Here’s how the New York Times explained the reasoning behind the bailout:

“If AIG had collapsed—and been unable to pay all of its insurance claims—institutional investors around the world would have been instantly forced to reappraise the value of those securities, and that in turn would have reduced their own capital and the value of their own debt. Small investors, including anyone who owned money market funds with AIG securities, could have been hurt, too. And some insurance policy holders were worried, even though they have some protections.“

Um, isn’t that how it’s supposed to work? When you make a bad investment, you take the loss—you can bet your ass that the individual AIG investors have already taken their losses. Insurance is another matter entirely of course, but as the Times stated, there are protections already in place for AIG policy holders. Because the value of investments in AIG are not being reset, the Federal Reserve has done nothing to prevent this from happening again. Worse, there’s nothing being done to address the “too big to fail” issue. If an entity is too big to fail it’s too big to exist. Pretty simple—not exactly rocket science.

Oh, but we’re not done yet. Not hardly. [....]

Earlier this week, Kevin Kelly spoke briefly—but deeply—at the Web 2.0 Summit on what’s likely to happen with regard to the web during the next 6,500 days.

I’ve followed most of what Kevin Kelly has done for the last 20 years because he’s a completist—he does something until it’s done and then moves on. He thinks deeply and completely. And he’s at it again.

Kelly begins by pointing out that what’s happened on the web in its first 6,500 days is impossible. “There’s not enough money in the world, 6,000 days ago, to accomplish all the things that have happened already,“ said Kelly. We have to start thinking differently about what’s impossible, he says.

First, we linked data and shared packets. Then we linked pages on the web and shared those links. Throughout both of these phases we were concerned about the sharing piece of the equation. We’ve mostly gotten over these concerns.

Dylan’s shows are usually either spectacular or spectacularly lackluster. The US election night show was more erratic than John McCain’s campaign. Chalk it up to constantly different arrangements for the old chestnuts, I suppose. The mushy vocals were attributable to a crooner with a croak and bad microphone selection. But Masters of War, It’s Alright, Ma (I’m Only Bleeding), and Blowin’ In The Wind were exceptionally well done.

Last summer, Dylan told the Times of London, “We’ve got this guy out there now who is redefining the nature of politics from the ground up: Barack Obama. He’s redefining what a politician is, so we’ll have to see how things play out. Am I hopeful? Yes, I’m hopeful that things might change. You should always take the best from the past, leave the worst back there and go forward into the future.“ So you just had to know this show was going to be a political statement.

The setlist was carefully selected for US election night:

So this year, I’m finding myself holding my nose again. I’ll be voting for Barack Obama—and that’s not an endorsement—with anything but enthusiasm. Obama is a moderate-right centrist, not the leftist portrayed by the right and the corporate media. Moreover he’s a politician, and while certainly deft, not an especially atypical one. Don’t believe it? Here’s a simple example: Obama supports universal health insurance, not universal health care. Need another? Do the math on Obama’s “wealth redistribution” plans.

I took a vacation day because this is a historic event. Historic not solely because of the first bi-racial candidate for president but mostly because this is the year that the citizenry starts voting again. For the first time in a long time more people will vote this year than don’t. That’s worth celebrating, I suppose, in an ineffably dark and vaguely depressing way.

But tonight—tonight is also historic in that it’s the first time Bob Dylan plays at the University of Minnesota. I’ll be spending the evening in Northrop Auditorium, main floor section 5, row 35 on the edge of my seat. And that’s definitely something to celebrate.

Redbox rents DVDs for US$1 per day and sells used DVDs for US$7 at more than 10,000 kiosks throughout the United States.

The sale of used DVDs, in case you were wondering, is protected by the first sale doctrine, section 109(a) of US copyright law. It specifically allows a copyrighted item to be resold or given away without permission or license from the copyright holder.

Last night my wife and I watched the first installment of The Last Enemy (no spoilers, please; we’re behind in our Tivo watching). It’s simultaneously fascinating and disturbing in a way that only our limey friends across the pond can do. Watching it didn’t help my internal spring one little bit.

