They received and lost hundreds of billions in federal bailouts, but AIG will spend some $100 million on bonuses for senior employees this week, the Washington Post reports, even as Treasury Secretary Timothy Geithner implored the company to stop the internal spending. In a letter to Geithner leaked to the Post last night, AIG CEO Edward Liddy said the bonuses had been scheduled months ago and "could not be cancelled altogether because the firm would risk a lawsuit for breaching employee contracts." Liddy also argued that changing compensation plans mid-stream would cause an exodus within AIG's already embattled ranks. AIG put forth a plan for restructuring bonuses but not for eliminating them: Thousands of the failing insurance company's employees will continue to receive hundreds of millions in bonuses.

The economy's in the tank, firms are going belly-up left and right, and Wall Street titans Goldman Sachs and Morgan Stanley are... having a good year? Hard to believe, but Barron's is reporting the two banks "seem on course for a profitable first quarter and full year." Morgan's stock is up 58 percent to $25 a share, while Goldman is up 17 percent, to $98. Why? Both lack the crushing consumer-debt and commercial-loan portfolios of their rivals, and "both have bolstered their relationships with institutional traders in the important bond, equity, commodity and foreign-exchange markets," Barron's reports.

With demand for oil—like many other recession-era demands—sagging, Saudi Arabia's oil minister is pressuring OPEC nations to cut oil production in a bid to drive crude prices back up. Saudi Arabia is OPEC's largest producer, pumping more than double the quantity of the organization's second-largest producer, Iran. On Friday oil futures rested at $46.52 per barrel in New York, down from a $100 peak in July. Consequently, oil producing nations are feeling a pinch. Commodity experts in the West say the world can't handle a spike in oil prices, but OPEC appears to be sticking to its guns on a goal to get prices back up to between $75 and $100 this year. Industry leaders remain divided, however, on whether Saudi Arabia's new plan is wise. Compliance with OPEC's current production ceiling lingers around 80 percent, with Nigeria, Angola, and Iran overproducing at the highest rates. Qatar's oil minister said OPEC should force overproducing nations to comply with current limits before creating even lower ones.

Michael Jackson's much-heralded end-of-career concert series won't all be rehashing: Publicist Randy Phillips says the King of Pop is "working on a new move. Something like the Moonwalk, but different," referring to the signature move that cemented Jacko's place in dance history. In an interview with the Daily Telegraph, Phillips discussed Jackson's concert comeback in epic terms: "We finally made Mohammed come to the mountain of the O2," the London stadium where Jackson has 50 shows planned. He also downplayed the role Jackson's shaky finances played in the star's decision to return to the stage: "I asked him straight off: Why say yes to the tour now? Was it the money? He said, 'you know what, my kids are old enough now.'" Jackson originally agreed to only 10 concert dates, but Phillips' company, AEG, convinced him to 40 more. Phillips also noted that Jackson's comeback could be good for the recession: "Forgetting tickets, the local economy will get $500 million."

The president today turned his announcement of a new Food and Drug Administration chief—former New York City health commissioner Margaret Hamburg—into a chance to make some bigger news: He's overhauling the entire agency in the wake of tainted peanut butter, spinach, and tomato recalls. "Food safety is something I take seriously, not just as your president, but as a parent," Obama said in his weekly video address. The government will make a billion-dollar investment to keep the nation’s food and medicine supply safe by boosting the number of food inspectors and modernizing labs.

The prison cell, apparently, isn’t quite what Bernard Madoff is accustomed to: The New York Post reports, with typical élan, that “he will have to tweak his taste for prime rib and cognac amid conditions that are decidedly less refined.” The admitted Ponzi schemer spent his first night at the Metropolitan Correctional Center in isolation, after a savoring a meal of frozen chicken patties and canned string beans served on the finest Styrofoam. “Think of the worst school lunch you ever had,” said a source. And one veteran defense attorney quipped: “Le Cirque it ain’t.”

This isn't going to help her career: The Beverly Hills Police Department has issued a $50,000 warrant for the arrest of Lindsay Lohan. The erstwhile actress is being sought in connection with her May 2007 DUI and hit-and-run case, for which she’s on probation. TMZ speculates the warrant "has something to do with violating the terms of probation...either failing to attend her alcohol ed courses or, perhaps, not taking or failing a drug test." While Lohan said in a statement that the "warrant for my arrest is completely fabricated," the police rebutted her claim, saying: "It is our hope that Miss Lohan will surrender herself so that this matter will be resolved in a timely manner."

First China harassed US ships international waters, and now it’s making fear-mongering comments about its US investments—what gives? The White House is having none of it: Responding to Chinese Premier Wen Jiabao's remark that China is "concerned about the safety of our assets" in US Treasury securities, press secretary Robert Gibbs said, "There's no safer investment in the world than in the United States." Larry Summers, Obama’s chief economic adviser, piled on, defending record US deficit spending: "If you don’t prime the pump and you allow the processes of decay and decline and de-leveraging to continue, it’s much more costly to do it later." China’s offensive underscores its fragile relationship with the US, as well as its "extraordinary role" in the US economy, the Wall Street Journal reports.

