Stories and rumors about the subprime contagion are flying around the net. If you hear a story or rumor, more than ever, check the facts and confirm the sources.
I just did this on an apocalyptic bank meltdown story supposedly out of Europe that a blog commenter mentioned. Googling the names involved produced just one hit, and that was from a seriously crackpot and fringe website. They are the apparent (and only) source for the story. The Financial Times, BBC, Independent, and Guardian had nothing on it, and if a major European bank was collapsing, it would certainly be news and impossible to conceal.
Thus, the story is bogus. In these financially tumultuous times, confirming the validity and source of a story is crucial.
While blogging has many benefits, it cannot serve as a replacement for traditional news reporting. One reason is that individual bloggers do not have the resources to develop stories at their source with any kind of quality assurance. The second is a related phenomenon to the one you described, which is akin to the problem that traditional news sources have in being the first to break a story, which creates something of a crowd mentality. Bloggers tend to cite and repeat stories which, when traced back to the original, are less persuasive than their retelling would suggest. Most decent news organizations and magazines–the New Yorker is a notorious example–have extensive fact checking departments that are beyond the means of any, nonorganizational blog.
This does not mean that blogs do not have a place in the universe, but one needs to be very, very careful about what one readers. The rightwing blogs alone are Exhibit A for the prosecution. (Readers of Polizeros will probably argue that “liberal” blogs are Exhibit B; YMMV.)
More and more, I try to check a story back to the source. Blogs all across the political spectrum have been known to repeat as true stuff that wasn’t. Maybe it was a sloppy mistake or maybe they didn’t care.
The New Yorker has been known to fact-check an article even to the point of verifying the color of a car. Certainly blogs can’t do that, but they can click back to find the source of a story.