[jyl]

A question we hear a lot lately is "why should the federal government commit hundreds of billions of taxpayer dollars to support the financial system"?

Many people feel disconnected from the current financial crisis. They see no reason why a "regular Joe" should care what happened/is happening to Bear Stearns, Lehman Bros, Merrill Lynch, AIG, Fannie Mae, Freddie Mac, etc - or about what may/will happen to Citigroup, Bank of America, Wells Fargo, Wachovia, Morgan Stanley, Goldman Sachs, etc. After all, most of us see the stock market go up and down daily, with no obvious impact on our income or life.

I wanted to start this thread to discuss this topic:

What is the connection between Wall Street and Main Street?

Do financial crises impact the so-called "real economy" of our daily lives? Why, and how? When does a financial crisis merit govt intervention? What kind of intervention should we allow? Are there historical examples, from the 1930s, 1970s, 1980s or otherwise, of govt intervention that was justified and worked?

Please discuss your views. I have some views and charts that I'll try to gather and post later, but I'm not going to lead off.