City Republic: Second attack on credit crunch
LONDON - The government appears to have saved the life of the most important patient in the hospital -- the UK economy -- but full recovery looks as far away as ever.
The £37bn great bank bail-out in the autumn (completed this morning with news that the government now owns 43.4% of Lloyds TSB and HBOS) prevented the banking system going into meltdown but associated measures to get the economy, through bank lending chiefly, moving again have signally failed.
Reversing Labour's tax rises affecting lower-paid workers and cutting VAT by a rather feeble 2.5% may have stopped things getting worse, but they haven't made things markedly better.
So Gordon Brown and serried ministers are embarking on phase two of "kill the credit crunch", starting with a so-called "summit" on jobs at the Science Museum in London this morning.
This will pump a relatively small amount of money -- £500m or so -- into various retraining schemes, hardly likely to make more than a small dent in a jobless total heading for three million.
Later in the week we may hear more about loan guarantee schemes for businesses and the implementation in full, or in part, of Sir James Crosby's plan to get the mortgage market moving again by the government, possibly through the Bank of England, buying big (and currently almost valueless) mortgage packages off the banks.
The bank bailout was supposed to solve the credit crunch leaving any further government spending with the task of shortening the recession.
But the credit crunch is still the problem.
The recession, now reckoned to be worse than 1992 and on a par with 1980, shouldn't actually be the problem it clearly is, because of low inflation.
In 1980 and 1992 inflation was sky-high so the obvious way of boosting the economy, slashing interest rates, wasn't available.
This time round it has been of course but it's made precious little difference.
Neither, so far, have plummeting fuel and food costs, exactly what people were crying out for a year ago.
So Brown, chancellor Alistair Darling and this morning's other performer Work and Pensions secretary James Purnell badly need a Plan B.
New York Times faces debt crisis
British newspaper companies are looking nervously across the Atlantic where the Tribune Company, owner of the Chicago Tribune and Los Angeles Times, has gone into administration. Some analysts are saying even the formerly mighty New York Times might be headed the same way.
The Bancroft family, former owners of the Wall Street journal, must be thanking their lucky stars that Rupert Murdoch's News Corporation happened along with a $5bn cheque just over a year ago.
The "old gray lady", as the NYT is still known, is arguably the most famous paper in the world but circulation is falling, ad revenue is drying up and not even 14m unique users on its website are helping very much as internet advertising is on the skids in the US too.
To compound its problems, it's labouring under $1bn or so of debt, the result of its move to a posh new building on Eighth Avenue a couple of years ago.
The NYT has been controlled by the founding Ochs-Sulzberger family since 1896. Although it's quoted on Wall Street they own a majority of the voting B shares.
A couple of hedge funds, Harbinger Capital and Firebrand Partners (where do they get these names from?) own 19% and Mexican telecoms tycoon Carlos Slim (he's not) owns 6%.
Rupert Murdoch would very much like to own it too.
A change of ownership looks the least that's required if the NYT is going to survive another century.
But, more alarmingly, the business model for newspapers, a two-pronged attack through print and the web, doesn't seem to be working very well at the moment.
Blame it on David Bowie
Today presenter and one-time BBC economics editor Evan Davies begins an investigation in to the City on BBC 2 on Wednesday.
One of the things he comes up with is the intriguing notion that the noxious development of "securitisation", bundling all sorts of stuff including sub-prime mortgages into packages and selling them on, began in the 1990s when singer David Bowie packaged future royalties on his music and sold them for a chunky one-off fee.
The bankers cottoned on to this and the rest, as they say, is history.
The cold climate car show
If there was ever a time you didn't want to go to Michigan it's January when the temperature plummets to sub-Arctic levels.
But every the year the world's car executives have packed their thermals and set off there for the North American International Auto Show in Detroit.
Today is preview day for what used to be the biggest car show on the planet but there'll be few of the usual lavish jollies accompanying the likes of General Motors or Ford as they unveil their latest gas guzzling pick-up.
As recently as last year the event used to resemble an urban rodeo for rhinestone cowboys more than a car show as GM, Ford and Chrysler tried desperately to keep the American car dream alive.
Well it's well and truly departed this year as many execs give the event a miss and gas guzzlers (for now) are decidedly out of fashion.
Instead the latest thing is the battery-driven electric hybrid which you can recharge from the mains overnight. One such, the F3DM (catchy that), is being launched at the show by giant Chinese battery firm BYD.
As usual Detroit has been left behind, with GM's Chevrolet Volt (which is almost all-electric, with the engine only there to charge the battery) scheduled for launch in 2010.
GM boss Rick Wagoner will be the only car boss in Detroit who's hoping the price of gasoline starts going up.
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