A Marshall Plan for AIG

With each passing day, the insurance giant is looking more like Western Europe after World War II--devastated, bankrupt and occupied by the American government.

As Congress conducts its equivalent of war crimes trials for AIG executives to recover a fraction of one percent of bailout money, the larger question for American taxpayers is how to rebuild, salvage and/or sell off the corporation, of which they now own 80 percent.

While there may be gratification in vengefully hounding the defeated, there could be much more long-term profit in enlisting AIG people in undoing the mind-boggling deals that led to the mess.

According to the New York Times Wall Street expert, "A.I.G. employees concocted complex derivatives that then wormed their way through the global financial system. If they leave--the buzz on Wall Street is that some have, and more are ready to--they might simply turn around and trade against A.I.G.’s book. Why not? They know how bad it is. They built it.

"So as unpalatable as it seems, taxpayers need to keep some of these brainiacs in their seats, if only to prevent them from turning against the company. In the end, we may actually be better off if they can figure out how to unwind these tricky investments."

But there is a less cynical way to look at it. Before the crash, AIG was a top-down company, but its Hitlers, Himmlers and Goerings are gone now. The mid-level people, some still there and many who have left, were doing their jobs back then under the rules that existed.

Couldn't they be invaluable to the Treasury in unwinding the deals they helped structure under the equivalent of a post-World War II Marshall Plan for the company that now belongs to taxpayers? Punishment is less the point than rehabilitation.

"Marshall Plan," Wiki tells us, "has become a metaphor for any very large scale government program that is designed to solve a specific social problem. It is usually used when calling for federal spending to correct a perceived failure of the private sector."

Exactly.

Obama's Stress Test

In the absence of an outrage du jour by the Bush Administration, the American Commentariat is now caught up in a more complex, elusive project--analyzing the nation's fall into future shock and Barack Obama's fitness to deal with it.

Is the President on a speeding-up treadmill struggling not to fall behind, as Paul Krugman suggests today?

"The problem with the budget," John Cassidy diagnoses in the New Yorker, "isn’t its size or its underlying philosophy, which is one of pragmatic progressivism. The problem is that unless the deterioration of the economy stops, the Administration’s ambitious multiyear plans could end up being purely symbolic...

"With some economists talking openly about a 'depression,' the Administration needs to start rethinking elements of its recovery program, and the President himself needs to get more involved."

In the New York Review of Books, long-time Washington watcher Elizabeth Drew observes that "the still-new President has a staggering number of challenges before him...Yet the President was traveling for most of his third and fourth full weeks in office. A little more management may be in order" and adds that "the President's aides had concluded that it hadn't been helpful for Obama to be seen participating in the give-and-take of Washington, that 'that's not what he was elected to do.' Yes it is."

All this polite, nervous yet serious criticism of a president they were prepared to cheer on reflects the disappearance for opinion makers of the black-and-white days of Bush and the new era of huge gray issues such as economic stimulus, bank bailouts and mouth-to-mouth resuscitation for Detroit.

MSM pundits and bloggers alike are struggling to adapt as Markos tells CNN that "our challenge is that line from destructive criticism to constructive criticism, because there is going to be criticism. The issue is how we manage that and it's a fine line and it's very tough sometimes."

Meanwhile, Barrack Obama is beginning to show a little gray in his hair as the rest of us watch and hope and hold our breaths.

Meaning of the Stock Market Hissy Fit

As the nation's banks face their "stress test" by the Treasury this week, the stock markets are having the equivalent of a heart attack with indexes falling to lows unseen in this century.

What can Barack Obama possibly say tonight that would stop the cratering of values in the entire economy? The major banks, the automakers, the insurance giant AIG have all swallowed billions of taxpayer money and are now begging for more.

It's the President's mission to reassure the country that everything will be all right--eventually. But eventually keeps receding, and there is no sign that politics-as-usual is being put aside to deal with the magnitude of the emergency.

If anything, the stock market may be sending a message that its greatest advocates are still not getting. Those Republicans who are still prattling about free markets are not hearing what the biggest market of all is trying to tell them: This problem is too big for any other entity but government and, the longer it takes for everyone to agree on that, the worse it's going to get.

How to Feel About the Meltdown

Suddenly, prescribed treatments for the ailing economy have turned psychiatric.

*Dr. Bill Clinton calls himself in for consultation and urges Dr. Obama to dole out anti-depressants: “I just want the American people to know that he’s confident that we are going to get out of this and he feels good about the long run.”

The new Physician-in-Chief immediately announces plans to cut the budget deficit in half.

*Professor Frank Rich analyzes national stages of grief and finds no movement past the first: "Obama’s toughest political problem may not be coping with the increasingly marginalized G.O.P. but with an America-in-denial that must hear warning signs repeatedly, for months and sometimes years, before believing the wolf is actually at the door."

*Elsewhere CNBC's clinic for the money-mad produces its version of Paddy Chayevsky's loony "Network" anchorman in Rick Santelli's rant against rewarding bad behavior with bailouts against a backdrop of cheering inmates at a Chicago trading ward.

All this may simply reflect postpartum depression after Washington's giving birth to trillion-dollar bailout babies with no more assurance of future financial security than the Suleman octuplets.

In their dismay, some Americans seem to have stopped listening to politicians and pundits and turned to a more traditional source of guidance, getting financial advice in church.

As it gets crazier out there, Dr. Obama is going to have to find new ways of dispensing hope.

Sorcerer's Apprentice Transition

Barack Obama's to-do list just keeps growing as aides tell us he is "closely monitoring" the Gaza crisis even as they keep repeating the one-president-at-a-time mantra.

In the weirdest transition in White House history, the question of being ready on Day One, which was the subject of so much debate earlier this year, has morphed into two months of pre-presidential involvement in bailouts and economic stimulus debates--and now a full-blown foreign policy flap.

According to senior adviser David Axelrod, Condoleeza Rice is keeping the President-Elect up to speed "to get a handle on the situation, so that, when he becomes president on January 20, he has the advantage of all the facts and information leading up to that point."

When the training wheels come off that day, Obama may be hurtling downhill steering his way around a Middle East roadblock as he tries to get to the economic mess.

It's all beginning to look like the sorcerer's apprentice in an overflowing presidential workshop.

Enter Obama, Exit Brokaw

Today's Meet the Press was a scene of passage between the 21st century president-to-be and a media giant of the past, less striking for what was said than the display of intelligence and grace that has been so rare on the public stage for many years.

A month after his election and more than that before taking office, Barack Obama seems effortlessly presidential as he discusses the failing economy, corporate bailouts as well as military and diplomatic challenges in a dangerous world.

In his first months, Obama will face a balancing act--to jump-start the economy in ways consistent with "long-term, sustainable economic growth...investing in the largest infrastructure program--in roads and bridges and, and other traditional infrastructure--since the building of the federal highway system in the 1950s; rebuilding our schools and making sure that they're energy-efficient; making sure that we're investing in electronic medical records and other technologies that can drive down health care costs...down payments on the kind of long-term, sustainable growth that we need."

Doing that will take unprecedented leadership skills working with a Congress of competing interests and ideologies, but the new administration starts with a good deal of hope and good will aroused by a new president who can communicate with the public.

Seeing him interviewed by Brokaw, who took over Meet the Press when Tim Russert died suddenly in June, is a reminder of the media obligation to focus on what politicians are saying and doing and hold them to account with tough but fair questioning.

Both sides of the equation are in transition as David Gregory takes over the Sunday morning talkfest for a new era, but watching Obama with Brokaw was a reminder of how useful the process can be.