The news at a glance
The economy: Portrait of a slowdown; Moguls: SEC targets the Wyly brothers; Banking: HSBC posts big gains; Media: Newsweek finds a buyer; Goldman Sachs: No swearing, please
The economy: Portrait of a slowdownThe U.S. economy hit the brakes in the second quarter, decelerating to a 2.4 percent annualized growth rate “after several quarters of more robust growth,” said Kevin Hall in The Miami Herald. The Commerce Department’s quarterly gross domestic product report also included revised economic-growth figures for several previous quarters. The revisions showed that the economy shrank a nearly unprecedented 4.1 percent from December 2007, when the recession began, through June 2009. Previous estimates had the economy shrinking 3.7 percent during that period. Another set of revisions showed the economy growing 3.7 percent in the first quarter, better than the department’s original, 2.7 percent growth estimate for the period.
The report tells the “tale of two economies,” said Daniel Gross in Slate.com. Package-delivery companies, railroads, and other firms tied to the global economy prospered, while grocery chains, home builders, and other businesses “tethered exclusively to U.S. consumers” turned in anemic results. Despite the weakness in consumer spending, though, businesses increased their investment in new plants and equipment by 17 percent—a sign that economic activity should continue to expand “at a decent clip.”
Moguls: SEC targets the Wyly brothersThe Securities and Exchange Commission last week filed a $550 million securities-fraud suit against billionaires Sam and Charles Wyly, Texas brothers with a history of run-ins with regulators, said Zachary Goldfarb and Philip Rucker in The Washington Post. The SEC accused the brothers, “who have been generous contributors to the Republican Party,” of using offshore trusts to conceal their ownership of several companies. The Wylys said the charges were “without merit.”
Banking: HSBC posts big gainsHSBC Holdings, Europe’s largest bank, reported that its income doubled in the first half of 2010, on the strength of soaring profits in North America, said Jon Menon and Andrew MacAskill in Bloomberg.com. The bank earned $6.76 billion in the first six months of the year, compared with a profit of $3.35 billion in the first half of 2009. North American operations swung to a profit of $492 million from a $3.7 billion loss a year earlier.
Media: Newsweek finds a buyerStereo-equipment mogul Sidney Harman, 92, has won the bidding for Newsweek, reportedly paying a mere $1 to take over the money-losing magazine and its liabilities, said Michael Calderone in Yahoo.com. Harman’s “charitable nature and civic-mindedness” helped seal the deal with Newsweek’s owner, The Washington Post Co., as did his proposal to retain about 250 of Newsweek’s 325 employees. Editor Jon Meacham will be among those departing. Harman founded Harman International, maker of JBL and Infinity audio equipment, and is married to Democratic Rep. Jane Harman of California.
Goldman Sachs: No swearing, please “Goldman Sachs workers can’t say bleep in e-mails anymore,” said Linda Stern in CBSmoneywatch.com. The firm barred employees from using profanity in electronic communications, and it will use screening software “to make sure everyone complies.” The firm was embarrassed in April when congressional investigators published an e-mail from a Goldman executive touting a “sh---y” deal involving subprime mortgages. Michigan Sen. Carl Levin repeatedly quoted the vulgarity as he questioned Goldman officials last spring.