I have been thinking about writing a bit on the financial crisis, but fortunately for you I found some analysis from people who actually know what they're talking about. A particularly relevant bit from the Freakonomics blog:

[Frequently Asked Question #] 4) I do not work at Lehman or A.I.G. and do not own much stock; why should I care?
The concern for the man on Main Street is not the bankruptcy of Lehman, per se. Rather, it is the collective inability of major financial institutions to find funding.
As their own funding dries up, the remaining financial firms will be much more cautious in extending credit to normal firms and individuals. So even for people whose own circumstances have not much changed, the cost of the credit is going to rise. For an individual or business that falls behind on payments or needs an increase in short-term credit because of the slowing economy, credit will be much harder to obtain than in recent years.
This is going to slow growth. We have not seen this much stress in the financial system since the Great Depression, so we do not have any recent history to rely upon in quantifying the magnitude of the slowdown. A recent educated guess by Jan Hatzius of Goldman Sachs suggests that G.D.P. growth will be just about 2 percentage points lower in 2008 and 2009. But as he explains, extrapolations of this sort are highly uncertain.

The full article is greatly worth reading for a straight-forward (well, they still use the insider terms, but to be fair, it's almost impossible not to) explanation of what exactly's been going on.

Also try looking here for a brief take on the crisis in the media, but mostly for a good selection of links.

I'll let gardener and Farmer tackle the normative side of the whole situation. I have a feeling they have something to say on the credit situation that got us here...