This afternoon Charlie Gasparino reported on CNBC that Treasury was thinking about creating a fund to buy junky mortgage debt from banks and Wall Street firms, and the Dow shot up 400 points. I thought that seemed like an overreaction–of course Treasury was thinking about it. But this evening Hank Paulson and Ben Bernanke are headed to …

There are reports today that Morgan Stanley is talking to the China Investment Corp. (CIC) about buying 49% of the suddenly under-fire investment bank. (There are also reports that it’s talking to Citic, a Chinese securities firm, but those appear to be wrong.)

But what doesn’t appear to have penetrated the consciousness of the U.S. …

Go shopping, of course. The quintessential value investor reacts exactly the way you’d expect, snapping up a good company that (he thinks) has been unfairly punished in the market. From CNBC.com:

A subsidiary of Warren Buffett’s Berkshire Hathaway just announced a tentative agreement to buy Constellation Energy for roughly $4.7 billion

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So yet another big dollar-pumping exercise by the world’s major central banks seems to have calmed down global markets that yesterday seemed on the verge of becoming completely unhinged. Which should give you time to read Andy Serwer’s and Allan Sloan’s fine TIME cover story on How Financial Madness Overtook Wall Street. A sample:

How

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I’ve got my own piece up on Time.com this morning, about the fate of Morgan Stanley and Goldman Sachs, the last two investment banks standing.

In it, I point out that yesterday the yield on the 3-month Treasury was 0.04%, down from 0.68% the day before. There are so many people rushing to the safety (am I still allowed to use that …

I’ve got a new piece up on TIME.com. It was originally intended as my column for the magazine, but got bumped by the dastardly space-constrained editors. Here’s how it begins:

It has become an article of faith for many on the left — and some from other political precincts — that the 1999 repeal of the Depression-era Glass-Steagall

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UK-based economist Willem Buiter, who earlier in the year was fiercely critical of the U.S. approach to managing the financial crisis, is okay with the AIG deal. But he wonders if it should be the beginning of something bigger:

If financial behemoths like AIG are too large and/or too interconnected to fail but not too smart to get

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The Connecticut Hedge Fund Association got a lot of queries this week about whether its annual conference in Greenwich would go on as planned. It did, and Reuters tells us what it was like:

The $1.9 trillion hedge fund industry’s own losses were on the minds of the roughly 350 managers and job seekers settled into a local hotel’s

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The Commerce Department’s report this morning on New Residential Construction in August 2008 (pdf) is generally being painted as dire news. To quote the AP:

The Commerce Department reported Wednesday that housing construction dropped a surprise 6.2 percent last month to a seasonally adjusted annual rate of 895,000 units. That’s the

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It’s not that AIG is too big too fail—rather that it’s too connected to the rest of the financial system for policymakers to stand by and watch it collapse.

At the heart of that connectedness is the credit default swap (CDS). Not familiar? Back in March, Janet Morrissey wrote a story for Time.com explaining what they are, why they …

TIME’s Adam Smith in London addresses the really big question: What does the financial crisis mean for soccer sponsorships?

Consider the line up: local bank and Newcastle United sponsor Northern Rock had to be nationalized in February after it was caught short of cash when the money markets seized; on Sep. 12, Britain’s third largest tour

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