But then I read something like Jeffrey Goldberg’s “The Things He Carried” and I breathe easier. Wait. What? Shouldn’t the fact that Goldberg got through Transportation Security Administration (TSA) checkpoints at various US airports with “al-Qaeda t-shirts, Islamic Jihad flags, Hezbollah videotapes, and inflatable Yasir Arafat dolls” not to mention “pocketknives, matches from hotels in Beirut and Peshawar, dust masks, lengths of rope, cigarette lighters, nail clippers, eight-ounce tubes of toothpaste… bottles of Fiji water, and box cutters” (box cutters!) be at least upsetting? Or how about the Beerbelly, designed to sneak of to 80 ounces of liquid into concerts and athletic events? [....]

There’s a big difference between the two.

Could the reason be that the candidate is bought and paid for by the US insurance lobby? That would certainly explain Hillary Clinton’s near-miraculous shift from supporting universal healthcare to supporting universal health insurance. Oh, and by the way, if you need a clear indication that the tide is turning in the US electorate just take a look at how the insurance lobby’s contributions have shifted in the last year.

I’ve suspected all along that Obama was little more than just another politician, and this does very little to assuage the perception. And don’t take this as any sort of backhanded endorsement of John McCain’s healthcare plans—McCain’s plan isn’t even worth criticizing.

Liza Mundy, writing for Slate, outlines the difficulties she encountered with the Obama campaign in getting access to sources for a book about Michelle Obama.

Mundy approached Michelle Obama’s relatives—both close and fairly distant—to have them “walk [her] through what they knew of her life” only to have the Obama campaign instruct the potential sources not to talk to long-form print authors.

It’s common practice during the political silly season to have campaigns instruct everyone to check in before talking to the media about anything. But keep in mind that this stonewalling by the Obama campaign comes after Michelle Obama told Michelle Powell and Jodi Kantor, writing for the New York Times, “I will walk anyone through my life. Come on, let’s go.“

Here’s Mundy on why we should care:

“Why should you care about one writer’s shaggy-dog story? In one sense, none of this is tragic; every reporter knows that being denied access to the usual contacts means you dig harder and turn up new voices. But you should care if you are expecting an Obama presidency to achieve new levels of transparency. Obama, if elected, may well bring many changes to Washington, but unusually open access to the media—and, by extension, the public—is not necessarily going to be one of them.“

On 10 October, Paulson said, “We can use the taxpayer’s money more effectively and efficiently, get more for the taxpayer’s dollar, if we develop a standardized program to buy equity in financial institutions.“

It’s time for Paulson to admit that he hasn’t a clue, has politicized the issue, and to step aside.

If the credit markets have, in fact, seized—and I’m not sure I believe they have—the resolution is straightforward, costs the US taxpayers nothing, but requires a backbone in US agencies and our elected representatives. At 7AM on Monday the US Treasury, Comptroller of the Currency, and Federal Deposit Insurance Corporation (FDIC) jointly announce that one of the core functions of banks is to make good loans. If said banks don’t immediately start making good loans they no longer meet the criteria of being a bank and will have their banking licenses revoked starting at 7AM on Tuesday. Deposits will immediately be seized and auctioned to banks willing to make good loans. Concurrently, the US Congress has to magically grow the appropriate anatomy and immediately reenact the Glass-Steagall Act in its entirety. If there’s something I’ve missed with this scenario, please advise.

Update: Sunday, 12 October 2008 1:20PM CDT: This, of course, has to be coupled with the banks writing down their questionable assets to their true values and the government helping recapitalize them. If the banks don’t revalue these assets—and do it now—as Thomas Friedman says, the market will do it for them.

Representative Henry Waxman (D-California) totaled up the figures in today’s House of Representatives committee hearing about AIG’s close call with the financial reaper. “Less than a week after the taxpayers rescued AIG, company executives could be found wining and dining at one of the most exclusive resorts in the nation,“ Waxman said.

Sadly, but perhaps unsurprisingly, AIG executives continue to draw multimillion-dollar paychecks. In fact, documents provided by AIG to Waxman’s committee indicate that “as the company’s risky investments began to implode, the company altered its generous executive pay plan to pay out regardless of such losses,“ according to Peter Whoriskey’s Washington Post account. In March, after having lost more than US$5 billion in the fourth quarter of 2007, AIG chief executive Martin Sullivan urged the company’s compensation committee to “ignore those losses” and award bonuses. Which, of course, it did, awarding Sullivan a cash bonus in excess of US$5 million and a golden parachute of US$15 million.

Ob-La-Di, Ob-La-Da.

