The Plank

From The Business Pages, Nov. 3, 2008

  • Following
    on the heels of an optimistic
    in the New York Times
    about green jobs in the Rust Belt comes a Financial Times report that investors are fleeing
    the energy sector
    . This means less money to improve the country’s
    ailing power infrastructure, and probably even less to push into renewable
    power generation. Which only underlines the need for an
    infrastructure stimulus package from Washington.
  • The Wall Street Journal provides
    new details
    about the FDIC’s aggressive management of banking-sector
    mergers. The agency, best known for insuring bank deposits, forced
    Wachovia to find a buyer on the threat of a government takeover, then
    shepherded it through offers and counter-offers from Citigroup and Wells
    Fargo, ultimately settling with the latter. All this is part of the feds’
    strategy to wring underperformers from the sector.
  • The
    Washington Post has an interesting, if flawed, piece
    on the failing AIG bailout
    . As you might recall, many moons ago the
    feds gave the foundering insurance giant a huge amount of money to cover
    its debts, then extended even more money when it ran out. (Meanwhile,
    AIG bigwigs spent half a million on a company retreat.) No one seems to
    think the bailout is going well, though they differ on why. The Post draws too big a conclusion,
    arguing that the firm would have been better served by going bankrupt. After all, the
    real question was never whether the bailout would save AIG per se, but whether the
    alternative would contribute to the mass panic then hitting the investment
    community. (To be fair, the piece does offer a buried comment to this
    effect from insurance-industry observer David Schiff: “The point isn't to
    save AIG; it's to save the U.S.
    financial system. I think they were afraid to find out who else goes under
    if you let AIG fail.”)
  • It
    seems there is, in fact, a limit to the government’s recent largesse: The
    Treasury has denied
    GM’s request
    for help in acquiring Chrysler. That also reverses, or at least puts the brakes on (get it!), the possibility that Washington’s $700
    billion bank bailout will be expanded to other industries.
  • Finally,
    over at Forbes, NYU economist Nouriel Roubini has a column
    predicting stagflation in the coming six months. Aside from his mini-celebrity
    as a Gawker flameball,
    Roubini also has a penchant for making extreme claims and having them
    proved exactly right, so give this a good read.

--Clay Risen

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