• It's expected to be a rough week ahead for financial markets. [Reuters, WSJ]
• The world economy is on track to post its worst performance since the Great Depression, according to a report by the World Bank. [CNN]
• The financial crisis seems to be "getting ahead" of Treasury Secretary Timothy Geithner, as if you weren't aware of that already. [NYT]
• The big beneficiaries of the AIG bailout: Goldman Sachs, Deutsche Bank, Merrill Lynch, and a handful of other banks both foreign and domestic. [WSJ]
• After canceling a trip to reward its top brokers, Citigroup gave out $3.5 million worth of gift cards to 2,000 people as a consolation prize. [NYP]
• Credit markets appear to be tightening up once again. [WSJ]
• JP Morgan and Goldman Sachs advised on Merck's $41 billion acquisition of Schering-Plough, which was announced this morning. [DB]
• Expect to see fewer foreign bankers living it up in NYC beginning this summer: Bank of America is withdrawing job offers made to foreign MBA students. [FT]

Where are insurance giant AIG's bailout billions really going? The White House doesn't want to tell us. But the Wall Street Journal, bless its Rupert Murdoch-owned heart, found out anyway: Foreign banks, lots of them!

Expect a request for a building maintenance bailout any minute! [EVG]

• Stocks appear positioned to rise this morning after tumbling to their worst levels in more than a decade during yesterday's trading session. [CNN, MW]
• More on what the government is trying to do with the billions it's been pumping into AIG. Meanwhile, the insurance giant's founder, Hank Greenberg, has filed suit against his former company and accused it of fraud. [NYT, NYP]
• Citigroup is still hoping to shed a handful of "non-core" assets, including its mortgage and insurance operations, Japanese brokerage, and private-label credit card business. [NYP]

AIG announced this morning that it lost $61 billion during the fourth quarter of 2008, or $465,421 per minute. To put that into perspective, "every six seconds it loses enough to pay full tuition for a year at Harvard." [NYT]

• The government is pumping another $30 billion into AIG, the insurance giant deemed "too big to fail." The company also reported a fourth-quarter loss of $61 billion, the largest quarterly loss in history. [NYT, BN, WSJ]
• Stocks moved lower on Monday morning following the AIG news. [BN]
• HSBC is cutting 6,100 jobs and raising $18 billion in capital. [Reuters, DB]
• Hedge funds are bracing for another wave of withdrawals. [WSJ]
• The third bailout of Citigroup last week? It may not be the last. [NYT]
• Investment banks pulled in $53 billion in fees in 2008, 39 percent less than the record $87 billion of a year earlier. JPMorgan took the biggest share. [BN]
• Consumer spending rose in January for the first time in seven months as shoppers took advantage of post-holiday discounts. [BN]

Well now, let's just open the paper and have a look at the...OHMIGOD, what the hell, Jesus Christ, is the entire world economy collapsing today, worse than ever? Yes it is.

• Citi chief Vikram Pandit is still working out the details of a rescue package that would turn over as much as 40% of the bank to the federal government. He'd really love to hang on to his job as part of the deal, though. [WSJ]
• In a last-ditch effort to raise cash, Citigroup is looking to sell off both its Japanese investment bank and brokerage. [Reuters]
• John Thain "sneaked in a side door" to answer Andrew Cuomo's questions for a second time on Tuesday, and provide more detail on the billions in bonuses Merrill Lynch handed out just before the firm was acquired by BofA. [NYDN]
• AIG is now facing two "distasteful" options: sell "prized assets to competitors or hand over a big part of its business to the federal government." [NYT]
• Connecticut is planning legislation to regulate the hedge fund industry. [DB]
• You can thank Ben Bernacke for the Dow's rally yesterday. [NYT]
• Existing-home sales tumbled to a nearly 12-year low in January, and prices took a double-digit drop. [WSJ]

