THE PLANK NOVEMBER 3, 2008
on the heels of an optimistic
piece 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.
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.”)
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.
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.