Today’s announcement that lawmakers are close to an early agreement in principle on the plan is good news for the country. Let’s hope it has some teeth.

But what is going on? Back up for a second into the abstractions of economic theory. If on the morning of Thursday, Sept. 18, 2008, you had set out to park your money in a three-month Treasury bill, you would have found that the interest you could get was … zero. Well, not quite zero: You would get $1 in interest over three months on a $1,000 Treasury bill investment — an annual interest rate of 0.4 percent. By contrast, if you had taken that $1,000 and put it into a major bank in a three-month bank certificate of deposit — a CD — you would have been promised $14 in interest at the end of three months: an annual interest rate of 5.6 percent.

Why this big spread in interest rates? What does it mean? It means that even though the bank has promised to pay you back your CD principal plus $14 in interest in three months, the CD is a higher-risk asset, because people are not sure that the bank will be around to keep its promise to pay them back with interest. (By contrast, people are reasonably sure that the United States government will not dry up, blow away and stop payment on its debts in the next three months.

What if you show up in three months to get your money and the bank is locked tight with the lights off — as in fact happened to people who showed up at the London office of Lehman Brothers on the morning of Monday, Sept. 15? If the bank goes belly-up in the next three months your investment is probably not a total loss: You will probably get three-quarters of your money back, eventually, after being tortured by lawyers over a period of years. On the other hand, if the bank goes belly-up it is probably because other very bad financial things are happening and you really need your money right then. The $250 you will have lost will be as painful to you as a loss of $500 in normal times.

So interpret the $13 spread in the interest paid over the next three months on a CD vs. a T-bill as an indication that one investment is a much better bet. The market thinks the T-bill is a sure thing.

But there are — the market thinks, or thought last Thursday — 26 chances in 1,000 that a typical bank will go belly-up in a 13-week period: one chance in 500 each week, or the average bank goes belly-up every 10 years at last Thursday’s levels of risk. And not just banks: Every financial institution that borrows short-term and invests in assets that have value for the long-term, whether it calls itself a commercial bank, an investment bank, a universal bank, a hedge fund or a multipurpose bank, is now in trouble because the market fears that lending to it is risky and so is forcing it to pay through the nose when it tries this week to keep borrowing the same amount of money that it had borrowed last week. The normal level of this T-bill-to-CD spread is much smaller: Up until August 2007 it corresponded to one chance in 10,000 that a typical bank would go belly-up each week, or that the average bank would be expected to go belly-up once every 200 years. The market thinks that the banks are way risky right now.

In large part because the market thinks banks and other financial institutions are way risky, they are. There is a self-fulfilling prophecy element here. No bank or other financial institution can survive for more than a month or two when market risk is at current levels. Banks borrow a lot of money. They lend out a lot of money at a slightly higher interest rate. They make their profits on volume — on the amount of money borrowed and loaned. Most of their loans are long-term: Their terms don’t change when market conditions change. Most of their borrowings are short-term: Their terms do change when market conditions change. The high level of market risk and its rapid run-up from normal levels only a year ago last August means death to all banks, and near-banks, and shadow-banks, and banklike institutions — unless the economic fever is broken and is broken soon.

“Good riddance!” you might say. “Death to all the banks! Those bankers — those smug overpaid suit-wearing bastards piously lecturing others on financial responsibility while they collect big, big bucks and wind up with fortunes in the $50 million or more range. Let their institutions die! Let them go bankrupt! Let all the bankers have to get minimum-wage jobs working at the Rubbermaid Plant in Winchester, Va.!” But that would not be wise. I could get behind the Winchester, Va., part — it has pros and cons — but the “death of institutions” part is probably not what we want to do.

Why don’t we want to do it? Because right now we are relying on our banks and other financial institutions to cushion and manage a great economic migration. Eight million American workers who used to have jobs in construction or in high-end consumer services funded by free-spending yuppies using their homes as ATMs and taking out home equity loans on the appreciation of their residences have lost and are losing their jobs. They have to get other jobs in other sectors.

The natural place for them to go is our export goods and services industries, and our import-competing manufacturing industries, which are expanding rapidly right now as the decline in the value of the dollar gains them market share from Americans and foreigners who now find it cheaper to buy American. But our exporters and our import-competing manufacturers need to borrow money to buy buildings and install machines if they are going to expand. If Wall Street freezes up, then they cannot borrow money — and the 8 million American workers don’t successfully complete their migration across the economic desert to the water hole. And then it gets worse. As domestic spending drops, still more people in other industries that had relied on this spending to create demand for the products they made lose their jobs. Et cetera.

