Our usual weekend open thread is how I normally start these posts but today’s isn’t usual.  This will be the last weekend open thread; in fact, it will be the last thread of any sort here at Blogocracy.  I have handed in my notice and I am finishing up today.  I do this with a great deal of sadness but also with a sense of excitement about new prospects.  I’ve had some wonderful opportunities over the years, beginning back with the first job I had after leaving school two or three hundred years ago.  Getting a gig in a record shop back when I was young and silly and lived and breathed music was an unbelievable thing and I still find it hard to believe it happened.  Since then, I’ve run a number of my own businesses, an undertaking that is life-changing in many ways, and I’ve also had the opportunity to live and work in both the United Kingdom and the United States, experiences I wouldn’t swap for anything.  It was during that latter o/s stay that I first discovered blogging and I was attracted to it because it meshed so well with what I had just spent the previous fours years of my life writing about in my PhD thesis, the relationship between citizenship and public debate.  So I started a blog to see what it was all about and how it might work and it was the success of that led to me being offered the gig here at News.  It’s been quite a ride since then and I want to thank everyone here at News Digital Media for their help and support over that time.  As I say, finishing up is a sad moment, but there is much to look forward to.  One of those things is the chance to write a book, something I have been approached about a number of times over the last couple of years but that was impossible to pursue with so much time devoted to writing here.  As much as I enjoy the rapid-fire aspect of blogging, there is something to be said for stepping back and taking a longer, deeper look at the things we talk about here and that’s what the book will do with any amount of luck.  There’s another project too, but you’ll have to wait and see what that is.  In any event, the first thing I intend to do is take a few weeks break, sleep in past 5am, and get into some serious recreational cooking.

The main thing I wanted to say today, however, was thank you to all of you, readers and commenters, who have made Blogocracy the success it has been.  I really can’t express how much I appreciate the interest and support the site has received over the last couple of years.  So let me say it again: from the bottom of my heart, thank you.  And yes, I’ll be around in comments for the rest of the weekend.  Of course, we can’t go out without one more tune—I know some of you won’t miss my taste in music!—and this is simply a favourite. 

FINAL UPDATE: Thanks, everyone.  Thanks so much for all the kind and generous comments: greatly appreciated.  But that’s it!  Comments are now closed.

The editors at news.com.au have given me the list of winners from our giveaway of Mark Davis’ new book Land of Plenty published by Melbourne University Press.  If those named below want to email me a mailing address, I will pass the details onto MUP and you should receive your free copy of the book with all haste.  So drop me a line at

As it turned out, it was a terrific discussion and so thanks to Mark for contributing the guest post and thanks to a great bunch of commenters for chipping in.  If you want to continue discussing stuff with Mark, his own blog associated with the book is now set up: go check it out.

Here are the winners as judged by the editors at news.com.au: John McPhilbin of NSW; Seadrift; Rose of Adelaide; pete m; and Rebecca of Canberra.

Indications that the McCain camp is feeling the heat of falling poll ratings, especially in regard to the candidates perceived economic credentials:

McCain said he was suspending his campaign and would return to Washington to focus on the roiling US financial crisis.  He said he asked Democratic opponent Barack Obama to join him in the US capital and to agree to a delay in the first presidential debate.

I don’t think anyone is seeing this as other than a stunt to try and regain some sort of initiative (well, with the possible exception of ABC radio this morning).  As this article notes, even the McCain campaign more or less acknowledges the fact: ‘The McCain campaign believes that their candidate is at his best when he is seen as a deal-maker, willing to reach across party lines to get things done for the good of the country. This economic crisis, they believe, provides McCain a chance to show the sort of leadership that voters value in the Arizona senator.  “John McCain’s leadership and experience credentials outrank Barack Obama’s,” said Sarah Simmons, a McCain campaign strategist, this morning. “[We are] walking through a crisis and people are looking to see how it is going to be handled.“‘

So how are those polls?:

More voters trust Obama to deal with the economy, and he currently has a big edge as the candidate who is more in tune with the economic problems Americans now face. He also has a double-digit advantage on handling the current problems on Wall Street, and as a result, there has been a rise in his overall support. The poll found that, among likely voters, Obama now leads McCain by 52 percent to 43 percent. Two weeks ago, in the days immediately following the Republican National Convention, the race was essentially even, with McCain at 49 percent and Obama at 47 percent.