• As part of the rescue plan currently under discussion in Washington, the government would end up with 40 percent of Citigroup, which isn't quite the same as nationalizing it, but is pretty darn close. [NYT]
• JPMorgan Chase cut its dividend to a nickel yesterday. [AP]
• John Thain spent six hours answering Andrew Cuomo's questions last week. But he'll make a return visit this week now that a judge has ruled Thain has to provide more detail on Merrill's controversial bonus payouts. [Reuters]
• AIG needs more government money. Feel free to laugh or cry about this. [DB]
• UBS may end up going to court as it tries to fight an order to disclose the names of its American clients suspected of offshore tax evasion. [NYT]
• Allen Stanford had ties to Joe Biden's brother and son, apparently. [WSJ]
• A bankrupt Lehman Brothers is spinning off its venture capital arm. [WSJ]
• Home prices in 20 U.S. cities declined an average of 18.5% in December. [BN]
• Federal chairman Ben Bernanke says the recession should end this year and 2010 "will be a year of recovery," if the banking system's stabilized. Reassuring words, provided you still believe anything Bernanke has to say. [WSJ]

• Have you heard? Our banks are insolvent. Happy Friday to you, too. [NYT]
• The markets are down this morning as the House and Senate prepare to vote on the $789 billion economic stimulus package. [CNN]
• It's still unclear whether Wall Street got the message that "that high living on the corporate tab is now unacceptable." That's comforting to hear. [Reuters]
• Leon Black's Apollo has tapped Henry Silverman as COO. [WSJ]
• AIG's financial products unit is now under investigation in Britain. [DB]
• Morgan Stanley has suspended its global head of real estate investing. [FT]
• Prosecutors have started interviewing employees of Bernie Madoff. [WSJ]
• Tim Geithner and Fed chairman Ben Bernanke are in Rome today and tomorrow to meet their G-7 counterparts to discuss the stimulus plan. [WSJ]
• Time's list of 25 people to blame for the economic crisis. [Time]

• Everyone on Wall Street is waiting for Tim Geithner to take to the stage at 11am to outline the administration's new bailout plan. Among other things, he'll be announcing a new name for the bailout: TARP (or Troubled Asset Relief Program) will be FSP (or Financial Stability Plan) from now on. [BN, DB, CNN]
• UBS announced a quarterly loss of $6.9 billion and now says it plans to cut another 2,000 more jobs at the bank. Is there anyone left? [NYT, WSJ]
• Linda Chatman Thomsen, who has led the SEC's enforcement division since 2005, has stepped down from the job amid criticism. [NYT, NYP]
• One thing Wall Street has clearly screwed up as of late? Its PR efforts. [TDB]
• Private equity firm Fortress has slashed 11 percent of its staff. [DB]
• Strangely, there are few buyers for the crappy assets AIG is selling. [BN]

• Bank of America landed $20 billion in additional aid to help it absorb Merrill Lynch. It also posted a loss of $1.79 billion for the fourth quarter. [NYT, WSJ]
• Citigroup reported an $8.29 billion quarterly loss. The beleaguered bank also said it plans to reorganize the company into two business units. [WSJ, NYT]
• UBS is selling parts of its commodities business to Barclays. [FT]
• AIG is paying a total of $619 million to retain employees. [NYP]
• Morgan Stanley and Citi are pulling clients' money from a fund run by Union Bancaire Privée, after it was exposed to Bernie Madoff. [DB]
• Citi is hiring! And you thought it was only laying people off these days. [NYP]

• Citigroup and Morgan Stanley may announce a joint venture combining their brokerage divisions as early as today or tomorrow. The firms have already agreed to set aside $2 billion and $3 billion to retain top brokers. [WSJ, NYP]
• The joint venture isn't giving Citigroup or its CEO, Vikram Pandit, much of a boost. Shares dropped 17 percent yesterday as investors grew concerned the deal was prompted by Citi's desperation more than anything else. [NYT]
• Close to 2,000 former Merrill Lynch employees in London have been laid off by new parent Bank of America. [Times UK]
• AIG is expected to sell its Canadian life insurance operations to Bank of Montreal to repay government loans. [BN]
• Federal Reserve chair Ben Bernanke says a fiscal stimulus won't be enough to spur an economic recovery. [BN]

Isn't socialism fun? The government now owns four-fifths of AIG, the insurance giant whose foray into complex financial contracts required a $150 billion bailout. And we may be stuck with it for years!

