Sign up for The Media Today, CJR’s daily newsletter.
Business is cyclical and so is business news, but even so it’s amazing how universally bad the news is across industries and around the world.
Bloomberg has a couple of its useful (but little-noticed outside the Bloomberg box) stories that peak around the economic corner. Profits at U.S. companies may drop the most since 1998, Bloomberg says, led by financial firms, Merrill Lynch and Lehman Brothers. European consumer confidence, meanwhile, is the worst since 9/11.
The Wall Street Journal expands on the stunning news, reported earlier, that Detroit automakers are cutting way back on car leases, which combined two great pillars of the American economy: cars and credit.
My quibble with the story is that it spends more time explaining what automakers stand to lose by this move and pushes why they are doing it to the bottom. Apparently the value of cars returned after being leased is plummeting, while banks are skittish about extending credit to automakers’ leasing arms. It would have been nice to have some delinquency numbers on auto loans, too.
Meanwhile, Bennigan’s is filing for bankruptcy. Dang. Where will we go for those Jameson ® BBQ ribs?
And Delta is charging $50 (!) for the second checked bag. Can this be happening?
Major financial outlets take a look at Lone Star, the private-equity fund on the other side of yesterday’s stunning deal that had Merrill Lynch selling collateralized debt obligations with a face value of $30 billion to Loan Star for twenty-two cents on the dollar. Loan Star paid even less in cash, about five cents, as Merrill had to finance the rest. The consensus seems to be that Loan Star got a pretty good deal.
This is ominous news, however, for banks and institutions holding these CDOs.
Doha—doh!
Coming amid the negative news, the collapse of the Doha Round of trade talks seems to fit, even though the sticking point for a deal had nothing to do with current economic news and everything to do with India and its less-developed partners disagreeing with the U.S. and its developed partners over how much protection to offer subsistence farmers in developing countries, as the WSJ gracefully explains:
The trade summit, among the longest global trade summits diplomats could remember, came undone over what seemed to be a simple bargain: rising titans such as China and India were to lower their tariffs on industrial goods, in exchange for European and American tariff and subsidy cuts on farm products.
China and India, however, demanded a “safeguard” clause that would allow them to raise tariffs on key crops such as cotton, sugar and rice if there were a sudden surge in imports. The two sides couldn’t agree, however, on where to set the threshold for any import surge that would trigger the clause. The U.S. wanted to set the trigger at a 40% jump. China and India wanted the trigger set much lower, at a 10% increase.
The New York Times also does a nice job with this story.
And while Bloomberg offers the counter-take that trade actually will continue to grow even without a deal, other analysts say a deal would have provided a shot of much-needed confidence to the global economy.
Sorry, I have no opinion on it.
But…
I can recommend the Journal story on an Iraqi oil executive being pushed out by the central government. It features an interview with the executive, who has so far refused to leave his post. It apparently is peaceful enough in Iraq for people to return to government intrigue and boardroom power struggles.
I will take a hopeful sign for the day.
Has America ever needed a media defender more than now? Help us by joining CJR today.
