How, exactly, does this work? The Federal Reserve is close to a deal where it will essentially acquire 85% of AIG in exchange for an $85 billion loan. Where does the money come from? Where does the authority come from? We’re essentially nationalizing one of the world’s largest companies here, right?

Until this week, it would have been unthinkable for the Federal Reserve to bail out an insurance company, and A.I.G.’s request for help from the Fed of just a few days ago was rebuffed.

But with the prospect of a giant bankruptcy looming — one with unpredictable consequences for the world financial system — the Fed abandoned precedent and agreed to let the money flow.

The fundamentals of our economy being as strong as they are, according to Mr. McCain, I guess now we’re just strengthening the hell out of them. If we’re not careful, we might pull something.

Dispatches from the Culture War has a good summary on the issue of using U.S. forces to conduct raids in the Pakistan tribal areas where al Qaeda is believed to have strongholds.

To summarize the summary – Obama got all kinds of crap from McCain and Clinton when he said:

[H]e would be willing to attack inside Pakistan with or without approval from the Pakistani government, a move that would likely cause anxiety in the already troubled region.

“If we have actionable intelligence about high-value terrorist targets and President Musharraf won’t act, we will,” Obama said.

McCain, in particular, said that Obama’s position was “naive.” Now Bush has ordered such raids, just as Obama had suggested. No word from McCain on whether Bush’s actions were “naive.”

This weekend’s unnerving events on Wall Street does nothing to allay my feeling that, for a long time now, we have been mining our economy rather than growing it. Generally speaking, to grow an economy, I’d think that you have to concentrate on inventing new things, improving old things, or producing old things more cost effectively than before. On the other side, you need a sufficient number of people who are inventing, improving, or producing other things. In a sense, each inventor, improver, or producer swaps some of his stuff for some of the other guy’s stuff.

But, since it’s cumbersome to engineer a person-to-person swap; we have currency which stores value in much the same way as a battery stores energy. However, whereas batteries store energy pursuant to scientifically observable physical laws; currency is a whole lot less reliable. Currency works on trust and reputation. People accept currency in return for their stuff or labor because they believe that the value of that currency will be there when it is time for them, in turn, to go and acquire stuff or labor of their own.

Seems like, instead of inventing, improving, or producing; our economy has been focused more on doing funny things with currency, e.g., elaborate schemes with mortgages founded on unreliable notions about the ability of the mortgagor to make payments as agreed. We’ve been draining that currency battery and, after awhile, the jumper cables aren’t going to work anymore.

It’s been tough getting a straight answer out of McCain as to what he proposes with respect to Social Security, but according to this Wall Street Journal article, he apparently favored Bush-style privatization.

Something to keep in mind as we ponder the stagnant stock market, government bail outs of Bear Stearns, Fannie Mae, and Freddie Mac, and see what the future brings with respect to the likes of Lehman Brothers, and AIG.

Although, at this rate, rather than making social security assets private; we’re going to convert all the private liabilities to public ones. So I guess, one way or another public money is going to get together with private debt. Privatize the profits, socialize the debts.

This is a nice graphic demonstrating the primary reason for my shameful (in the eyes of many of my friends and family) transition from “conservative” to “liberal”:

No Republican president has balanced a budget in close to 40 years. I can’t remember which budget that would have been, but it was some time during the Nixon administration. Ford didn’t do it. Reagan didn’t do it. George H.W. Bush didn’t do it. And George W. Bush didn’t do it. Since 1980, Republicans Reagan, Bush, and Bush have had 20 opportunities to preside over a balanced budget and have not managed it once. For Reagan, I’ve been told that the Democratic Congress was the problem all 8 years. For Bush the Elder, again, it was those darn Democrats. When Clinton presided over balanced budgets, then it was because of the Republican Congress. But when Bush the Younger had a Republican Congress to work with, deficits hit record highs. It’s time to face the fact that, with Republican administrations, budget deficits are not the exception, they are an iron-clad rule.

Rap freestyle translated into plain English:

http://view.break.com/569516 – Watch more free videos

Interesting story reported by Arstechnica concerning the town of Monticello, Minnesota’s attempts to lay fiber optic cable. The town asked Bridgewater Telephone to lay a fiber optic network to homes and businesses in the municipality. The telecommunications company declined. So, the town proceeded to pursue a plan to lay its own network; issuing bonds for the project. The day before they were to close on the bonds, Bridgewater filed suit to stop the project.

Bridgewater argues that the project impermissibly allows the town to use tax exempt bonds to compete with Bridgewater and that the bonds will be used for “current expenses.” I don’t know Minnesota law, but it’s not unusual for bonds to be prohibited as a source of money for current operating expenses as opposed to capital expenditures. From the article, it sounds like Bridgewater is stretching on its “current expenses” argument and is characterizing what are really capital expenditures as current expenses.

On the unfair competition angle, it does not sound like Minnesota law actually prohibits this, and the argument becomes even less tenable when you consider that Bridgewater declined the town’s request to provide the service.

In any case, I think it’s forward thinking of the municipality to recognize high speed connectivity as necessary infrastructure. Whether they’re implementing their vision in the best way, I couldn’t say; but I think they are correct that the Internet connectivity is going to be akin to roads, water, and electricity in terms of necessary infrastructure for municipalities in the future.

The Delaware County GOP is a dysfunctional little operation. I last took notice of them when one of their operatives slugged a Democratic Congressional candidate. (The operative was apparently upset at measures being taken to deal efficiently with the surge of voter registrations before the primary.) Today, I see that a Republican Delaware County election board member, Bill Bruns, is continuing a grand old tradition of roadblocks and bottlenecks for voting. In particular, this time, he opposes early voting at satellite voting centers at Ball State. Similar sites have been approved at IU, Purdue, and Indiana State. Mr. Bruns appears, therefore, to be suggesting that he and his colleagues in Delaware County are less capable than their counterparts in Tippecanoe, Monroe, and Vigo Counties. The alternative would be an uncharitable assumption that he would rather the students at Ball State have more trouble voting. That would be cynical.

Twitter is my latest addiction. At first I didn’t get it, didn’t see a use for it, then gradually it grew on me and my tech addiction took over, and I’ve become a Twitterer. You can get real time updates from other folks in the country by going to http://search.twitter.com/search?q=%23ike.

Here’s a trick the Voter ID crowd may like to adopt in Indiana to supplement efforts to reduce voter turnout.

The Michigan GOP in Macomb County Michigan is proposing to add insult to injury for those who have lost their home to foreclosure.

“We will have a list of foreclosed homes and will make sure people aren’t voting from those addresses,” party chairman James Carabelli told Michigan Messenger in a telephone interview earlier this week.

Man, that’s cold. But, I guess if they can’t pay their damn mortgage, they don’t deserve a vote — doesn’t matter if the bank has kicked them out yet or not.