A great, and lengthy, article on the story behind the US financial bailout: Anatomy of a Meltdown
The most striking part, for me, is the idea that the financial system is so large and complex that nobody understands all of it. This isn’t really news but it’s dramatic to see the truth of it as these world-leading economists try to contain the crisis. For example, the Fed had decided to let Bear Stearns fall, similarly to Leahman Brothers, until they discovered Bear was one of the largest dealers in the overnight “repo” market for short-term capital. If Bear fell, the repo market would descend into chaos, leading to widespread damage to the larger economy.
Also interesting is that the low interest rates put in place at the Fed to feed the economy post 9/11 were a large factor in the housing bubble. Seems obvious, in hindsight, but few people guessed it would have been such a large factor.
If you have any interest in the financial bailout this is a great read.