Up until two weeks ago I was hoping that we could get out of this without the unemployment rate ever going above 7 percent (it’s 6.1 percent now) and with economists in the future having learned disputes in cinderblock-walled seminar rooms over whether 2007-09 was a recession or a not-quite-recession. Now I think we’ll be very lucky if we get out of this without the unemployment rate going above 8 percent, and without entering into a deep recession.

The game that Ben Bernanke and Hank Paulson are playing right now is an extremely tricky one: try to keep the banking system from freezing up; try to restore risk perceptions to normal levels; try to keep finance flowing so that we have a peak level of only 8 million unemployed in America next year, rather than 15 million or more; try to accomplish this while keeping feckless financiers who are responsible for the catastrophic failure of risk management that has gotten us into this from escaping with too large a share of their ill-gotten gains.

Bernanke and Paulson have decided that they need extra help to accomplish these goals: permission to borrow an extra $700 billion on the faith and credit of the United States of America and then use that $700 billion to invest and buy mortgage securities. The hope is that the economy will recover and risk perceptions will drop so fast that the government will make a profit on the deal — we did, after all, make a healthy profit in 1995-96 on the government’s interventions during the last Mexican peso crisis. Bernanke and Paulson do not expect that all the $700 billion requested to buy bad debt will go down the drain — the expectation for net losses is around $100 billion. But that is a social investment worth making. If the bailout ends up preserving the jobs of 5 million Americans during the next two bad years, then we have about $50,000 x 5,000,000 x 2 = $500 billion on the plus side. Without doing anything, therefore, we’d be down $500 billion instead of just $100 billion. A 400 percent net profit rate is a good deal.

Treasury Secretary Paulson has a plan: give him the $700 billion and trust him.

The big problem is that it is unlikely that he will still be Treasury secretary on Jan. 21, 2009, and there is a 48 percent chance that the next Treasury secretary will be chosen by a man who thinks Sarah Palin is the American most qualified to be vice president. Sen. McCain’s chief economic advisor is former Sen. Phil Gramm, the prime architect of the financial deregulation of the past two decades and a true believer that deregulation was for the best. He would not implement the Troubled Asset Relief Program the way that Paulson would — indeed, he probably would not want to implement it at all.

Sen. McCain’s second most prominent economic advisor is ex-Hewlett Packard CEO Carly Fiorina, who was issued a $21 million golden parachute by Hewlett Packard’s board of directors if she would just go away and not manage the company anymore. She does not seem to be someone to set up as a watchdog to reduce the sizes of the fortunes that the feckless escape the wreck carrying. And it is not our way to issue blanket grants of unreviewable power. We believe in checks and balances, separation of powers, accountability to the law. The idea of issuing blanket authority to officials to do what they see fit belongs not to the American republic but to the Roman Republic. Remember the Roman Republic’s grant of imperium — unlimited discretionary power — to Gaius Julius Caesar covering the provinces of Cisalpine Gaul, Transalpine Gaul and Illyria? Remember how that turned out? Trust is OK, but verification is better.

Corporations give broad grants of power to executives to use their best business judgment. The United States government does not give unreviewable grants of power to Cabinet secretaries.

Sen. Chris Dodd, chairman of the Senate Banking Committee, has the responsibility for writing the bill to give Bernanke and Paulson the authority they believe that they need. It’s a hard problem — protection of the taxpayer’s interest vs. flexibility, punishing the feckless vs. effectiveness at restoring the flow of finance, rescuing deserving homeowners vs. rewarding those who used the housing boom to fund la dolce vita.

The most ingenious and clever thing about how Sen. Dodd wants to structure the Troubled Asset Relief Program is in how the monies the Treasury pays to businesses for the troubled assets it is taking off their hands change classification depending on what happens in the future. If the Treasury is able to sell the assets for a good price, the monies paid by the Treasury were a purchase. If the Treasury is not able to sell the troubled assets ever and must eat a large loss, the monies paid by the Treasury are deemed to have been an investment in the firm — and the government and the taxpayers own a pro-rata share of the firm, and get a pro-rata share of the dividends and the capital gains the firm earns in the future.

It’s exciting to watch, if you are an economist.

So Wallace, following a 92nd Street Y panel last night, said this:

“There will be pressure to elevate a woman but there will be an equal amount of pressure to pick someone who is prepared,” Wallace said.

And then she said this:

Wallace flagged one female official in particular who she thinks would be a good choice this year.

“Nikki Haley — she’s great,” she said. “She’s the most effective surrogate Romney has.”

