Banks raid the family jewels
U.S. banks have tapped deep-pocketed foreign investors, and burned them with losses, to make up for steep writedowns, says Daniel Gross in Slate. They have little choice now but to sell “the family jewels”—often “extremely valuable hard assets that have been passed down from generation to generation.” In the past week, E-Trade sold off its Canadian subsidiary; Merrill Lynch sold its 23-year-old stake in Bloomberg; and SunTrust said it will unload its 90-year-old stake in Coca-Cola. With several regional banks facing similar repeat losses, there’s probably “more heirloom-hocking to come.”
Cheap oil’s mixed blessing
“Obviously, the soaring cost of energy is causing plenty of pain for Americans,” says John Carey in BusinessWeek.com, but it could make them better off in the long run. The discomfort belies “a deeper truth: Expensive energy, in many ways, is good.” We are starting to see benefits in everything from rising efficiency to lower obesity. The U.S. made similar gains after the tough medicine of high oil in the 1970s, but much of that good was lost over the following two decades of too-cheap oil, which just encouraged bad choices. Cheap oil has its upsides, but they come with a hidden price.
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