I don't usually read Bill Kristol's column, but once in a while, my eyes get caught by a headline (that's the difference between reading online and "on paper"), and I'll check out what he has to say. The other day, I read his column "Admit we don't know" on the current economic crisis that, while not in my mind "wrong", seemed puzzling to me. Pay attention to the last paragraph (highlighted in bold).

...basically, it seems to me, we're all flying blind. The markets are spiraling down, and our leading experts don't have much of a clue as to what to do.

Given that, one has to welcome the expected appointment to senior positions in the Obama administration of economists like Lawrence Summers, Timothy Geithner, Jason Furman, Peter Orszag, and Goolsbee himself. They're sober and competent people who know we face a real crisis -- and who, importantly, may be more

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Markus Brunnermeier provides an excellent summary graph of the financial crisis, told in "spreads".

Figure 3 from Brunnermeier (2008): Interest Rate Spreads. The top panel shows the LIBOR-OIS spread (dark shaded area). The TED spread (LIBOR minus the Treasury bill rate) is given by the sum of two shaded areas. It also captures the fact that Treasury bonds are especially sought-after collateral in times of crisis. The top panel also shows the ABCP rate minus OIS spread, while the lower panel depicts the spread between mortgage backed repos and general collateral repos and the agency spread. Sources: Bloomberg, LehmanLive, and Federal Reserve Board.

From the conclusion to M.K. Brunnermeier, "Deciphering the Liquidity and Credit Crunch 2007-08," forthcoming Journal of Economic Perspectives, 2009, 23(1):

An increase in mortgage delinquencies due to a nationwide decline in housing prices was the trigger for a full-blown liquidity crisis that emerged in 2007

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