What's going on with the economy?

So I keep hearing about the current economic crisis and tidbits about AIG and Merrill Lynch. I keep hearing tidbits about a lot of things but I'm still confused as to what exactly is going on right now. What has recently happened that's causing so many problems and what is the government doing? (I've also heard things like the US government taking action but again, I'm confused about what exactly) any good explanations would be awesome, and yes, I realize that this is a big question...