaginable events. Lehman Brothers, America’s fourth-largest securities firm, filed for bankruptcy. Merrill Lynch, the best-known firm, was forced overnight to sell itself to Bank of America. And market pressures forced the Federal Reserve into a huge $85bn takeover of AIG, our largest insurer, to avert its bankruptcy.

All of this occurred only two weeks after the massive federal rescue of Fannie Mae and Freddie Mac and three months after the collapse of Bear Stearns. Market participants around the world have been shocked senseless by these serial failures. Their confidence has evaporated, replaced by an unprecedented level of fear. That is why lending is frozen and worldwide markets are plunging.