If the Sarah Palin problem was a problem of preparation and vetting, Haley … might present some issues? Specifically an odd and mostly unsubstantiated sex scandal and also these rumors that she might at any moment be indicted on tax charges. The tax thing might be bullshit and the affair story was the product of a self-promoting creep but they’re “out there,” as they say.

More important, Haley has been governor of South Carolina since January of 2011. As in very slightly longer than one year. And slightly less time being a governor than Sarah Palin had in 2008. It’s almost as if Wallace is making a pick not based on the principle of Who Would Be Best For the Nation but on demographics and optics?

Wallace also apparently suggested Carly Fiorina, which, lol. Romney/Ex-CEO who famously received a giant golden parachute when she was forced out of her company 2012, everyone! Just the ticket for the new economy.

That is sort of a shame. The Palin thing is the most heavily over-covered story line of the entire 2008 campaign, so focusing on it might be totally logical from a marketing perspective, but it’s unfortunate from an artistic one. The film re-creates various moments of YouTube campaign ephemera very well — remember when that old white lady called Obama an Arab and McCain looked uncomfortable? When it takes us behind closed doors, it’s to witness scenes any moderately close observer of the election and its aftermath could’ve dreamed up him- or herself. It might have been fun to see a TV movie about the Democratic primary fight; the personality clashes of the disastrous Clinton campaign would have made for entertaining television, and Mark Penn is surely a creature crying out for a grotesque Emmy-winning portrayal by, say, Paul Giamatti.

Instead, McCain has won the nomination three-and-a-half minutes into the film. Soon we’re watching Julianne Moore watch Tina Fey on TV. You remember the “SNL” sketches making fun of Palin, right? In case you don’t, “Game Change” airs lengthy chunks from most of them. It also has tons of actual footage from CNN and MSNBC and Fox News, and it re-creates debates and speeches and the Couric interview and the Charlie Gibson interview and a bunch of other things you saw either live or on YouTube when they happened.

Moore’s performance is not just fair but maybe even flattering. (For one thing, she doesn’t hit those flat upper Midwest vowels as gratingly as the real Palin.) Woody Harrelson plays strategist Steve Schmidt — the film’s protagonist — as a grizzled, “too old for this shit” campaign veteran called back to the trail against his better judgment. Jamey Sheridan is given barely anything to do as Mark Salter, McCain’s “conscience.” Salter, the primary author of his “Maverick” mythos, is limited, after the Palin selection, to making a hilariously over-telegraphed face of concern as everyone else in the war room applauds her first speech.

But the film is about Schmidt and Nicolle Wallace because they were pretty clearly Halperin and Heilemann’s primary sources, and we watch them become horrified by the depths of Sarah Palin’s ignorance at exactly the same time as everyone else in America became horrified by her ignorance.

Because it’s Hollywood, there’s very little politics in the film’s depiction of politics. Policies are simply things for Sarah Palin to write on note cards and not memorize. Operatives confidently declare, in faux Sorkin-ese patter, that if this or that meaningless decision is made, it means “we’ll lose by five.”

There is a sheen of faux cynicism (McCain swears like a sailor!) but it masks complete naiveté: Everyone is basically honorable and decent. Nicolle Wallace — a member of the Bush administration communications team — is sincerely alarmed at the prospect of someone as dangerously ignorant as Sarah Palin in the White House. On election night, she breaks down in tears as she admits to Schmidt that … she didn’t vote. They embrace.

The film subscribes to the simplest theory of Sarah Palin: That she is childlike, vain and incredibly ignorant but also an essentially decent person and wonderful mother. The moments that come closest to “unfair” — Sarah Palin doesn’t know that the head of Great Britain’s government is the prime minister, not the queen — are basically plausible. This isn’t Andrew Sullivan’s conniving, dangerous pathological liar. It’s an overwhelmed working mother whose most unhinged moments are explained by a crash diet. Her convention speech is largely stripped of its snarling attack lines, imagining a world in which it appealed to “the base” because of Palin’s heartfelt commitment to special-needs children and not because she was very good at saying mean things about Obama. (The film actually repeats the bullshit story that her teleprompter broke midway through, and she kept going.) Even when the film has her take a major heel turn — “if I am single-handedly carrying this campaign, I am gonna do what I want!” — after “winning” her debate with Joe Biden (played by video footage of Joe Biden), she is still basically an innocent seduced by the adoration of riled-up crowds and national attention. (Todd Palin barely does anything.)

