Wall Street - why is this happening and how does it affect me?

NVDL:Well one of the reasons why this is happening is because of massive amounts of diffuse debt. In plain English, too many companies were using their credit cards, and 'inventing money' out of a myriad of debt instruments. Eventually fictional money has to face up to the reality that it doesn't exist (along with the creators of it). That causes financial pain, including the collapse of those companies and systems based on these fictional/delusional cash creators.

clipped from finance.yahoo.com The last 10 days have been the most remarkable period of government intervention into the financial system since the Great Depression. 1. What has happened that is so remarkable? This episode started when the Treasury nationalized Fannie Mae and Freddie Mac on September 8. Their combined assets are over $5 trillion. These firms help guarantee most of the mortgages in the United States. 2. Why did these things happen? 4. I do not work at Lehman or A.I.G. and do not own much stock; why should I care? The concern for the man on Main Street is not the bankruptcy of Lehman, per se. Rather, it is the collective inability of major financial institutions to find funding. 7. When will the turmoil end? The inability to secure short-term funding fundamentally comes from having insufficient capital. There are many indicators that the largest financial institutions are collectively short of capital.