Weekly Review — September 23, 2008, 12:00 am

Weekly Review

[Image: Caught in the Web, 1860]
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.”EconomistThe Wall Street JournalBloombergGlobal 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. Der SpiegelThe New York TimesThe New York TimesDer SpiegelBoston GlobeCNNBloombergCentral 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.BBCDer SpiegelThe Los Angeles TimesBloombergSECThe International Herald TribuneThe Washington Post“My first instinct,” said President George W. Bush, “was to let the market work, until I realized, being briefed by expertsâ?¦ 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 billionâ??$2,000 per Americanâ??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. BloombergThe Wall Street JournalThe Los Angeles TimesThe Washington PostPoliticoBloombergThe New York TimesFinance 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.The New York TimesThe Wall Street JournalMorgan 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.” The Washington PostReutersBloombergeBayThe Wall Street JournalBloomberg

The Marriott Hotel in Islamabad,Pakistan, was destroyed by a huge truck bomb, killing at least 53 people and wounding at least 266.The Washington PostThe Christian Science MonitorBBCAP via YahooThe New York TimesTwo 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. AP via Detroit Free PressAP via Star-TribuneThe Christian Science MonitorThe Los Angeles TimesThe New York TimesWaPoOil 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.”The New York TimesThe New York TimesA 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.Philadelphia InquirerWFTVMiami Herald

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.The New York TimesThe Washington PostThe Washington PostCNNPoliticoThe Wall Street JournalABCThe wife of international banker Sir Evelyn de Rothschild endorsed McCain for president because she finds Barack Obama to be an elitist.CNNReporters 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!”PoliticoAt 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.” NewsweekThe New York TimesFormer Justice Department terrorism prosecutor Ed Oâ??Callaghan tried to stall a pending ethics inquiry into Alaska Governor Sarah Palin‘s firing of Public Safety Commissioner Walt Monegan, BloombergBBCABCAnchorage Daily NewsTPMNewsweekAP via Detroit Free Pressand 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. Atlanta Journal-CourierIn 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.” AP via Star-Telegram

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Nobody in academia had ever witnessed or even heard of a performance like this before. In just a few years, in the early 1950s, a University of Pennsylvania graduate student — a student, in his twenties — had taken over an entire field of study, linguistics, and stood it on its head and hardened it from a spongy so-called “social science” into a real science, a hard science, and put his name on it: Noam Chomsky.

At the time, Chomsky was still finishing his doctoral dissertation for Penn, where he had completed his graduate-school course work. But at bedtime and in his heart of hearts he was living in Boston as a junior member of Harvard’s Society of Fellows, and creating a Harvard-level name for himself.

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