The McCain campaign have also squandered the Palin bounce.  As I noted when she first entered the race, she is a personable politician and, at least in the early stages, kicked the campaign along nicely.  Part of her appeal is that she is a strong, successful woman but the McCain team has undermined this obvious truth and strength of her appeal by shielding her from press interviews.  This to-camera piece by journalist Campbell Brown has therefore been getting a fair bit of attention:

Anyway, the Obama campaign—which has been stooping to the sort of tactics they accuse McCain using—is calling McCain’s bluff on the idea of suspending his campaign, a tactic that also includes postponing a Presidential debate.  Even hardline conservatives are saying that McCain is being “gimmicky”. 

The bottom line seems to be this:

Democratic rival Barack Obama declined to follow suit, saying he would return only if congressional leaders requested his presence and said there was no reason to suspend the campaign or delay Friday night’s presidential debate.  A president, Obama said, “is going to have to deal with more than one thing at a time.”

...Obama campaign spokesman Robert Gibbs was more direct. The scene at the debate site in Oxford, Miss. Friday night, he said, would consist of “a stage, an audience, a moderator, and at least one presidential candidate.”

We’ll see what happens....

One of the things I’ve been wondering about the current mess on Wall Street is why so little attention seems to be being paid to accountability, either professional or even legal.  While it is probably right that the first priority should be to try and fix things, there surely needs to be some attempt also to consider whether laws have been broken and whether or not various officials have performed well enough.  As it happens, a couple of pieces this morning address the matter.  For instance, John Quiggin accesses the role of US Treasury Secretary Henry Paulson:

One thing that really puzzles me about the great bailout plan is the almost universal acceptance that Paulson should be the one to run it, at least until the next Administration. More generally, I’m surprised by the kid-glove treatment he’s been getting in public discussion, even from people highly critical of the plan.

....Looking back at the record, plenty of people have observed that, at least in his public statements, Paulson repeatedly underestimated the severity of the crisis. And there’s nothing in the ad hoc shifts between cash infusions, bailouts and bankruptcies to suggest that he has much more of an understanding of what’s going on than anyone else. As Paul Krugman has said, he’s making it up as he goes along, just like the rest of us.

But the bailout plan is something else. The possibility of a meltdown like this has been talked about, increasingly seriously, for the last couple of years. Yet Paulson responds with a three page document saying “I need $700 billion, no questions asked”. Wasn’t there a contingency plan? Or worse still, was this the contingency plan?

Either way, Paulson should be sacked forthwith.

It seems a reasonable point to me, though there is no sign at all that Paulson will actually be given his marching orders.  Regardless, on the matter of criminal accountability, apparently the FBI is investigating a number of cases:

THE US Federal Bureau of Investigation (FBI) is probing allegations of fraud by finance giants, US media has reported.  According to the reports Lehman Brothers, Fannie Mae and Freddie Mac, and insurer AIG are being looked at.  CNN said the mortgage, investment and insurance titans were part of a fraud inquiry by the FBI, which has widened its net to include probes of 26 Wall Street firms as lawmakers rush to agree a $US700 billion ($830 billion) government bailout of the troubled US financial sector.

...FBI Director Robert Mueller told the US Congress last week that 24 cases of potential corporate fraud were under investigation, up from 21 disclosed by the bureau in July.  In testimony before the House of Representatives Judiciary Committee, the FBI chief also vowed to pursue corporate executives if necessary in mortgage fraud cases.  Mr Mueller said the FBI was looking at all levels of the mortgage systems. With respect to the corporate probes, which could result in federal charges, “the allegations would be there were misstatements of assets,” he said.

Another reports notes that: “Several California institutions, including IndyMac Bank of Pasadena, which collapsed in July at a cost of $8.9bn (£4.7bn), are reported to be under investigation.  Countrywide, formerly the largest mortgage lender in the US and now owned by Bank of America, is also under scrutiny.”

So there you go, wheels are turning.  Still, given the scale of the investigations, I guess we shouldn’t expect a quick resolution of any matters being considered.

