Alright, so as of this writing, things still haven't shaken themselves out yet.  Odds are, it will take quite some time.  But we're getting a better picture of where things are, and where they are going.  For a fantastic explanation of what has happened thus far, read this FAQ style post from the Freakonomics blog.  I won't bother quoting out of it.  Just read the whole thing.  There are also some interesting theories popping around... like is Elliot Spitzer really to blame for AIG's downfall (via Volokh):

As America was racing toward the nationalization of what is left of American International Group, we couldn't help think of Eliot Spitzer. Among all his mistakes, it's hard to think of one more catastrophic than his decision to force Maurice "Hank" Greenberg out of the leadership of AIG. The picture since then has not been a pretty one. As Mr. Greenberg put it yesterday in a letter, "In a little over a year, I, and other shareholders, have watched the company that I helped build over 35 years into the largest and most successful insurance company in history and one of the strongest and one of the most profitable companies in the world lose over 90% of its value."

It would have been another matter had Mr. Spitzer — or anyone else — found any wrong-doing by Mr. Greenberg. But they didn't. Instead, Mr. Spitzer's raid on AIG resulted in the installation of new management that, one can say at this point, just wasn't up to the job. As Mr. Greenberg put it in his letter yesterday to AIG's chief executive, Robert Willumstad: "Despite repeated assurances from management and the company that everything was under control, it is now clear that nothing was under control."

I don't think you'd find much disagreement with this idea in Wisconsin, where Spitzer did pretty much the same thing to Strong Funds, and forced their sale to Wells Fargo.  In the mean time, there is lots of second guessing regarding whether the bailouts that have already occured will help, and whether proposed bailouts are the way to go.  Cato has a good look at how these bailouts hurt stockholders in the end, and now the SEC is halting (temporarily) the short selling of stocks.  This will screw Hedge Funds, who usually go short on about half their trades.  While some people who don't know better consider short selling to be unpatriotic (and terrorism?!), it actually serves a useful purpose in helping traders find out what the actual price of a stock should be, and allowing smart people to benefit when stockholders refuse to see that their assets are overvalued.  By banning the short selling of stocks, it will prolong the market correction, and possibly put us worse off in the end.

But enough second guessing.  The Bush Administration is now considering the largest bailout in U.S. history, and will essentially buy up lots of bad debt from mortgage companies.  This could closely mirror the creation of the Resolution Trust Corporation during the 1980's S&L scandal.  The pricetag?  $1,000,000,000,000 (that's $1 trillion for those of you who's eyes just bugged out).  And what are the major candidates saying?  McCain seems to be saying "I told you so" a lot, while Obama has a secret plan to solve the crisis but won't say until he's elected.

Unfortunately, at least as far as I'm aware, neither one of them has changed their tune regarding their proposed spending and or taxation plans.  These plans, by both candidates, were still largely based on a somewhat robust economy, and more manageable debt structure (or at least in comparison our national debt last week looks manageable compared to what it is this week).  Things change.  Have the candidates?  Not that I've seen.

Obama will more than likely still push socialization of anything he can get away with, and McCain will more than likely continue to push tax cuts which we simply can no longer afford, along with increased military spending and no meaningful entitlement reform.  The Presidential debates just became 100 times more important.  Will either candidate truly change their tune, and revamp their policy signifantly in the wake of these events?  If either one can do it, I might actually vote for them instead of Bob Barr.  The gauntlet has been laid down.  Sadly, I'm pretty sure neither candidate is capable of picking it up.

Update:  Corrected link to "Obama's secret plan".