The constant use of actual news footage adds a bit of verisimilitude but also constantly raises the question of why this lightly fictionalized version of the election actually needs to exist. “Game Change” is not really for serious political junkies, who remember all the stuff that did happen and will scoff at the stuff that didn’t. (At one point, John McCain answers his ringing iPhone in the middle of the night. He used a BlackBerry, HBO.) But if casually politically involved people want to see their assumptions about Sarah Palin reinforced, well, there are still those “SNL” sketches.

In the end, the Republican operatives who foisted Sarah Palin on an unprepared nation are rightly horrified that they created a monster, but at no point does anyone act concerned that their actual candidate was himself an angry, warmongering old crank with extremely fungible principles. Sure, Sarah Palin didn’t know what the Fed did. Do we have any proof John McCain knew what it should’ve done? Maybe everyone actually was totally unfair to poor Sarah Palin.

Rice, the national security advisor in George W. Bush’s first presidential term and secretary of state in his second, is currently a professor at Stanford with the requisite right-wing think tank fellowship. She has not said or done anything “political” in years. But Curl has been hearing things!

America’s first black female secretary of state is quietly positioning herself to be the top choice of the eventual Republican presidential nominee, ready to deliver bona fide foreign-policy credentials lacking among the candidates. The 56-year-old has recently raised her profile, releasing her memoir in November and embarking on a monthlong book tour.

After 2 1/2 years as a professor at Stanford, Miss Rice is reportedly getting “antsy” to get back into the political game. “She’s ready to go,” said one top source.

Oh, a month-long tour in support of her book about her time in the Bush administration! She must be running for vice president, along with Donald Rumsfeld and Dick Cheney and Scott McClellan and George W. Bush.

There’s more. (And not just the part where Curl calls Rice “a spicy Rice dish” and waxes fetishistic about “her guns” being “a match for those of our first lady Michelle Obama.”)

Plus, her selection would be a giant chess move to counter the expected replacement of Vice President Joseph R. Biden with Secretary of State Hillary Rodham Clinton. Sure, the White House denies and denies, but that should really make any political watcher more suspicious. One White House insider even told me that the position swap was the only reason Mrs. Clinton joined the administration in the first place.

Curl has so many inside scoops packed into this column! I had no idea that our first presidential running mate swap since Ford’s 1976 campaign was basically a foregone conclusion and not just a weird Beltway journalist fantasy! But yes, I can see why the still  un-chosen GOP candidate would definitely be looking pretty closely at Rice — who’s been strongly making the case for her selection by not explicitly denying interest in the position — in case Obama replaces Biden with Clinton, which he will surely do.

The column gets worse (“Funny thing is, she is, unlike Barack Obama, an ‘American black’”) but that’s not really important. What’s important is exploring how someone like Condoleezza Rice ends up a perennial name on the fantasy ticket list.

Rice has been a subject of these columns since 2005, when she became Bush’s second secretary of state, and the White House tasked communications operative Jim Wilkinson — previously known best for inventing the false story of Jessica Lynch* — with getting Rice (and her boss) some much-needed positive press. Wilkinson did his job beautifully (remember when Rice’s knee-high boots were a topic of actual serious news coverage for weeks?) and Rice began receiving the “rock star” treatment.

In the Washington Post, Glenn Kessler, author of the 2007 Rice bio “The Confidante,” summarized the exact moment of the birth of the presidential speculation:

In March 2005, before Rice sat for an interview with the Washington Times, Wilkinson slipped a note to the editorial page editor, Tony Blankley, suggesting that she be asked whether she would consider running for president. It was an audacious proposal — she had been secretary for only six weeks — but such speculation would bolster Rice’s image as a leader. (Wilkinson and Blankley said they do not recall the incident, but others present said they saw Wilkinson’s note.)

Oh, the Washington Times.

Shortly thereafter, Dick Morris wrote a book claiming — nay, insisting — that 2008 would be “Condi vs. Hillary.”

As Iraq descended into a violent civil war in 2006, Rice-for-president buzz bizarrely grew. There was enough of a false grass-roots movement for a paint-by-numbers AP trend piece with a silly nickname and everything. Tim Russert asked her point blank. As always, she said no in no uncertain terms.

Then, of course, everyone began to speculate that she’d be McCain’s running mate. Robert Novak claimed as much on Fox. Dan Senor said she was pushing for the pick on some Sunday show. Hendrik Hertzberg wrote a Talk of the Town piece on the subject! McCain and Rice both finally denied “reports” that she was angling for the spot on the ticket.

Now, I guess, it’s time to start up the rumor mill anew.

But before you put pen to paper on that column about how a Gingrich-Rice ticket would surely win moderate women in Ohio, consider this: In addition to the fact that she’s always denied wanting the job, and in addition to the fact that she was an unmitigated failure in the Bush administration, downplaying terrorism as a priority prior to 9/11 and selling the public on the Iraq invasion with untruths, Condi Rice is pro-choice.

