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The Federal Reserve yesterday stepped in to bail out insurance giant, American International Group Inc (AIG) in what is being characterized as the “most far-reaching intervention into the private sector ever” (AP). AIG is promised an $85 billion injection of taxpayer money in return for a nearly 80% stake and a and the right to remove senior management by the government. In another dramatic downturn in the American economy earlier this week the prominent securities firm Lehmann Brothers filed for bankruptcy while Wall Street giant Merrill Lynch agreed to sell itself to Bank of America to avert a serious financial crisis. The crises, which promise to “reshape the landscape of American finance” according to the New York Times, come on the heels of a federal bailout of mortgage managers, Fannie Mae and Freddie Mac. Earlier in the year, the government had helped JP Morgan Chase buy up Bear Stearns. A financial crisis of this magnitude has never hit the US so close to a presidential election. It may be the September surprise no one was prepared for. Republican hopeful John McCain called for a commission to study how the current crisis was reached. McCain has constantly maintained that the economy is still strong. Meanwhile Democrat Barack Obama criticized McCain and called for more aggressive regulation of Wall Street at a speech yesterday in Golden Colorado. Meanwhile the Peace and Freedom Party candidate Ralph Nader said he predicted the crisis 8 years ago and released a 10 point plan on how to recover.

GUEST: Larry Beinhart, author of Wag the Dog, The Librarian and Fog Facts: Searching for Truth in the Land of Spin. His new novel is Salvation Boulevard.

Read Larry Beinhart’s article about the economic crash at http://www.alternet.org/workplace/98913/a_crash_course_in_economic_crashes/