by Adam Davidson and Alex Blumberg
The potential for disaster was horrifying. For people on Wall Street and in the inner circles of government, last Wednesday and Thursday will long be remembered as the time when the American economy survived a brush with death.
The nation's entire financial system slid toward a terrifying abyss, they say — a landscape where no one would lend and no one could borrow, where no one could buy anything and no one could get paid. As Congress and the Bush administration continue debating a proposed $700 billion bailout of Wall Street, those with intimate knowledge of the crisis say that whatever solution emerges must avert future brushes with very real disaster.
The nightmare scenario rattled Mark Peterson, far from the halls of finance, in Memphis, Tenn. "For those of you who've experienced an earthquake, some say it's a soul-wrenching experience, and it's massively moving everything," Peterson says. "And that's last week. There was a monster unleashed. The commercial paper market, which is the most liquid market, probably in the world, basically froze up."--------------------> More