♦ Congressional Democrats and the Bush administration are in the final stages of negotiating an auto bailout package. A vote in the House is expected as soon as Wednesday afternoon. [NYT]
♦ Bad news for GMAC: The auto and consumer lender failed to secure additional financial and will not be able to transition to a bank holding company. [CNNMoney]
♦ Yahoo! is expected to hand out 1,500 pink slips today. [CNN]

Some poor flack from money-burning "insurance" company AIG tried to send Wonkette editor Ken Layne—a known terrorist!—several long, dry emails correcting him on some minor point of fact, until a pissed Layne vowed "I am going to post all of these, for hilarity," and now AIG looks thoroughly incompetent in media relations as well as the insurance business. Why must it take a dangerous patriot like Ken Layne to teach AIG about jokes? [Wonkette]

Last week, we sent some some spray-on tanning lotion to Ed Liddy, AIG's embattled CEO, just to make up for the pricey junkets that are no longer available to senior execs at the company. But it looks like we may have to send him some coupons, too. Under pressure from Andrew Cuomo, the company has announced it will pay Liddy $1 a year in salary and will also freeze the salaries of seven other top executives. [Dealbook]

One of the crappiest CEO gigs in America right now? That would be the job occupied by Edward Liddy, who took over as AIG's chief executive in September after the ailing insurance giant revealed it would go bankrupt without a jaw-droppingly massive bailout from the federal government. Liddy was supposed to restore order, but things haven't improved much since he arrived on the scene. AIG has since asked Washington for billions more, and the company has been on the defensive over multi-million dollar payouts to former company execs. Then there were the scandals over AIG's all-expenses-paid getaways to lavish hotels: For some strange reason, the idea that taxpayers would foot the bill so that AIG employees could have spa treatments and sip pina coladas struck many as a little bit inappropriate! The downside, of course, is that some AIG execs won't be able to put as much time in the sun this winter, and we wouldn't want any employees to turn sullen and depressed, would we? As part of our continuing effort to cheer up the CEOs who have battered by the financial crisis—so far this week we've sent presents to Lloyd Blankfein (see here) and Vikram Pandit (see here)—we picked up a bottle of "self-tanning mist" for Liddy. If Liddy can't relax in the sun, we'll bring the sun to him. We sent it to his office, though, not his home, because it's a gift we'd really like Liddy to share. Spread it around, Ed. Everyone in the executive suite has the right to pretend they just got back from Aruba. Click here for a larger pic.

The news just gets worse and worse for AIG. A day after the insurance giant asked for another $40 billion in government aid, it was revealed that the company sent execs on yet another lavish trip to a Phoenix resort last week and tried to conceal its role in sponsoring the event. Resist the urge to get angry: Most of the attendees will probably be unemployed in a few weeks. As for senior management, they'd be well-advised to get in as much pool and spa time now, since as far as we know even the most luxurious minimum-security prisons don't have them. [ABC News]

♦ With so many companies looking to tap into the $700 billion bailout, it's clear there won't be enough to go around, and a lot more work (and cash) is going to be needed to fix the problem. [WSJ]
♦ The latest company to convert itself into a bank to tap into government funds: American Express, which earned approval from the Fed to become a commercial bank yesterday as it seeks to cover rising credit card defaults. [Bloomberg]
♦ GM's possible bankruptcy was a major topic of conversation at the White House yesterday when Barack Obama met with George Bush. Meanwhile, shares of GM fell to $3.36 yesterday, its lowest level since 1949. [WSJ, Bloomberg]