‘FRIGHTENING AS HELL’…. Reading the morning papers can often be a little discouraging. Some days, it’s violence in the Middle East. Other days, it’s Bush administration corruption. Once in a while, we’re reminded of the climate crisis. Lately, we’re inundated with non-stop dishonesty from the McCain campaign.

But reading through the dailies this morning was altogether different. Slate’s Daniel Politi had a very good summary of the day’s news.

The New York Times, Washington Post, and Los Angeles Times lead with, and the Wall Street Journal devotes most of its front-page real estate to, the Sunday that shook up Wall Street. The LAT and WSJ announce the news with banner headlines this morning, and the Journal doesn’t mince words: “Crisis on Wall Street.” The fast-moving story has several parts to it, but here’s the gist: Lehman Bros. will file for bankruptcy, Merrill Lynch agreed to be sold to Bank of America, and insurance giant American International Group could be the next big casualty of the global credit crisis. In an effort to prevent more trouble, the Fed announced it would make it easier for securities firms to borrow money, and 10 big banks agreed to create a $70 billion fund that any of them could access if they find themselves in desperate need of cash. The WP says that the American financial system “faced its gravest crisis in modern times” this weekend. […]

The NYT says Sunday was “one of the most dramatic days in Wall Street’s history” that will “reshape the landscape of American finance.” The WSJ agrees and notes that the “American financial system was shaken to its core” yesterday, an assessment that is easily backed up by all the panicked statements from Wall Street insiders, who are bracing for bad news when the markets open today. “These are the most extraordinary events I’ve ever seen,” said the co-founder of the private equity firm the Blackstone Group. “We are in a hysteria,” a banking analyst tells USAT. “This is frightening as hell,” another analyst summarizes to the LAT.

We’re apparently in the beginning stages of working out a “fundamentally new architecture for the financial world.”

Paul Krugman added that he doesn’t think the U.S. financial system will collapse this week, but he’s “nowhere near certain.”

Steve Benen

Follow Steve on Twitter @stevebenen. Steve Benen is a producer at MSNBC's The Rachel Maddow Show. He was the principal contributor to the Washington Monthly's Political Animal blog from August 2008 until January 2012.