Our usual midweek open thread on which all talk of politics is banned.  Talk about something else.  Like books.  I’ve spoken before about my admiration for US writer Philip Roth and there is a nice long profile/interview with him that you can read here.  Unfortunately, it gets a bit bogged down in the old debate about whether he is really writing about himself or not—which is a really tired subject and one that should be irrelevant to critics and readers alike—but he has a pretty neat response to those who go on about it:

Roth himself hates to be asked about his many alter egos. He speaks contemptuously of critics who get snared in the barbed wire of the Rothian no-man’s-land, gunning them down with: ‘Am I Roth or Zuckerman? It’s all me… Nothing is me. I write fiction and I’m told it’s autobiography; I write autobiography and I’m told it’s fiction. So since I’m so dim and they’re so smart, let them decide what it is or isn’t.’

There’s another piece on him here, which I haven’t read yet.  Today’s music is a twofer.  I happened to be writing about this mob and these songs in another context and lo and behold, both tracks are there together on an single YouTube.  Feed your head.

The new bill on abortion reform before the Victorian parliament has the following provision:

Despite any conscientious objection to abortion, a registered medical practitioner is under a duty to perform an abortion in an emergency where th abortion is necessary to preserve the life of the pregnant woman.  Despite any conscientious objection to abortion, a registered nurse is under a duty to assist a registered medical practitioner in performing an abortion in an emergency where the abortion is necessary to preserve the life of the pregnant woman.

Unfortunately, the Catholic Church in Victoria thinks practitioners in their hospitals shouldn’t have to abide by the law if it passes and so is not only suggesting that their staff may have to break the law but is even threatening that Church-run hospitals will stop providing maternity care altogether.  While I can see why a straight out abortion would be an issue for them, I find it very hard to believe that they would not perform an emergency procedure to save a woman’s life, as the above-quoted provision allows.  Seriously, in that sort of emergency situation—“where the abortion is necessary to preserve the life of the pregnant woman”— would they really just let the woman die?

Nonetheless, as I say, they are making all sorts of noises about breaking the law and closing down services:

VICTORIA’s 15 Catholic hospitals are likely to tell their doctors and nurses to break the law rather than refer women to abortion providers.  A meeting of Catholic hospital heads yesterday unanimously agreed to oppose the state’s proposed abortion law, to be debated by Parliament’s upper house next month.  The bill would require doctors with a conscientious objection to abortion to refer a woman to someone with no such objection.

“We cannot in good faith provide an abortion or a referral to an abortion provider,” said Martin Laverty, chief executive of Catholic Health Australia, who spoke on behalf of the meeting.

Archbishop Hart has also said: “This Bill poses a real threat to the continued existence of Catholic hospitals.  Under these circumstances, it is difficult to foresee how Catholic hospitals could continue to operate maternity or emergency departments in this state in their current form.”

My understanding was that, in terms of referrals, they are already obliged to offer them, so this law doesn’t change anything in that regard. This is at least what heard in a radio discussion on the matter the other day.  And as one article notes: “...in Melbourne at least, some Catholic hospitals operate a system of “informal” referrals and tell women seeking an abortion that the Royal Women’s Hospital has more expertise in women’s health issues.” However, according to the CEO of Catholic Health Australia, this is not the case:

Importantly, staff in our hospitals do not currently offer referral to abortion services.  The Bill, if enacted, will change this.  It will have the effect of requiring staff in Catholic hospitals to make referrals to other medical professionals who do not object to provision of abortion.  This is the change that we object to.  Catholic hospitals and our staff should not be required to make referrals for abortions.

Presumably if they object to referrals, they also object to the the provisions quoted above?  Unfortunately, the article doesn’t address them. He does say, however, that, “The Archbishop of Melbourne, Denis Hart, has rightly raised the prospect of changes in operation of Catholic health services should the Bill pass the Legislative Council.  In yesterday’s meeting, we have affirmed our long-standing position that Catholic hospitals do not and will not offer abortions.” So I’m still left wondering if they are really saying that they would let the woman die under circumstances “where the abortion is necessary to preserve the life of the pregnant woman”?

As with the threat to discontinue maternity and emergency services, it is sounding at this stage as if the Church is simply using what threats and power it has to influence the passage of the bill while it is still before the parliament.  Maybe they will be successful and the bill will either be amended or defeated (some evidence of that here).  If, however, it passes more or less as is, it will be interesting to see if the Church carries out its threats.

ELSEWHERE: The Hoyden’s discuss the matter in no uncertain terms and Jeremy chips in as well.

Ah, the joys of compromise in a Senate you don’t control:

The grim reality of the Government’s reliance on minor parties to win Senate approval for its legislation hit home yesterday, with Health Minister Nicola Roxon forced to rewrite plans to lift income thresholds on the Medicare surcharge levy, which applies to high-income earners who do not have private health insurance.

