Science has determined that people need to know 7.5 things per day, on average, about the world of business. You can't argue with science. Lucky for you, the Huffington Post has an email newsletter, delivered first thing every weekday morning, boiling down the day's biggest business news into the 7.5 things you absolutely need to know. And we're giving it away free, because we love you, and also science. Here you go:
Thing One: Government, Out: Soon General Motors will not have the millstone of government ownership around its neck, meaning it can start wasting money again on executive compensation.
America's biggest auto maker yesterday announced that it planned to buy back 200 million shares from the government by the end of the year, repaying about $5.5 billion of the $49.5 billion bailout it received during the crisis. That will leave the government with 300 million shares, or about 19 percent of the company. GM plans to buy the government out fully over the next 15 months, helping to shed itself of the stigma of the bailout and the handle "Government Motors."
At the moment, the deal is going to represent a $12 billion loss for the government on the bailout, unless aliens suddenly arrive from Tau Ceti and offer to pay more than $50 per share for GM, estimates Bloomberg, compared with the stock's Wednesday closing price of $27.18. Still, the government can argue that $12 billion was a justified investment in the rescue of an iconic American company, saving more than a million jobs and bolstering the economy.
Treasury claims to have made money on many of its other bailouts, including those of big banks and American International Group. The irony is that those bailouts were handled so badly, with so few real strings attached, that the government might have been better off had it lost money but forced more changes in the size and management of the banks.
Speaking of strings, one of the reasons GM just can't wait to get rid of the yoke of government oppression is that Uncle Sam is forcing it to keep a lid on its executive compensation and purchase of corporate jets, the New York Times writes. These limits, apparently, are keeping unidentified auto-making and -selling geniuses from wanting to work for GM.
GM could certainly use such geniuses, but it should maybe think twice before buying too many jets: Though auto sales have rebounded since the recession and should continue to do so, foreign auto makers and rival Ford consistently outpace GM in customer-satisfaction surveys. GM was not exactly the picture of corporate health before the crisis, and it's not hard to see it getting itself into trouble again. Freedom shouldn't be a reason for GM to act like it's got nothing left to lose.
Thing Two: NYSE On Sale Again: Speaking of faded American icons, the New York Stock Exchange is up for sale again. Storied old stock exchange operator NYSE Euronext is in talks to be purchased by a young whippersnapper of a commodities-and-derivatives platform known as IntercontinentalExchange for $8 billion. As the NYT points out, this is the latest sign of the fading importance of traditional stock trading and the rise of robot-driven derivatives trading. The NYSE floor is a glorified television studio now; NYSE's derivatives business is where all the juice is. ICE teamed up with Nasdaq OMX last year to try to buy NYSE, and Deutsche Boerse made its own bid for NSYE, but both of those deals were scuttled by antitrust concerns. This deal might fare better.
Thing Three: Cliff Watch! Fiscal-escarpment talks are in a slough of despond, just in time for Christmas! Though President Obama yesterday said he thought he and Speaker of the House John Boehner were pretty close to a deal, the two men haven't actually had formal talks since Monday, reports the Huffington Post's Sam Stein. Boehner yesterday had a snippy, 50-second press conference, in which he said he was pressing forward with his talk-scuttling Plan B From Outer Space. So that wasn't a good sign. But maybe it's just as well: The deal consensus in Washington seemed to be coalescing around cuts in Social Security benefits. No deal might be better than that deal.
Thing Four: The Cost Of Libor: Though the Libor scandal has been going so long that readers already seem to be getting bored with it, it has really only just begun. Wednesday's $1.5 billion settlement by UBS was the biggest moment in the scandal, but there are lots of other shoes to drop -- including estimates of how much the scandal really hurt people. The watchdog for the Federal Housing Finance Agency, the regulator for government-owned mortgage giants Fannie Mae and Freddie Mac, says interest-rate manipulation by big banks might have cost Fannie and Freddie more than $3 billion. And that only covers an 18-month period after the financial crisis. As we learned from UBS, Libor manipulation has been going on a lot longer than that.
Thing Five: Must Be Something In The Cocoa In Switzerland: In other bank-screwup news, the U.S. government has indicted three employees of an unnamed Swiss bank, accusing them of helping American clients hide $420 million from the IRS. The bank does not have offices in the U.S., so that eliminates some of the better-known possibilities. This is the latest move in a broader crackdown on the longstanding tradition of hiding money in Swiss bank accounts.
Thing Six: Money Printing Ahoy: The Bank of Japan, responding quickly to political pressure, jacked up its bond-buying program on Thursday, its third stimulus-boosting effort in four months. The central bank added 10 trillion yen (about $118 billion) to its existing purchase plan and suggested it would soon set a relatively high inflation target. This comes less than a week after Shinzo Abe won election as Japan's new prime minister on a platform of pushing the BOJ to do more to help Japan's economy, which is back in recession again. The BOJ, the Federal Reserve, the European Central Bank and the Bank of England are all now fully engaged in an unprecedented experiment in flooding the global economy with cash.
Thing Seven: Apple Loses Again: Apple's tough run in court continues, as America's favorite maker of shiny distractions has lost another round in its legal battle with rival Samsung over patents. The U.S. Patent and Trademark Office declared that Apple doesn't have a valid patent for a smartphone technology commonly called "pinch-to-zoom." This throws into doubt the $1 billion jury verdict Apple recently won against Samsung over that technology, the New York Times writes.
Thing Seven And One Half: A Sappy Story: It's like something out of a James Bond thriller, except if James Bond were a Canadian lumberjack instead of a British spy: The New York Times has the pancake-eatin' good tale of how thieves infiltrated Canada's strategic maple syrup reserve, run by a shadowy, sticky cartel, and made off with millions of gallons of syrup. In other news, Canada has a strategic maple syrup reserve.
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Calendar Du Jour:
Economic Data:
8:30 a.m. ET: Weekly Jobless Claims for Dec. 15
8:30 a.m. ET: Third Quarter GDP, third estimate
10:00 a.m. ET: Existing Home Sales for November
10:00 a.m. ET: Philadelphia Fed Manufacturing Index for December
10:00 a.m. ET: Leading Economic Indicators for November
Corporate Earnings:
ConAgra
Carnival
Discover Financial
Nike
Heard On The Tweets:
BREAKING: Time magazine still exists.
— Matt Yglesias (@mattyglesias) December 19, 2012
Calendar and tweets rounded up by Alexis Kleinman.
And you can follow me on Twitter, too: @markgongloff
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