The recent problems in financial markets still fall short of a "crisis" in my mind. I'll start to worry if we see a significant drop in household consumption. But at this point, I'm inclined to agree with Ken Fisher of Fisher Wealth Management who says (via Real Time Economics) “A few months from now this will all blow over and we will wonder what the noise was all about, as is the case with all corrections.”
On Econbrowser, James Hamilton has a nice post noting a couple of interesting aspects of the situation. The yields on short-term US Treasuries, which normally aren't very volatile, have plummeted as investors try to get into the safest possible assets (as the price of a bond rises the yield falls, so this reflects increased demand for Treasuries). This does, at least, get rid of the inverted yield curve (the situation where short-term yields are higher than long-term, which sometimes presages an economic slowdown). Also, though the Fed has not lowered the target for the Fed Funds rate, it has been below the announced target of 5.25% for a while now (could this dent the Fed's credibility?).
The NY Times reports that several big banks have made a show of tapping the Fed's discount window. The banks say they don't actually need the money - this is a symbolic move to support the Fed's actions, which are also, I think, largely symbolic. Its as if the markets just need a big hug... Poor Wall Street, everything will be okay! Do you feel better now?
Via Economist's View, I see that Dean Baker has a sterner attitude: "Wall Street Welfare Wimps Keep Whining," he says.