The 2008-09 budget proposed lifting the threshold from $50,000 a year to $100,000 a year for singles and $100,000 a year to $150,000 a year for couples.

But with the Opposition and minor parties opposed to the move for reasons including its potential effect on private health insurance, Ms Roxon told question time yesterday she would cut the reduction in the threshold for singles to $75,000 a year, with the figure for couples to remain at $150,000.

As we’ve talked about at length before, the argument about the “potential effect on private health insurance” is undoubtedly being manipulated by the AMA and the health insurance industry with the support of the Opposition, and now, apparently, the Greens and other balance-of-power Senators.  As the consumer watchdog Choice has noted: ““The AHIA (Australian Health Insurance Association) is trying to discredit Treasury and dupe consumers with misleading figures.” (Remember, industry figures and an AMA-commissioned report suggests around 800,000 will dump private health insurance, while Treasury says the figure is closer to 400,000.) Mike Stekettee summed up the situation in a piece I quoted a while back when we were looking at all this:

The argument goes that we need a vibrant private health sector because it offers choice to patients and keeps the public sector on its toes. But who is to say the ideal level of private health insurance is about 45 per cent of the population, as at present, rather than the 30 per cent it might fall to without enormous government subsidies?

Private health insurance, say its supporters, takes pressure off public hospitals. But to the extent that is true, it comes at a cost. Doctors charge higher fees for private patients, who also are more likely to undergo more procedures and more expensive ones. This would not necessarily matter if the quality of medical care was better but the evidence on this is ambiguous. Nor would it matter if it did not involve large buckets of government money to private insurance.  The 30 to 40 per cent rebate alone cost the federal budget $3.5 billion last financial year. In terms of its impact on health, much of it is wasted because it goes to people who had private health cover before the rebate was introduced and would keep it whether or not it was subsidised. A much better use of the money would be to spend it on public hospitals or, for that matter, private hospitals.

...So why in the name of rational economics should we be pouring vast amounts of taxpayers’ money into an industry that is uncompetitive and provides a more expensive service?

The health insurance industry in particular has a vested in continuing to receive their massive government subsidies introduced by the previous government.  While it is hardly surprising to see the Coalition continuing to support taxpayer money being handed over in this way to a private companies—as I noted, it was the Coalition who introduced the handouts in the first place—I’m a little surprised that other Senate members are so keen to continue shovelling public money into private industry bottom lines, especially when they all wringing their hands about the level of pensions.  And really, it would’ve been a treat to be a fly on the wall in Senate offices over the last few months as the health insurance lobbyists pitched their case to the Senators.

But there it is: such compromise is the nature of our system where a government doesn’t necessarily have control of the Upper House.

A couple of weeks back I quoted from Mark Davis’s new book Land of Plenty.  I said at the time that I’d impose upon him to write a guest post for us and I’m pleased to say that he has agreed.  I’ve popped it up below.  Mark is travelling at the moment doing the hard yards of book promotion but has said he will check in and respond to comments.  So if you have any questions, comments or criticisms, feel free to chip in below as usual. 

But wait, there’s more....

As an added bonus, his publisher, Melbourne University Press (MUP), has given Blogocracy five copies of the book to give away.  So news.com.au editors will be judging the five most worthy comments and each of those commenters will be sent a copy of the new book compliments of Mark and MUP (competition terms and conditions here).  I know some of you have already expressed a desire to pick up a copy of the book, so here’s your chance for a freebie.  I’ll announce the winners on Thursday along with details of how winners can get their copy of the book.  The guest post follows:

Continue reading 'Land of Plenty: guest post by Mark Davis'

Julie Bishop is now Shadow Treasurer, while Joe Hockey has the Finance portfolio.  Helen Coonan gets Alexander Downer’s old job of Foreign Affairs.  Tony Abbott, against his will, gets to keep Families, Housing, Community Services and Indigenous Affairs.  Greg Hunt keeps environment, which will probably keep him happy.  Christopher Pyne will be Shadow Minister for Education, Apprenticeships and Training.  Nick Minchin is demoted to Communication.

The full list is nicely set out here (pdf).

Just on the appointment of Julie Bishop, can anyone clear up if she has any particular expertise in the portfolio?  I mean, I know the Liberals normally give the gig to the Deputy leader of the party, but given the fuss that is being made about the party regaining “economic credibility”, is there anything in her background that suggest that she has such credibility in the portfolio?

