Aside from commentators on CNBC and the Journal, I don't get a sense that what happened yesterday, September 14, 2008, has hit home.  In my opinion, yesterday we witnessed the single most significant event on Wall Street since the Great Crash of 1929.  It's amazing that two companies of the caliber of Merrill Lynch and Lehman Brothers should, for want of a better term, disappear.  I am reeling at the announcement of the Federal Reserve that they have relaxed their standards for collateral.  However, what is just stunning is not only would someone actually ask the Federal Reserve for a bridge loan--and to add insult to injury, an entity that is outside of the regulatory purview of the Board--but that the request was not only consider, but is now being acted upon.

What is also clear is that a monetary approach to this problem isn't working; I suspect Congress is going to have to move in and offer a fiscal solution--or at best a salve.  What Congress has to do is to jumpstart the housing market, which is no mean feat considering that everyone who wanted a house got one.  I suspect that they're going to have to play with taxes in some way.  Perhaps in a fashion where the Federal Budget won't be hit for five plus years.  If housing prices continue to soften--and I am conflicted about this one, because I have waited for five years for this problem to happen, but now it's hurting the long-term financial strength of the US, so there needs to be a turnaround--then more banks will fail.

On the bright side, I have been hoarding cash for two years to buy a bank.  It's not clear to me yet which bank I should buy.  Bank of America has demonstrated pretty dramatically this weekend that it's in better shape than most; however, I will continue to wait.

Back to my first point.  If it hasn't hit home yet--and things moved so quickly that it takes time for the significance to resonate--yesterday was a simply momentous day.