This is one of the most gullible stories I’ve seen in some time. The FT reports that Wall Street says it won’t use its government bailout to pay out bonuses. It’s going to use its other money to do that, the pink paper faithfully reports without a drop of skepticism.
Hey, this isn’t exactly three-card Monte here, FT. Call Wall Street out on its obvious bait and switch. It doesn’t matter which dollar is handed out once the government money has already been taken in.
Bloomberg says the next president will have the opportunity to do FDR-scale things.
No matter who wins the election tomorrow, the new president is likely to create a vastly larger economic role for the government. He’ll also permanently alter the relationship between financial markets and Washington, finish the job of reshaping the U.S. banking system begun under Bush, and — like it or not — will probably go down in history as the biggest deficit spender ever.
But Bloomberg doesn’t justify that last line, which after George W. Bush’s war-and-tax-cut-fueled deficits, needs some justification.
The Journal scoops that the feds are considering expanding the bailout to buy stakes in companies that aren’t banks or insurers, like General Electric and CIT Group.
If you want to know how bad the economy’s been affected by the worsened crisis of the last seven weeks, look at this Journal report on car sales falling off a cliff in October:
Auto makers sold 838,186 cars and light trucks last month, according to a tally by Autodata Corp. General Motors Corp. said it was the worst October in 25 years. When adjusted for increases in the U.S. population, last month was “the worst month in the post-World War II era,” Michael DiGiovanni, GM’s top sales analyst, said in a conference call. “This is clearly a severe, severe recession.”
Wow.
Here’s another China’s-in-trouble story—this one in the Washington Post.
In the initial weeks of the global financial crisis, Chinese officials resolutely declared that they were not significantly affected. But now, as factory closings, dire corporate earnings reports and stock market losses continue to mount, the Communist Party’s confidence has changed to another feeling entirely: fear.
For the first time in the 30 years since China began its capitalist transformation, there is a perception that the economy is in real trouble. And for the Communist Party, the crisis is not just an economic one, but a political one. The government’s response offers a glimpse into its still ambiguous relationship with capitalism — relatively hands-off in good times, but quick to intervene directly at the first signs of a downturn in order to prevent popular unrest.
This is great context that I don’t remember seeing in other stories on China’s hyper-growth:
Meanwhile, government figures released last month show that the gross domestic product grew by 9 percent in the third quarter — robust by almost any standard, but not in China. Here, the figure represented the slowest growth in five years, and was dangerously close to 8 percent. That’s the level at which economists say China needs to grow in order to keep generating enough factory jobs to maintain stability in the labor market, as millions of peasants continue to pour into Chinese cities in search of work.
China has to grow at 8 percent to just to tread water. That’s an amazing number.
Couldn’t happen to a nicer company: Circuit City is continuing to dig its own grave. But the WSJ, WaPo, and LAT in there stories don’t point out that the retailer fired 3,400 of its better-paid sales staff last year and replaced them (or rehired them) at peon wages.
That was bad for business in a number of ways: Bad PR (I know I vowed to never shop there again); lost expertise; lower morale. Hard to keep a struggling company afloat with those factors, and the papers should have written about them.
John C. Bogle, the legendary investor and founder of Vanguard, writes in Forbes on the benefits of the definancialization of the economy.
But there is a silver lining around the loss of jobs among the large portion of that 20% who work in financial services. Last year a substantial sum, $620 billion by my rough calculation, poured into a system that supports the money shufflers and middlemen, whom I call the “croupiers,” of the financial services industry. That’s a lot to pay for financial intermediation.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.