Anyway, more on all this as we go along…

We’ve talked before about the number of overseas trips Kevin Rudd has done since becoming PM.  Back then I noted that the question was less about the amount of time he spends o/s than about whether the trips are providing good value for Australia.  I doubt that that the matter is that simple any more.  I suspect this latest round of trips crosses a line and that not only does he need to seriously curtail the amount time he is spending outside the country but that he is providing the Opposition and the media with a legitimate stick with which to beat him.  In other words, his travel has now become a serious error of judgement, at least politically.  Let’s look at the official explanation for this latest venture:

Transport Minister Anthony Albanese refused to take questions on Mr Rudd’s trip, leaving lone Labor backbencher Craig Thomson to defend the Prime Minister.  “It’s important that we have a Prime Minister who puts Australia on the global stage,” Mr Thomson said.

While in New York, Mr Rudd will spend much of his time speaking with global financial leaders about how to handle the credit crunch which has now been running for more than a year.  US Treasury Secretary Henry Paulson has put forward a $US700 billion ($871.19 billion) rescue plan which must now be put to Congress.

“To be in New York, to be talking to the American regulatory systems about the way in which they are conducting their recovery, in terms of the bail-out, is the most important thing that our Prime Minister can be doing,” Mr Thomson said.

Not terribly convincing, is it?  I doubt the electorate is convinced.  As I say, the number of trips overseas has crossed a line and it amounts to an error of judgement. 

Just to show you that some people really are doing it tough in the wake of the subprime crisis and related matters, here’s a story from ABC America that illustrates the point:

As New York investment bankers, once called the masters of the universe, were sent packing, the super-elite tone set by multi-million dollar charity balls, birthday parties and bar mitzvahs too is threatened. 

“It was almost like they had created a whole separate world,” said Frank. “They were a parallel country of the rich. A lot of those people will have to sell their homes, they’re going to cut back on the private jets and the vacations. They may even have to take their kids out of private school,” said Frank. “It’s a total reworking of their lifestyle.”

He added that it’s going to be no easy task.

“It’s going to be very hard psychologically for these people,” Frank said. “I talked to one guy who had to give up his private jet recently. And he said of all the trials in his life, giving that up was the hardest thing he’s ever done.”

I’ll get a link up later so you can donate to help him out.  I think Oxfam are organising an appeal.  (Thanks to reader JD for the link.)

Great news!  The natural order of the universe will shortly be restored and probably even the Liberal Party will forgive the electorate for their silly mistake last October:

Liberal Party leader Malcolm Turnbull says Prime Minister Kevin Rudd is a “phoney”, and he’ll beat him at the next election....In an interview with The Daily Telegraph, a confident Mr Turnbull promised “leadership, energy, action” as he tries to topple the Rudd government.

“We are determined to make this a one-term government,” he said.  “We have a lot of work to do, but yes we can win and I believe we will win.”

Seems he’s got over that whole ”humble” thing that afflicted him briefly last week, which is good to see.  That four vote victory over the compelling Brendan Nelson is such a feather in his cap, you can see why; and it’s also a clear indication that Australians will see the error of their ways and return the government in exile to their rightful position.

I mean look what he’s done already.  He has nearly selected a frontbench, so that’s good.  All those bright new names just waiting in the wings to reelectrify the Australian voters: Hockey, Abbott, Bishop, Pyne.  The electorate can hardly wait.  And he has called for a bipartisan approach on the economy and mocked Kevin Rudd for turning him down.  Winner!  He also wants to get rid of tax returns for some people.  The guy is obviously on a roll.  Next thing you know he’ll be getting into the heavy hitting like blocking the tax on alcopops and drawing fine lines between his position on an ETS and that of the government.  Reclaiming all that economic credibility as the papers keep telling us after the mess of Brendan Nelson.  It’s a new broom! 

Clearly the Coalition has nothing to learn from the last election and there was no message in the fact that they lost power and their own leader lost his seat.  All they needed to do was put Mal at the helm and the rest would take care of itself.  A few sharp words aimed at Kev and Bob’s your uncle and Mal’s your prime minister.

And look at the polls!:

MALCOLM Turnbull’s election as Liberal leader has dramatically cut Kevin Rudd’s leadership advantages and restored the Coalition’s credentials as economic managers at a time of global financial crisis.

