The House of Representatives, reacting to a plan by AIG to pay its executives as much as $218 million in bonuses, voted 328 to 93 in favor of a 90-percent tax on executive bonuses at firms that receive $5 billion or more in federal funds. Eighty-five Republicans voted for the bill despite their party’s traditional opposition to tax increases. “The American people,” explained Mark Kirk (R., Ill.), “are all watching here.” “The first thing that would make me feel a little bit better towards them,” said Senator Charles Grassley (R., Iowa) of the AIG executives, “if they�??d follow the Japanese …

President Barack Obama addressed a joint session of Congress, offering a broad outline of a massive spending plan paired with $2 trillion in spending cuts over the next decade. “Now is the time,” he said, “to jump-start job creation, restart lending, and invest in areas like energy, health care, and education.”NPR.orgIt was announced that General Motors lost $30.9 billion last year; that U.S. GDP fell 6.2 percent in the fourth quarter of 2008, exceeding the officially predicted 3.8 percent drop, and even the 5.5 percent drop economists had expected; and that the U.S. government will own up to 36 percent …

Caught in the Web, 1860. Federal agents arrested hedge-fund manager Bernard Madoff and charged him with running a $50 billion Ponzi scheme, possibly the largest in Wall Street history. Madoff faces a maximum penalty of 20 years in prison and $5 million in fines; he had hoped to distribute his last $200 million to friends, family, and favored employees before his arrest, but was turned in by his sons. SECNYTBloombergWSJNYTRepublicansenators killed a plan to loan $14 billion to American automakers, and the White House said it would consider other options to save the industry and as many as three million …

The world economy continued its collapse. The Dow Jones Industrial Average declined 22 percent over eight days, Wall Street lost $2.4 trillion in market value, and Iceland went bankrupt.CNNBusiness WeekThe head of the International Monetary Fund warned that the world was on the “brink of systemic meltdown,”BBCand Democrats in Congress called for a $150 billion economic stimulus plan to rebuild America’s crumbling infrastructure.Yahoo! NewsBarack Obama called for firms that create jobs to be rewarded with tax credits and for a moratorium on foreclosures;AFPJohn McCain refused to answer questions about his economic plan, but was reportedly considering a cut in the …

A Christian martyr. The Dow Jones Industrial Average fell 777 points in one day after the House of Representatives failed to pass a Wall Street bailout plan, first put forth by President George W. Bush, that would have granted Treasury Secretary Henry Paulson up to $700 billion to buy, at any price, toxic mortgage-backed assets from financial firms. “It’s not based on any particular data point,” said a Treasury spokeswoman of the $700 billion figure. “We just wanted to choose a really large number.”Wall Street JournalWashington PostForbes.comSenator John McCain announced that fixing the economy was more important than politicking, suspended …

The Treasury Department seized control of mortgage and loan giants Fannie Mae and Freddie Mac, firing the companies’ chief executives and promising to provide as much as $200 billion to prevent insolvency.New York TimesThe jobless rate rose from 5.7 percent to a five-year high of 6.1 percent, with more than 84,000 jobs lost in August,Yahoo and Senator John McCain accepted the Republican Party’s nomination for the presidency.KTLA.com“This campaign is not about issues,” said McCain’s campaign manager, Rick Davis. “This election is about a composite view of what people take away from these candidates.”Washington PostIt emerged that McCain did not properly …

One million people fled New Orleans to avoid Hurricane Gustav, which landed in Louisiana as a weakened category-2 hurricane and caused relatively little damage. Mississippi officials ordered people still living in the FEMA trailers erected after Hurricane Katrina to evacuate, and John McCain canceled opening-day ceremonies for the Republican National Convention at the Xcel Energy Center in Saint Paul, Minnesota. “This is a time when we have to do away with our party politics and we have to act as Americans,” said McCain. “Not as Republicans.”GuardianIOL.co.zaNew York TimesUSA TodayYahoo!McCain picked Alaska Governor Sarah Palin, 44, as his running mate. Palin, …

After more than a week of fighting and one failed cease-fire, Russia and Georgia signed a revised cease-fire agreement, but Russian troops remained within 25 miles of the Georgian capital, Tbilisi. Russian President Dmitri Medvedev promised French President Nicolas Sarkozy, who negotiated the agreement, that Russian forces would soon withdraw from Georgia. He also insisted that troops would remain in the breakaway Georgian territory South Ossetia. “The superpower showed that she was able to defend her people,” said Marina Katayeva, a 30-year-old Russian doctor. “Now we will be more respected.” Georgian President Mikheil Saakashvili said Russians were “twenty-first-century barbarians” who …

