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NEWS AT A GLANCE

Bloomberg index: global confidence drops

Confidence in the global economy fell this month, according to the Bloomberg Professional Global Confidence Index, which measures the sentiment of Bloomberg users on five continents. The index fell to 11.3, from 14.1 in August; in the U.S., confidence fell to 10.6, from 18.2. Any number below 50 indicates pessimism. "We moved from Fannie and Freddie to Lehman to AIG, and even today, one question is: who is going to be next?" said Ulster Bank economist Simon Barry in Dublin. (Bloomberg) Outside of finance, gas prices edged up to a nationwide average of $3.85 a gallon, the eighth straight daily rise, according to AAA. (CNNMoney.com) Oil rose, also, trading at $93.95 in New York early today, reversing a two-day drop. (AP in Yahoo! Finance)

Fed bails out AIG, takes majority stake

The Federal Reserve agreed to an $85 billion bailout of teetering insurance giant American International Group, giving the U.S. government a 79.9 percent stake and averting a potentially catastrophic bankruptcy. The Fed replaced CEO Robert Willumstad with former Allstate chairman Edward Liddy. (The New York Times) The $85 billion is structured as a two-year loan, at 11.3 percent interest (at today's rates) and with all of AIG's assets pledged as collateral. The assets will probably be sold off. (CNNMoney.com) An AIG meltdown could have cost the financial industry $180 billion. But "nobody really knows what it would have meant," said UBS analyst David Havens. "There was an enormous amount of systemic risk." (Bloomberg)

Barclays buys Lehman's U.S. banking unit

Days after rejecting a buyout of Lehman Brothers, Britain's Barclays agreed to buy Lehman's U.S. investment banking and capital market operations for $1.75 billion in cash. About $1.5 billion of the money is for Lehman's Manhattan headquarters and two New Jersey data centers. (MarketWatch) The units fetched much less than Lehman had hoped, but the deal could save up to 10,000 jobs. (AP in Yahoo! Finance) It will also give Barclays a long-sought, strong U.S. presence. "If you want to transform yourself from a minor player into a major firm, this is the time to do it," said Roger Nightingale at Pointon York in London. (The New York Times) Separately, Britain's Lloyds TBS is in talks to buy U.K. mortgage giant HBOS. (Bloomberg)

Google phone on deck

The much-anticipated Google Phone will be unveiled next Tuesday, T-Mobile said. The G1 phone, which will be made by HTC and be powered by Google's Android software, won't hit the shelves until October. The G1 is expected to compete with Apple's iPhone and RIM's BlackBerry. (Los Angeles Times) In other tech news, Samsung made a $5.85 billion hostile bid for U.S. chipmaker SanDisk. SanDisk rejected the offer as too low. Samsung, the No. 2 chipmaker, already pays SanDisk about $400 million a year in patent royalties. (Bloomberg)

BEST COLUMNS OF THE DAY

Time to play offense

The fact that the economic fallout from this Wall Street meltdown hasn't been worse, says David Leonhardt in The New York Times, "should be considered a victory for Ben Bernanke and Henry Paulson, the point men on the crisis." But while they've reacted aggressively to keep things from crashing down, neither man has done much to address the problems underpinning this crisis. Bailouts hinder long-term solutions (think Chrysler), and besides, the causes of this crisis -- people with stagnant incomes taking "wishful-thinking loans" from "lightly regulated banks" -- can't be solved with a bailout. Playing defense has kept us from sinking, but "when will someone start playing offense?"

Wall Street's dead; long live Wall Street

"Wall Street as we know it is kaput," says Robert Samuelson in The Washington Post. And it's not just the fall of Lehman Brothers, Merrill Lynch, and AIG. Rather, "Wall Street's business model has collapsed." Three changes since 1980 -- a move by financial firms from advising and acting as intermediary to placing their own market bets; skewing compensation toward exorbitant bonuses that reward short-term gain, and a heavy reliance on crazy amounts of leverage -- turned Wall Street into "a manic machine for gambling." It is unclear how Wall Street will restructure itself, and the changes will probably be beneficial, eventually and for a little while, but Wall Street's miscalculations will hurt the rest of the economy in the meantime

GOOD DAY FOR: Taking the wheel, after Porsche gained controlling interest in Volkswagen, Europe's top automaker, raising its stake to just above 35 percent, from 31 percent. Owning VW will give Porsche -- which sells about 100,000 cars a year to VW's 6 million -- more flexibility in its production. Porsche is one of the world's more profitable automakers. (The New York Times)

BAD DAY FOR: Equating time with money, after an Australian pizza delivery man was caught going 82 miles per hour in a 50 mph zone as he rushed to deliver a late pizza. Police let him deliver the pizza before ticketing him. The unidentified 20-year-old was caught driving 83 mph on the way back to the pizzeria, on the same stretch of road. He was fined $1,226 and had his license pulled for 15 months. (Reuters)

NOTED: Morgan Stanley, one of two major independent investment banks left on Wall Street, is actively weighing whether to merge with another bank, as its zig-zagging stock price could scuttle its plan to stay independent, according to unidentified sources. CEO John Mack is wary of repeating the fate of Lehman Brothers, which rejected several takeover offers before being forced into bankruptcy. (CNBC)

This column was written by Peter Weber and edited by Harold Maass of TheWeek.com.