Monsters Inc. by James Surowiecki at the The New Yorker – How the banks got so big and why they need to be smaller…

GM Bankruptcy Probable as Obama Favors UAW Against Bondholders by Jeff Green and Caroline Salas at Bloomberg – lowering the importance of the rule of law to favor the unions

New York Fed Chairman’s ties to Goldman raises questions by  Kate Kelly and Jon Hilsenrath at WSJ – New York Fed Chair appears to be just like the old one, Tim Geithner… owned by GS.

Wall St confidence grows over stress tests by Kiran Stacey at FT – We’ve been saying the government is managing the release of stress tests results to produce an anticlimax…

A post at The Economic Populist suggests unemployment from GM will get much worse:

I just had a truly frightening experience. During a conversation about the auto industry one of my colleagues who researches the auto industry told me that according to his calculations, the GM shutdown is going to send 250,000 off the job in Ohio.

This includes only the multiplier effect at auto suppliers, not any macro economic effect. For example, job losses at retail stores resulting from drops in spending are not included, nor are any further drops from other problems.

The post goes on to suggest that Indiana will see over 100,000 and Michigan a whopping additional 1 million in unemployment!

Holman Jenkins of the WSJ says President Obama will never jeopardize his re-election by hurting the UAW:

“Even a “prepackaged” filing runs too much risk of a judge imposing more “sacrifice” on the UAW than the administration is prepared to tolerate.

GM bondholders understand this: They’ve been intransigent precisely because they calculate the UAW is too important to Democratic electoral politics for Mr. Obama to risk losing control of the reorganization process to a bankruptcy judge.”

What could be and what will be:

“Better than trying to rewrite GM’s business relationships — the job of a bankruptcy judge — Mr. Obama might take up the duties of a president. He might try giving the country a coherent auto policy for a change. He could repeal two fleets so Detroit could build its small cars profitably offshore and tame the UAW monopoly in the process. He could dump CAFE or impose a $5 gasoline tax so at least customers would have a reason to buy the cars Washington is forcing Detroit to build.

None of this will happen. Mr. Obama will be content with incoherent policies that poll well — which means GM, Chrysler and perhaps Ford eventually will need taxpayer subsidies as far as the eye can see — or until a real bankruptcy sometime after November 2012.”

Something tells us Mr. Holman is right about GM, so how beholding is Mr. Obama to the banks? Will there be pain for the banks, who have contributed vast sums to the president’s re-election, as well as to virtually all of Congress?  The answer seems obvious.  But will this approach backfire as a populist backlash starts against GM, AIG and the banks’ bailout bonanza?