The Dow Jones Industrial Average plunged more than 500 points today (Sept. 15), following the bankruptcy filing of Wall Street's Lehman Bros. and Merrill Lynch's agreement to be purchased by Bank of America. Today's 4.4 percent drop is the biggest since 9-11. B of A has offered $29 a share in stock for Merrill. B of A stock plunged $7.19 or 21.31 percent today, while Merrill stock was only up 11 percent to $19. Shareholders may knock this one down, and that could leave Merrill vulnerable, because it is tied up in derivatives with Lehman. Stock of insurance giant AIG plunged 60.79 percent. It is deeply wound up in derivatives. The State of New York will permit AIG to borrow $20 billion. The Federal Reserve, which meets this week, is expected to lower interest rates, perhaps before the official meeting. The government is expected to try to hamper short sellers, who bet on stocks to go down. These measures may work in the short run, but the long term picture is clear: the U.S. economy is deleveraging. Since the early 1980s, debt (consumer, government, corporate and particularly the financial sector) has grown much faster than the economy. A smashup, tied in with the plummeting dollar, was inevitable, and it's happening now. The government and Federal Reserve are trying to fight market forces (despite their ideology), but their efforts will be difficult. Debt is coming down, and must come down.