From the New York Times…

Criminal correction spending is outpacing budget growth in education, transportation and public assistance, based on state and federal data. Only Medicaid spending grew faster than state corrections spending, which quadrupled in the past two decades, according to the report Monday by the Pew Center on the States, the first breakdown of spending in confinement and supervision in the past seven years.

In that one paragraph you have the problem of demographic aging and cultural break down.

From the AP……

Investors’ despair about financial companies and the recession has brought the Dow Jones industrial average to another unwanted milestone: its first drop below 7,000 in more than 11 years. The market’s slide Monday, which took the Dow down 300 points, was nowhere near the largest it has seen since last fall, but the tumble below 7,000 was nonetheless painful.

The credit crisis and recession have slashed more than half the average’s value since it hit a record high over 14,000 in October 2007. And now many investors fear the market could take a long time to regain the lost 7,000.

From the Times…..

AIG, the fallen US insurer, unveiled a $62 billion loss today — the largest in US corporate history — as it secured a fresh $30 billion bailout package from the Government.

From Marginal Revolution (in regards to AIG bailouts)…..

No one wants to say it, but essentially the Fed has been bailing out European banks.

The inflation-adjusted cost of the Marshall plan has been estimated at about $115 billion in current dollars. If we end up spending $250 billion on AIG, how much of that sum will go to European financial institutions and might it someday exceed the scope of the Marshall plan? (I do not, by the way, think that central banks ought to treat foreign creditors differently.)

He is right that nobody important wants to say it, but blogs have been pointing this out from the beginning. Still, the comparison to the cost of the Marshall plan is an original twist.

This week’s essay of the week is Warren Buffett’s annual shareholder report. Key things to pay attention to are his comments on why bond insurance might make it more likely that municipal bonds will default and how the bail outs have meant that it is easier for firms on the ropes to get capital then relatively healthy companies like his own.