Radovan Karadzic was arrested in Belgrade and awaits imminent extradition to The Hague, where he will face charges of genocide for his role in the Srebrenica massacres and the siege of Sarajevo. The former Bosnian Serb president, a psychiatrist and poet who in 1991 pledged to drive Bosnian Muslims down “the highway of hell and suffering,” had been living in the Serbian capital as a New Age guru, promoting alternative medicine and “Human Quantum Energy” under the name “Dragan David Dabic.” Serbia hoped the arrest would hasten its campaign to join the European Union, and it was reported that Ratko …

The U.S. Office of Thrift Supervision seized the IndyMac Bank of California, worth an estimated 32 billion dollars, after the bank’s closure in the wake of mortgage industry collapse,AFPand the Bush Administration proposed a rescue package for ailing mortgage companies Fannie Mae and Freddie Mac that would allow the Treasury to buy billions of dollars of their stock and lend them billions more to meet their short-term funding needs. The two companies’ total debt is estimated at $1.54 trillion.NYTimesAbu Dhabi bought New York City’sChrysler building for $800 million,GuardianUKand the Belgian brewer InBev planned to buy Anheuser-Busch for nearly $50 billion.AP …

Twenty U.S. soldiers were killed last week fighting across Iraq, and 1,300 Iraqi officers and soldiers were fired for poor performance. The Bush Administration said it was optimistic that many more refugees from the estimated 4.4 million people who had fled Iraq or had been “internally displaced” would be allowed into the United States. Since the war began the United States has accepted only 5,000 Iraqi refugees. Sweden has taken 34,000.ReutersIHTHillary Clinton and John McCain accused Barack Obama of elitism after Obama commented on the bitterness of working-class people in a speech at an expensive San Francisco fund-raiser. “They cling …

An American cattleman. In the G.O.P. primaries on Super Tuesday, John McCain emerged as the likely Republican presidential nominee after winning California,New York, New Jersey, and other “blue states”; Mike Huckabee won states in the South, and Mitt Romney won states in which he has owned a home. Romney later announced the end of his presidential campaign to an audience that moaned and cried “No, no!” “Size,” explained Romney, referring to the number of delegates pledged to McCain, “does matter.”Talking Points MemoNational PostBreitbartDemocratic primaries left neither Senator Barack Obama nor Senator Hillary Clinton with a clear lead over the other, …

The Cloaca Maxima, 1872 Iranian President Mahmoud Ahmadinejad, hailed by his countrymen as the “Socrates of the Third Millennium” for “disarming other speakers through his sharp reasoning,” gave a speech on Monday in which he claimed that Iran had no homosexuals and disavowed reports of his nuclear ambitions. “Let me tell a joke here,” Ahmadinejad said. “I think the politicians who are after atomic bombs, or testing them, making them, politically they are backward, retarded.” On Tuesday he met with Zimbabwe President Robert Mugabe, addressed the United Nations (where he announced that he would disregard any resolutions adopted by the …

An American cattleman. Attorney General Alberto Gonzales resigned.New York TimesThe CIA’s inspector general released a report recommending that former CIA director George Tenet and other senior officials be held accountable for failing to prepare for the threat of Al Qaeda before the September 11 attacks,New York Timesand the Pentagon announced it would close Talon, the database created after September 11 to monitor and store information about security threats and peace activists. Washington PostGrace Paley died.New York TimesIn a motion filed by the Justice Department, the Bush Administration argued that the White House Office of Administration is not subject to the …

In the midst of a brief thunderstorm that transfixed the New York City subway system and killed one motorist, a tornado formed over the Atlantic Ocean, grazed the north coast of Staten Island, and blew into Brooklyn, felling 292 trees, ripping roofs off dozens of buildings, and displacing 200 people from their homes. New York TimesNY1Losses among lenders to American debtors led to a one-day plunge of 387 points in the Dow Industrial Average. The Federal Reserve injected $62 billion into the market–its largest intervention since September 19, 2001–and its international counterparts followed suit. Hedge funds were in the red. …

Executive power was transferred to Vice President Dick Cheney for two hours and five minutes while President George W. Bush underwent a routine colonoscopy. Spokesman Scott Stanzel announced that five small polyps had been removed, but “none appeared worrisome,” and the president was soon able to ride his bike.MSNBCAFP via Taipei TimesPrior to the procedure, Bush issued an order requiring the CIA to stop torturing its prisoners and to comply with the Geneva Conventions as the president interprets them, and also made clear that he would, by invoking executive privilege, refuse to allow the Justice Department to pursue any contempt …