Weekly Review

By Sam Stark

Caught in the Web, 1860.

After many years of increasing borrowing and at least thirteen months of evidence of an impending catastrophe, American financial institutions faced the worst credit crisis since the Great Depression. “The world,” explained Iranian President Mahmoud Ahmadinejad, “no longer has the capacity to absorb fake U.S. dollars.”^{1 2 3} Global stock markets lost $3.1 trillion in four days, and American International Group (AIG), the world's biggest insurance company and a leader in the $62 trillion credit-default swap market, was nearly bankrupted. “The private market has screwed itself up,” said Representative Barney Frank (D., Mass.), “and they need the government to come help them unscrew it.” The Federal Reserve loaned AIG $85 billion at 11 percent interest and took control of the company, which was founded in China in 1919 and driven out thirty years later by Mao. AIG was replaced in the Dow Jones Industrial Average by Kraft, the makers of Cheez Whiz. ^{4 5 6 7 8 9 10} Central banks poured hundreds of billions of dollars into the market, and the Securities and Exchange Commission temporarily banned the short-selling of 799 financial-institution stocks. The Bush Administration announced that it had a plan.^{11 12 13 14 15 16 17} “My first instinct,” said President George W. Bush, “was to let the market work, until I realized, being briefed by experts… It turns out that there's a lot of interlinks through the financial system.” The Bush Administration's three-page draft bill would permit the Treasury Department to buy up to $700 billion—$2,000 per American—in bad, mortgage-related debt, and would exempt the Treasury from administrative supervision, from legal challenges by any court, and from rules pertaining to government contracts. ^{18 19 20 21 22 23 24} Finance industry lobbyists tried to stop lawmakers from limiting executive salaries at bailed-out companies, and fought to get their companies hired to control the assets that the Treasury will oversee.^{25 26} Morgan Stanley and Goldman Sachs, the two remaining major U.S. investment banks, transformed themselves into traditional commercial banks, and a Lehman Brothers Fire Safety Team trucker hat sold on eBay for $84. “Lehman,” said Venezuelan president Hugo Chavez, “rest in peace.” ^{27 28 29 30 31 32}

The Marriott Hotel in Islamabad, Pakistan, was destroyed by a huge truck bomb, killing at least 53 people and wounding at least 266.^{33 34 35 36 37} Two car bombs near the U.S. embassy in Sana, Yemen, killed 17 people, including Susan Elbaneh, a high school senior from Lackawanna, N.Y., who had a cousin allegedly in Al Qaeda. Elbaneh had recently entered into an arranged marriage with a Yemeni man, who was also killed in the attack. ^{38 39 40 41 42 43} Oil facilities and pipelines in Nigeria were attacked by the Movement for the Emancipation of the Niger Delta (MEND), which declared that it would “continue to nibble every day at the oil infrastructure in Nigeria until the oil exports reach zero.”^{44 45} A truck carrying 20 tons of money from the Philadelphia Mint to the U.S. Treasury in Miami crashed, killing one passenger and spilling 3.7 million nickels onto I-95. “It's shiny,” said Florida Highway Patrol trooper Kim Miller.^{46 47 48}

The presidential candidates scrambled to blame each other for the financial crisis and to clarify their positions on the proposed recovery plan; John McCain said that if he were president, he'd fire the chairman of the SEC, who is not technically under presidential jurisdiction.^{49 50 51 52 53 54 55} The wife of international banker Sir Evelyn de Rothschild endorsed McCain for president because she finds Barack Obama to be an elitist.⁵⁶ Reporters traveling on McCain's Straight Talk Air, who had not had time with the candidate for over a month, staged a protest. “Bring Mac back!” they chanted, in the coach cabin of the plane. “Bring Mac back!”⁵⁷ At a Ford factory in Macomb County, Michigan, Senator Joe Biden jumped in a red Mustang convertible and revved the engine. “I like muscle cars,” he said, as factory workers whooped. ”I tell you, man, this is nice." ^{58 59} Former Justice Department terrorism prosecutor Ed O’Callaghan tried to stall a pending ethics inquiry into Alaska Governor Sarah Palin's firing of Public Safety Commissioner Walt Monegan, ^{60 61 62 63 64 65 66} and Vice President Dick Cheney watched a reenactment of the Battle of Chickamauga, the second-bloodiest battle of the Civil War, in which his great-great-grandfather fought for the losing Union side. ⁶⁷ In parts of Texas hit by Hurricane Ike, an estimated 20,000 cows and horses roamed free. Four thousand cows had been found dead, and officials thought that many more would never be found. “They're being eaten,” said Texas AgriLife Extension Service spokeswoman Kathleen Phillips, “by alligators.” ⁶⁸