The key seems to be collateral requirements related to the credit rating to the company involved (in this case AIG). When their credit rating goes down the collateral requirements of the credit default swaps become unbearable and destroys the company.

From http://www.huffingtonpost.com/david-paul/credit-default-swaps-the_b_133891.html

Credit Default Swaps, the Collapse of AIG and Addressing the Crisis of Confidence
by David Paul

....
In simple terms, AIG's collapse came as a result of the following sequence of events:

Looks like a deal is at hand right now (among Democrats). Let's see what's in it, when the details are revealed.

Democrats claim Wall St. bailout breakthrough
http://news.yahoo.com/s/nm/20080925/pl_nm/us_financial_bailout_deal_1
From Reuters:
By Richard Cowan and Thomas Ferraro 50 minutes ago

Democratic Rep. Barney Frank said on Wednesday Democrats had reached an agreement to stem one of the worst U.S. financial disasters in decades, and that there would be enough votes to pass the measure and send it to President George W. Bush to sign into law.

A very good summary of the bailout and the absence of leadership from the NY times with lots of good points.

http://www.nytimes.com/2008/09/25/opinion/25thu1.html
The New York Times
September 25, 2008
Editorial
Absence of Leadership

It took President Bush until Wednesday night to address the American people about the nation’s financial crisis, and pretty much all he had to offer was fear itself.

If you believe the Fed Chairman, the economic future of America is at stake right now (this week). The only question is how the very large sums of money needed to stabilize the American economy will be distributed and the ramifications for all of us.
It sounds like they're trying to avoid a Depression.

One related thought-- perhaps the Fed Chairman is really the most powerful person in the country when it comes to the economy.

http://www.nytimes.com/2008/09/20/washington/19cnd-cong.html

Congressional Leaders Stunned by Warnings
By DAVID M. HERSZENHORN

Not a good thing that these people are in charge of the oil drilling leases.

From the NYT:
http://www.nytimes.com/2008/09/11/washington/11royalty.html?em

Wide-Ranging Ethics Scandal Emerges at Interior Dept.

By CHARLIE SAVAGE
Published: September 10, 2008

Well, as many of us suspected, the oil markets have been manipulated:

Now will congress do something about this? What do you think? Even without gridlock it would be difficult, but with the current mix I suspect nothing will happen.

http://news.yahoo.com/s/ap/20080910/ap_on_go_co/oil_speculation

Study links oil prices to investor speculation
H. JOSEF HEBERT, Associated Press Writer

In my opinion the rating system is sometimes being used as a weapon to promote discord on this site. Take a look at this thread for example
http://securingamerica.com/ccn/node/16384

It's been several weeks since Wes Clark's out of context quote on Face the Nation exploded into a media frenzy that was essentially used to buttress McCain's qualifications for President.