Forget about AIG. This is the most important story of the day. Banks have essentially stopped lending to each other, threatening to bring the financial system, and thus the economy, to a standstill. This despite the Fed shoveling money into markets.

Adding to the spookiness, a major money-market fund “broke the buck”, meaning investors who had their money in these supposedly extra super safe investments will lose part of their principle.

My favorite part: the news prompted S&P to downgrade the fund from its top AAA rating to its lowest, riskiest level. What’s the point of these rating agencies again?

The Times’ David Leonhardt asks some good big-picture questions in his page-one column today on the crisis and the government lurching from one bailout to the next. The Washington Post says lawmakers are getting fed up with the “ad hoc” approach.

Slate’s new Big Money site takes a look at which big financial firms are likely the next to go (Washington Mutual, Wachovia, Ambac Financial)

The normally bearish Calculated Risk sees a glimmer of hope in the wreckage on Wall Street.

Nouriel Roubini, the clairvoyant of the current crisis (so far), does not:

…we are now closer to the financial meltdown that I described in my February paper in my “12 Steps to a Financial Disaster”. Stock prices are sharply down and there is a risk of a market crack; interbank spreads and credit spreads are wider than ever since the beginning of this crisis; Lehman and Merrill are gone and soon enough Morgan Stanley and Goldman Sachs will also need to find a larger partner with deep pocket or risk getting in severe trouble; the biggest insurer in the world—AIG—is teetering near bankruptcy; the biggest US S&L—WaMu—is effectively insolvent and close to going bust; dozens of other banks are near bankruptcy; there is a beginning of a silent bank run as depositors are nervous about their assets; the panic is mounting in financial market; the CDS market is frozen because of the collapse of Lehman and the soon collapse of AIG, WaMu and other financial institutions; many hedge funds are now teetering as their losses are mounting; investors in fixed income—including preferred stocks—have experienced massive losses; overnight LIBOR spiked over 300bps to over 6% as panicky investors seek the safety of cash while the Fed lost control of the Fed Funds rate yesterday as the liquidity demand push such rate from the target of 2% to over 6%; the financial turmoil is becoming global with stock markets all over the world plunging.

The upshot?

At this point the perfect financial storm of the century cannot be contained. The only light at the end of the tunnel is the one of the coming financial and economic train wreck.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.