Update: Thursday, 09 October 2008 05:37AM CDT: On Wednesday, the US Federal Reserve announced that it would lend AIG an additional US$37.8 billion. Sigh.

“What does taking the pledge mean? It means that when Democratic ‘leaders’ tell Americans we must settle for watered-down solutions while bold back-benchers in the House or Senate are pushing strong progressive alternatives, we will clamor for those bold alternatives together until they are passed into law.“

I ordinarily detest this kind of stuff, but this is what it’s come to. I’m not a Democrat, but I’m willing to do what I can to get a fair hearing for the few true US Congressional progressives.

As Jane Hamsher said two years ago: “better parking spaces for Democrats” is not a worthy goal. It’s time to take the government—and our Constitution—back.

This particular bailout takes the form of a “loan,“ except the loan payments are deferred for five years, making the cost to US taxpayers US$7.5 billion.

But wait, there’s hope. The bailout failed Monday in the House of Representatives vote, 228-205. Ian Welsh, writing at firedoglake, outlines four horrific provisions in the proposed bailout:

1. Changes the worth of a security from what someone will pay for it to what a mathematical model says it will be worth at maturity
2. Reduces mandatory reserve levels for banks to zero
3. Any equity position taken by the government will be non-voting
4. The bailout isn’t restricted to banks owned by US companies; virtually anyone can play

[....]

When I began writing this, the New York Times had a completely different image accompanying its story, one with everyone in the frame laughing almost uncontrollably. Why was the photograph changed to the current one where everyone looks much more sedate? And why is the original image simply nowhere to be found?

And just what does the American taxpayer get for taking on this enormous, no-hope-for-a-balanced-budget ever again, staggering debt load? Pretty much a bag of rocks:

• Limits on some (but not all) executive compensation whose firms take part in the bailout.
• Requirements to make “aggressive efforts” to prevent home foreclosures (but no actual, specific requirements or plan).
• Equity in some (but not all) companies that participate in the bailout.
• Oversight by a Congressional panel (that’s right—the same Congresscritters that allowed this to happen are going to be overseeing this mess).
• “Conflict-of-interest” rules (unspecified, natch) for the same financial firms that caused this mess who get to run the bailout.
• Provided an option for the Treasury Secretary to issue government insurance on the toxic assets (like trying to insure a house that’s already on fire). The creation of the insurance program is mandatory but it’s implementation is not.

What a deal. Except we don’t know for sure because, as Lori Montgomery and Paul Kane report in the Washington Post, full details of the bailout plan have not yet been released. This performance, after all, is solely for the benefit and consumption of the foreign markets that open later today. [....]

1. A five-year, 10% surtax on annual income over US$500,000 (US$1 million for couples)
2. Toxic assets must be purchased at a discount
3. The citizenry receives an equity stake in companies participating in the bail out
4. Creation of a major economic recovery package including the rebuilding of infrastructure and development of sustainable energy
5. Repeal of deregulatory legislation
6. Breaking up any company determined to be “too big to fail”

If you agree with this, sign the petition.

Well I call bullshit. In each case the corporate media received the Bush breathless warning of impending doom as gospel. It’s time to take a deep breath and look around at what’s really going on. Ask the questions that need to be asked.

The stock market dropped another 160 points today but the lights are still on. If the credit markets were really on the verge of collapse, wouldn’t the banks be eager to renegotiate homes in—or on the verge of—foreclosure? Why isn’t this happening? Why aren’t we hearing stories of small businesses having their loans called in or their lines of credit being slashed? Do a Google search for “interest-only mortgage”—about 748,000 results. Why are these toxic mortgages—the root of the problem, remember—still out there?

Most importantly, where’s the evidence? Not hand-waving, not predictions, not scenarios, but evidence.

We’re told repeatedly and without mercy that the markets are failing. But how does that cotton with Warren Buffett investing US$5 billion in Goldman Sachs?

How, at the end of the day, does Bush explain that his administration has been planning the emergency bailout—and its attendant ultimatum—for months.

“[White House Deputy Press Secretary Tony] Fratto insisted that the plan was not slapped together and had been drawn up as a contingency over previous months and weeks by administration officials. He acknowledged lawmakers were getting only days to peruse it, but he said this should be enough.“

Simmer down and ask the questions that need to be asked.