Harold Maass of The Week The Best of Today's Business

Central banks open their vaults

The world's top central banks said they will pump more than $180 billion in extra dollar funds into the financial markets today, in a coordinated effort to restore liquidity to the market. The participating banks are the U.S. Federal Reserve, the European Central Banks, and the central banks of England, Canada, Japan, Britain, and Switzerland. The $180 billion is on top of regional efforts to inject cash into local currency markets. (Reuters) In Asia, meanwhile, the Wall Street upheaval is prompting central banks, companies, and individuals to rethink the wisdom of their trillions of dollars invested in the U.S. A loss of confidence in the U.S. by Asian investors would have dire consequences for U.S. taxpayers and their government. (The New York Times)

Britain's Lloyds TBS buys lender HBOS

British bank Lloyds TBS agreed to buy Edinburgh-based HBOS, the largest U.K. mortgage lender, for $22.2 billion, in a government-backed merger. The combined firm will control 28 percent of Britain's mortgage market and own 3,300 consumer bank branches. (Bloomberg) HBOS, which relies heavily on wholesale markets, lost about half of its value this week after the collapse of Lehman Brothers left investors worried about its ability to obtain funding. (MarketWatch) "We had expected HBOS would struggle to make a profit through 2010, but we had not expected it would fall victim to the credit crunch," said analyst Sandy Chen at Panmure Gordon. (Reuters)

Morgan Stanley, Washington Mutual mull buyouts

As their shares get battered, Washington Mutual and Morgan Stanley are reportedly considering takeover offers to avoid a Lehman-like collapse. (BusinessWeek.com) Washington Mutual, beset by soured mortgages, is exploring a sale, whole or piecemeal, to bidders including JPMorgan, Citigroup, Wells Fargo, and HSBC. (Reuters) Morgan Stanley, meanwhile, is in talks with Wachovia, although it is also reportedly exploring deals with overseas banks like HSBC, Banco Santander, and Japan's Nomura. (The Wall Street Journal) "If we could get some deals done, that will add some confidence to the market," said Jack Ablin at Harris Private Bank in Chicago. "Banks are as cheap as they've been ever, relative to the rest of the market." (Bloomberg)

Gold jumps, jewelers groan

The price of gold jumped by $70.10 an ounce yesterday, to $846.60, in the highest one-day gain ever in dollar terms, as investors fled to safety from tanking stock prices. And in Los Angeles, that's bad news in the Jewelry District, which has seen a 70 percent drop in traffic this year as potential customers saw their discretionary spending dry up. And those customers that do come are mainly interested in items under $100, which have slimmer profit margins. "The economy's so bad customers can't even pay their mortgages," said Raymond Cohan of Acapulco Jewelry, where a $1,000 gold chain cost only $450 a year ago. "This is the last thing on their list to buy." (Los Angeles Times)

BEST COLUMNS OF THE DAY

The stages of AIG grief

Watching this "flabbergasting" week unfold on Wall Street, says John Gapper in Financial Times, was a study in moods: excitement at all the action, bafflement, fear, and finally, with the AIG bailout, anger. AIG was doing quite well insuring "risks it knew well -- car crashed and fires" -- before it greedily jumped into CDOs and other "derivatives it did not understand." Now it -- and banks, and worse, us U.S. taxpayers -- are paying the price. "The job of insurance companies is to guard others against catastrophes, not cause them." And if a "renegade insurance company" can "blow up the world's banks," we might have to rethink our regulatory system. "Regulation cannot solve everything but enough is enough."

The end of deregulation

Jimmy Carter started a 30-year period of deregulation with the 1978 Airline Deregulation Act, says Michael Mandel in BusinessWeek.com, and the Federal Reserved ended it Tuesday night, with the takeover of AIG. For 30 years, politicians of both parties competed to free the economy from "the oppressive yoke of government control," with the rallying cry "Less regulation, more growth." Not so much now. From food safety to, yes, airlines, "increased government supervision is becoming acceptable to business as well as to voters." This was a big change even before Wall Street's meltdown. Now, "the breakdown of the financial markets has left open the question of how much deregulation will be left when the dust settles."

GOOD DAY FOR: Changing business models, after a hotel in the Turkish Mediterranean town of Marmaris fired all its male employees for repeatedly having affairs with the female guests. "The last straw was when I saw our bartender, who was a very decent man, walk out of the bathroom with a British tourist," said hotel manager Pelin Yucel. The hotel is now run by an all-female staff.  (Reuters)

BAD DAY FOR: Consensus, as analysts disagree on the eventual taxpayer cost, or profit, from the $85 billion AIG bailout. Some argue that taxpayers will lose billions as AIG is forced to sell assets into the down market. (The Washington Post) Bijan Moazami, an analyst at Friedman, Billings, Ramsey, estimates that selling off the various pieces of AIG could raise more than $150 billion. (MarketWatch)

NOTED: The S&P 500 has now dropped 26 percent since its October 2007 peak, erasing half the gains from the five-year bull market. Between Oct. 9, 2002, and Oct. 9, 2007, the S&P 500 doubled, from 776.76 to 1,565.15; after yesterday's 4.7 percent plummet, the index stands at 1,156. Since the S&P 500's peak, stocks worldwide have lost $18 trillion in value. (Bloomberg)

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