EWS AT A GLANCE
Bloomberg index: global confidence drops
Confidence in the global economy fell this month, according to the Bloomberg Professional Global Confidence Index, which measures the sentiment of Bloomberg users on five continents. The index fell to 11.3, from 14.1 in August; in the U.S., confidence fell to 10.6, from 18.2. Any number below 50 indicates pessimism. “We moved from Fannie and Freddie to Lehman to AIG, and even today, one question is: Who is going to be next?” said Ulster Bank economist Simon Barry in Dublin. (Bloomberg) Outside of finance, gas prices edged up to a nationwide average of $3.85 a gallon, the eighth straight daily rise, according to AAA. (CNNMoney.com) Oil rose, also, trading at $93.95 in New York early today, reversing a two-day drop. (AP in Yahoo! Finance)
Fed bails out AIG, takes majority stake
The Federal Reserve agreed to an $85 billion bailout of teetering insurance giant American International Group, giving the U.S. government a 79.9 percent stake and averting a potentially catastrophic bankruptcy. The Fed replaced CEO Robert Willumstad with former Allstate chairman Edward Liddy. (The New York Times) The $85 billion is structured as a two-year loan, at 11.3 percent interest (at today’s rates) and with all of AIG’s assets pledged as collateral. The assets will probably be sold off. (CNNMoney.com) An AIG meltdown could have cost the financial industry $180 billion. But “nobody really knows what it would have meant,” said UBS analyst David Havens. “There was an enormous amount of systemic risk.” (Bloomberg)
Barclays buys Lehman’s U.S. banking unit
Days after rejecting a buyout of Lehman Brothers, Britain’s Barclays agreed to buy Lehman’s U.S. investment banking and capital market operations for $1.75 billion in cash. About $1.5 billion of the money is for Lehman’s Manhattan headquarters and two New Jersey data centers. (MarketWatch) The units fetched much less than Lehman had hoped, but the deal could save up to 10,000 jobs. (AP in Yahoo! Finance) It will also give Barclays a long-sought, strong U.S. presence. “If you want to transform yourself from a minor player into a major firm, this is the time to do it,” said Roger Nightingale at Pointon York in London. (The New York Times) Separately, Britain’s Lloyds TBS is in talks to buy U.K. mortgage giant HBOS. (Bloomberg)
Google phone on deck
The much-anticipated Google Phone will be unveiled next Tuesday, T-Mobile announced. The G1 phone, which will be made by HTC and be powered by Google’s Android software, won’t hit the shelves until October. The G1 is expected to compete with Apple’s iPhone and RIM’s BlackBerry. (Los Angeles Times) In other tech news, Samsung made a $5.85 billion hostile bid for U.S. chipmaker SanDisk. SanDisk rejected the offer as too low. Samsung, the No. 2 chipmaker, already pays SanDisk about $400 million a year in patent royalties. (Bloomberg)
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- Why I'm a pro-life liberal
- 31 TV shows to watch in 2014
- He said he was leaving. She ignored him.
- If a nuclear bomb exploded in downtown Washington, what should you do?
- What would a U.S.-Russia war look like?
- How Ukraine can fend off the Russians, in 7 simple steps
- These stunning travel photos remind us that we're all just amateurs with iPhones
- Why we can't stop procrastinating, according to science
- Israel and Russia are getting along. Have the neocons noticed?
- 10 things you need to know today: April 16, 2014
Subscribe to the Week