Is this how Russia’s planning to “reset” relations with the United States? A Russian air force general said today his country could base some of its strategic bombers in Cuba or an island off the coast of Venezuela—a direct shot across the bow of the Obama administration. Although a Kremlin official said the general had been speaking only hypothetically, the talk of placing bombers so close to US shores is a setback to US-Russian relations, which had been strained over Russia’s war with Georgia and US plans to locate missile defense systems in Poland and the Czech Republic.

Obama may have tried to stay positive during the campaign, but over the past month, as his approval ratings have dropped to 60 percent, the president has repeatedly reminded Americans—with increasingly explicit language—that he's dealing with “inherited” problems. "By any measure, my administration has inherited a fiscal disaster," he said on March 4. Rahm Emanuel defends the president's new tone: "The truth is that 98 percent of his speeches are about the future, and 2 percent are about inheritance. Whereas I think for Republicans, it's 2 percent about the future, and 98 percent hope that the people have amnesia."

First, President Obama announced he would close the prison at Guantanamo Bay. Now, CNN is reporting that President Obama has cleared the “enemy combatant” designation from Guantanamo Bay detainees. In a court filing, “the Justice Department said it is developing a new standard for the government's authority to hold detainees at the Guantanamo Bay detention facility in Cuba.” The Justice Department will no longer rely on the president’s authority as commander in chief, but on authority granted by Congress.

The question on every Northern Irishman’s mind: “Could the age-old grudge between Protestants and Catholics be spiraling into bloodshed again?” Two murders this week threaten to reopen old wounds. More than 3,000 people died in more than three decades known as “The Troubles” until a peace agreement in 1998 and the disarming of the IRA in 2005. The good news about the recent murders? The Wall Street Journal reports, “This month's killings, in contrast to those during The Troubles, have prompted an outpouring of grief from both sides, who are determined to see that there is no return to a cycle of violence.”

If you are a “source” close to Rihanna and Chris Brown, it seems you can get almost anything published: Earlier reports from “sources” that Rihanna and Chris Brown would be recording a duet together are false, according to People Magazine’s new “source.” Apparently, Brown and Rihanna recorded a demo together in 2008, but the song—“Bad Girl”—was eventually released by the Pussycat Dolls. The “source” says, “"Nothing has been recorded by Chris and Rihanna together since February."

Being a Russian billionaire ain’t quite what it used to be: The New York Times reports that Russia’s richest woman, Yelena Baturina, is seeking government aid—specifically, $1.4 billion in loan guarantees for her construction company, Inteko. Formerly a factory worker, Baturina had a net worth estimated at $4.2 billion in 2008, although she disappeared from Forbes’ list of billionaires this year along with eight other Russians.

Just when you thought the economic crisis was doing wonders for financial journalism, The Washington Post has quietly announced that it will be dropping its weekday business section. It will fold Business into the front section in an effort to save printing costs. The changes, which will be effective on March 30, also include trimming stock listings to a measly half a page and printing fewer Sunday comics.

According to typical recession logic, it would make sense to vacation at, say, a local Six Flags instead of Disney World, except: The New York Times reports that Six Flags “has a payment of nearly $300 million to holders of preferred stock due this year that it has no way of paying. So for several months now, the company, which is run by Mark S. Shapiro, and its advisers have been discussing a restructuring agreement with its bondholders that would keep the company out of bankruptcy court.”

Michael Jackson announced this week plans for a grueling seven-month comeback tour. Does anyone think he’ll make it to the finale? Insurers aren’t betting on it: According to The Telegraph, “AEG Live, which organized the star's program starting in July, said the company is ‘still negotiating’ with insurers, but insisted it is willing to take on the risk of Jackson falling ill.” Jacko’s comeback was originally supposed to only last 10 days, and insurers are apparently reluctant to cover anything beyond that, given the King of Pop’s famous frailty.

Hollywood's big box office bonanza may be slowing down. With private investment waning, studios are scaling back their busy release schedules. This year has only seen a 16 percent drop in wide releases, but experts predict we'll only begin to see the impact of the financial crisis on the big screen in 2010. It's also no longer as easy to green light films, and studio executives are hoping that will translate to, as Variety puts it, "enough titles to fill the pipeline, but not so many that they drown each other." But one anonymous honcho told the paper that a scale back in the crowded lineup is "The best thing that could happen to the business."

The Oracle of Omaha's vision continues to cloud: Today influential financial group Fitch Ratings downgraded Warren Buffett's Berkshire Hathaway fund from a perfect AAA rating down one notch to AA. The downgrade makes official whispers that Buffett may have lost his touch, and that no financier can escape this recession unscathed. According to Forbes, "Fitch cited Berkshire's unhedged market exposures and potential earnings volatility as 'inconsistent with the stability required at the AAA level." Berkshire shares fell 3% in response to the fund's shift in credit rating.