The news at a glance

Google: From search engine to phone maker

Google’s $12.5 billion purchase of smartphone maker Motorola Mobility is by far its largest acquisition ever and “could reshape the Internet giant’s fortunes in the mobile world,” said Amir Efrati and Spencer Ante in The Wall Street Journal. The deal will nearly double Google’s workforce, turn the search company into a manufacturer of handsets and tablet computers, and allow it to “integrate its Android software more tightly with Motorola devices.” Being able to control both the software and the hardware on its gadgets, much as Apple does with the iPhone, was a major attraction for Google, though the deal could jeopardize its relationships with companies such as Toshiba and Samsung, which also make devices that run Android.

This deal is actually “all about patents,” said The Economist. Google gains 17,000 technology patents, and another 7,500 that are in the pipeline. Google, which previously held fewer than 2,000 patents, now has a much deeper portfolio to strengthen its hand in increasingly contentious legal wrangles with competitors. Tech companies are in the midst of a spending spree on patents, “what some liken to an arms race,” to shield themselves from lawsuits over patent infringement. The Motorola deal offers Google not just a mobile platform but also added protection in court.

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Financial crisis: Fed lent banks $1.2 trillion

At the peak of the financial crisis, in December 2008, the Federal Reserve lent troubled banks $1.2 trillion, or about the same amount U.S. homeowners currently owe on bad mortgages, said Bradley Keoun and Phil Kuntz in Bloomberg.com. Some $107 billion in loans went to Morgan Stanley, $100 billion to Citigroup, and $91 billion to Bank of America. The Fed says it had “no credit losses” on the loans, most of which have since been closed. But the assistance shows how “deeply the world’s largest banks depended on the U.S. central bank to stave off cash shortfalls” during the crisis.

Tech: Hewlett-Packard pulls the plug on PCs

Hewlett-Packard’s announcement last week that it plans to get out of the personal-computer business sent its stock plummeting 20 percent, said Joseph Menn in the Financial Times. Investors were shocked by the company’s plan to sell or spin off its PC business, the world’s largest. The company also announced that it would kill production of its smartphones and the TouchPad tablet, and acquire Britain’s largest software company, Autonomy, in an $11 billion deal.

Credit ratings: Justice probes Standard & Poor’s

The Justice Department is investigating whether Standard & Poor’s gave improperly high credit ratings to toxic securities in the run-up to the housing bust so it could hang on to higher profits, said Louise Story in The New York Times. The rating agency recently downgraded U.S. credit for the first time ever, but the inquiry reportedly gained momentum “early this summer, well before the debt-rating issue reached a high pitch in Washington.” The government is looking into whether S&P analysts who wanted to downgrade mortgage bonds were overruled by managers seeking to protect the company’s ratings fees.

Food prices: Weather hurts corn crop

Expect higher food prices because of a smaller-than-anticipated corn harvest, said Paul Davidson in USA Today. U.S. farmers planted a near-record crop because of high corn prices, which have surged 70 percent since August 2010. But spring floods and summer heat in the Midwest and a blistering drought in Texas have cut the expected fall harvest. Corn is the “single-biggest driver of food prices,” and overseas demand will likely push them up 4 percent next year.