*Update: Jon Krakauer recently rescinded his claim that Wilkinson, then a communications aide to General Tommy Franks, was responsible for the initial false Washington Post report on Lynch’s apparent heroics before her capture. Though Wilkinson was obviously involved in the PR campaign surrounding Lynch’s rescue and return to the U.S., he apparently isn’t responsible for falsifying her actions or leaking that false story to the press.

The New Black Panther Party is a cartoonish fringe group of a couple guys who play “’60s radical” dress-up and say mean things about whitey for Fox cameras in order to scare old white people. They have been explicitly rejected by the old Black Panther Party. For some reason, various conservatives have dedicated themselves to proving that this weird, marginal group of Nation of Islam cast-offs is somehow supported by or deeply connected to the Democratic Party and the Obama administration in particular, because, you know, Eric Holder and Barack Obama, those are two guys who very obviously share the values of extremist anti-white proponents of racial separation.

So Breitbart “proves” something or other about the essential anti-white racistness of the Obama campaign by noting that members of the inane New Black Panther Party were spotted by cameras near Obama, at various times, and also NBPP head Malik Zulu Shabazz spoke at the event.

(Brietbart goes on to publish two pictures of the event despite the photographer withholding permission, because “The First Amendment allows photographs of such enormous public importance to see the light of day.” Good luck with that argument in court?)

Andrew C. McCarthy gleefully endorses Breitbart’s story in a breathless post at the National Review’s The Corner:

This is a shocking story, and a breathtaking indictment of the mainstream media which went out of its way to avoid vetting Obama as a candidate — and to make sure anyone who tried to do due diligence got no sunshine. A candidate who chose to appeared in the company of, say, the KKK, would have provoked relentlessly hostile media coverage and, in short order, have been marginalized as disqualified to hold responsible elective office.

If only the media had reported that some fringe weirdos also participated in this event that both Democratic candidates and thousands of other people participated in, and then the fringe weirdos sort of followed Obama around for a while. That would’ve opened America’s eyes! (I mean the media besides NPR, which did report that the NBPP was there.)

Here’s the bit of this sad, desperate reach that is the saddest and most desperate: “Andrew further reminds us that, in March 2008, the Obama campaign website posted an endorsement of Obama by the New Black Panther Party.” Whoa, did they really? Shocking if true! It is, of course, not true. It was a user-generated blog post on the Obama campaign site that the campaign removed as soon as they became aware of its existence. Because websites do not “post” things to themselves, generally, McCarthy’s statement can’t even be charitably described as technically accurate. It’s just a lie.

A random stupid incorrect Breitbart smear is worth paying attention to only to the extent that the smear threatens to bubble up to the more reputable conservative press, or Fox, or Republican elected officials. The McCarthy endorsement means keep an eye on this one!

Here’s my reaction to those revelations: Sarah Palin is a person! She’s done drugs and pissed people off and slept with people, like 90 percent of American humans. If Sarah Palin was smart she’d dismiss the book with a chuckle, say nobody’s perfect, laugh off the “gossip,” and move on.

Sarah Palin might not be smart.

The Palins always prefer grand self-pitying martyrdom to quiet dignity, of course, which is why picking on them can be so profitable: They will always respond, and always help you drum up more publicity for your Palin-attacking venture. Instead of depriving the book of oxygen, they launched a multimedia attack on Joe McGinniss before he’d finished the first draft, and what they accomplished was … giving him more material and ensuring that even more breathless anticipation awaited the book’s release.

Now that the book’s rollout is underway, the Palins might as well get paid for their marketing efforts. Todd Palin angrily denounced it, again accusing McGinniss of having a “creepy obsession” with Sarah Palin. Oooh, it’s so creeeepy to write an unauthorized biography of a prominent public figure, right?

How bad did the Palins allowed themselves to be trolled? Sarah Palin’s people released a statement on behalf of Brad Hanson, Todd Palin’s former business partner, with whom Sarah Palin is alleged to have carried on an extramarital affair, some years back. The statement is a blanket denial, but what does having the supposed beau directly address the press accomplish, exactly? It just drives more interest in the book’s salacious, shocking revelations about the secret life of Sarah Palin. This guy, of all guys, should be kept out of it.

I am sure that Todd and everyone else is very personally pissed off that McGinniss went to Wasilla, talked to a bunch of people who hate them, and published a book full of stories about how bad and awful they are, but blowing up publicly just sends the message that there’s stuff in the book worth getting worked up about.