Well, sort of.  As the article goes on to note:

But Mr Turnbull’s leadership has not changed the relative standing of the parties on primary votes and two-party-preferred support. And he is seen as less trustworthy, much more arrogant and less caring than both Mr Rudd and the former Liberal leader Brendan Nelson.

....Although the primary vote did not change outside the margin of error of the latest Newspoll survey, taken exclusively for The Australian on the weekend, the Coalition did register its best performance since the election with a primary vote of 38 per cent, up one point, compared with Labor’s 42 per cent, down two points.  The two-party-preferred support was back to the levels of mid-July, with the Coalition on 45 per cent and Labor on 55.

...On the key question of who would make the better prime minister, Mr Rudd kept a clear margin of 30 points over Mr Turnbull, but for the first time Mr Rudd’s support dropped below 60per cent, to 54 per cent, and Mr Turnbull’s 24 per cent support was 16 points closer than Dr Nelson was able to achieve two weeks ago.....In all other areas of character and personality, Mr Turnbull cut back Mr Rudd’s lead compared with the performance of Dr Nelson...There is little to separate Mr Rudd and Mr Turnbull on the issue of economic management, with the Opposition Leader on 43 per cent and the Prime Minister on 41per cent.

Labor has maintained its grip on its traditional strengths of health and education, but Mr Turnbull’s elevation to party leader has come with a nine-point fall in Mr Rudd’s ability to manage the environment, and Mr Turnbull’s support, at 23 per cent, is nine points higher than Dr Nelson’s three months ago.

So if an election were held now, Malcolm Turnbull would absolutely thrash Brendan Nelson.

Look, in all seriousness, the elevation of Malcolm Turnbull to the Liberal Party leadership is a good thing for the party—as I noted after he was elected—and Turnbull’s standing is going to help them no end compared to the flailing Brendan Nelson.  But the idea that is being entertained out there that this makes a change of government just about a fait accompli is dangerous nonsense for the Libs/Coalition to indulge in, and that’s the problems with Turnbull’s comments.  New leadership is simply not enough. 

Although it is true that new governments are, in one sense, at that their most vulnerable in their first term, it is also true that Australian voters tend to return new governments for a second term, giving them the benefit of the doubt.  As others have pointed out, even Whitlam got a second term.  I kind of like Malcolm Turnbull’s confidence, but it has to come from a genuine commitment to fix the party that lost the last election and address the electorate’s concerns about them, not just to do a better job than Brendan Nelson has been doing so far.  It is simply a fact that many on the conservative side have not accepted the legitimacy of the last election, still see it as some sort of aberration.  Malcolm Turnbull needs to let his analysis of situation run a little deeper than that sort of sense of entitlement.  Fortunately for the Libs, he is probably more than capable of that.

ELSEWHERE: Even better result for Turnbull/Coalition in the AC Neilsen poll: “The Government retains an election-winning position on the two-party-preferred measure (52 to 48), but the Coalition’s primary vote climbed three points to 42%, to be ahead of Labor (on 41%) for the first time since September 2006.  Mr Turnbull also narrowed the gap on the question of who voters prefer as prime minister.”

A friend just sent this link through and it is worth a look.  Economist Steve Levitt speaks to a couple of banking experts and gets their answers to seven basic questions.  I’ll list all the questions, but just one of the answers; the rest are at the link:

1) What has happened that is so remarkable?

This episode started when the Treasury nationalized Fannie Mae and Freddie Mac on September 8. Their combined assets are over $5 trillion. These firms help guarantee most of the mortgages in the United States. The Treasury only got authority from Congress to take this action in July, and in seeking the authority had insisted that no intervention would be needed.  The Treasury has replaced the management of both companies and will presumably oversee their operation. This decision marked an acknowledgment by the government that the mortgage market and the institutions to make it operate in the U.S. are broken.

On Monday, the largest bankruptcy filing in U.S. history was made by Lehman Brothers. Lehman had over $600 billion in assets and 25,000 employees. (The largest previous filing was WorldCom, whose assets just prior to bankruptcy were just over $100 billion.) On Tuesday, the Federal Reserve made a bridge loan to A.I.G., the largest insurance company in the world; perhaps best known to most of the world as the shirt sponsor of Manchester United soccer club, A.I.G. has assets of over $1 trillion and over 100,000 employees worldwide. The Fed has the option to purchase up to 80 percent of the shares of A.I.G., is replacing A.I.G.’s management, and is nearly wiping out A.I.G.’s existing shareholders. A.I.G. is to be wound down by selling its assets over the next two years. (Don’t worry, Man U will be fine.) The Fed has never asserted its authority to intervene on this scale, in this form, or in a firm so far removed from its own supervisory authority.

