Standoff between Striking Hollywood Writers and the Studios

With the Hollywood screenwriters' strike heading into its third month and a possible actors strike looming in 2008, is Hollywood headed for a complete shutdown of production? Can the studios let that happen? What is the writers strike about? Will the studios' hard line against the writers provoke or suppress strikes by directors and actors? Why do studios that lavish millions on stars insist that they can't afford to pay writers a few more pennies for the sale of a DVD?