2) Why did these things happen?

3) Why did the Treasury and Fed let Lehman fail but rescue Bear Stearns, Fannie Mae, Freddie Mac, and A.I.G.?

4) I do not work at Lehman or A.I.G. and do not own much stock; why should I care?

5) What does it mean for the Fed and Treasury going ahead?

6) What does this mean for the markets going ahead?

7) When will the turmoil end?

Also, John Quiggin offers this brief overview: “[I]t’s just about impossible to see things returning to the status quo ante. A severe recession now seems inevitable. And when it ends, we’ll be looking at a greatly contracted financial sector, with governments deeply enmeshed in both ownership and regulation. Among the likely consequences, a huge decline in the economic importance of New York City, as the firms that defined Wall Street disappear. London may gain relative to New York, but is still likely to suffer badly, as will Switzerland. And that will have implications for the national economies that depend heavily on playing a central role in the financial systems.”

Our usual weekend open thread, replete with music and discussion of the topics we have missed or skipped over during the rest of the week.  Keep it civil and no long cut-and-paste jobs.  Having watched the Swans unimpressive end to the season last weekend, I’ll be interested to see how the two preliminary finals finish up this weekend.  Really, though, it is hard to see it being other than a Geelong-Hawthorn Grand Final, which is no disrespect towards either the Western Bulldogs or Saint Kilda.  I guess if there is going to be an upset, it is most likely to be St Kilda against Hawthorn.  Geelong losing just doesn’t seem an option.  Whoever makes it through, I hope it is a better Grand Final that the farce we witnessed last year.  Anyone else want to chip in on the other codes, feel free.  On another matter, enjoyed this review of work by the artist Damien Hurst written by Australian (still?) art critic, Robert Hughes:

By now, with the enormous hype that has been spun around it, there probably isn’t an earthworm between John O’Groats and Land’s End that hasn’t heard about the auction of Damien Hirst’s work at Sotheby’s on Monday and Tuesday - the special character of the event being that the artist is offering the work directly for sale, not through a dealer. This, of course, is persiflage. Christie’s and Sotheby’s are now scarcely distinguishable from private dealers anyway: they in effect manage and represent living artists, and the Hirst auction is merely another step in cutting gallery dealers out of the loop.

If there is anything special about this event, it lies in the extreme disproportion between Hirst’s expected prices and his actual talent. Hirst is basically a pirate, and his skill is shown by the way in which he has managed to bluff so many art-related people, from museum personnel such as Tate’s Nicholas Serota to billionaires in the New York real-estate trade, into giving credence to his originality and the importance of his “ideas”. This skill at manipulation is his real success as an artist. He has manoeuvred himself into the sweet spot where wannabe collectors, no matter how dumb (indeed, the dumber the better), feel somehow ignorable without a Hirst or two.

Actually, the presence of a Hirst in a collection is a sure sign of dullness of taste. What serious person could want those collages of dead butterflies, which are nothing more than replays of Victorian decor? What is there to those empty spin paintings, enlarged versions of the pseudo-art made in funfairs? Who can look for long at his silly sub-Bridget Riley spot paintings, or at the pointless imitations of drug bottles on pharmacy shelves? No wonder so many business big-shots go for Hirst: his work is both simple-minded and sensationalist, just the ticket for newbie collectors who are, to put it mildly, connoisseurship-challenged and resonance-free.

Mmmm.  Don’t think he likes him.  Today’s music is more Richard Wright:

Don’t think this will be breaking anyone’s heart:

FORMER New South Wales premier Morris Iemma resigned from parliament today, triggering a by-election in the western Sydney seat of Lakemba.  The by-election is expected to be held on October 18, along with by-elections in three other recently vacated state seats, The Australian reported.  The Labor candidate in Lakemba, which the party holds by a margin of 34 per cent, is expected to be city of Canterbury Mayor Robert Furolo.  Mr Iemma will release a statement later today.

The people of NSW just have to hope that the Opposition can get themselves together over the next few years—and there are some positive signs—and offer a viable alternative to this tired, ruined Labor Government.  Talk about the need for a new broom....