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

NEWS AT A GLANCE

What's selling in magazines

Magazine ad sales dropped 8.2 percent in the second quarter, the Publishers Information Bureau reported, pointing to increasing trouble for the magazine business. The decline follows a 6.4 percent drop in the first quarter and a 0.8 percent slip the quarter before that. Automobile ads fell the sharpest, 21.3 percent, and ads for computers and other tech items fell 17.5 percent. But luxury-goods ads actually rose, helping high-end fashion, travel, and home design magazines. News magazines generally fared poorer, while several publications stayed about even. "The joke here is, 'Flat is the new up,'" said Conde Nast editorial director Thomas J. Wallace. Magazines are doing better than newspapers. (The New York Times)

Citigroup sells German operations for $7.7 billion

Citigroup, the largest U.S. bank, agreed to sell its retail banking operations in Germany to France's Credit Mutuel for $7.7 billion. Citi decided to sell its German Citibank Privatkunden unit, the centerpiece of its European business, after a worldwide strategic review by CEO Vikram Pandit. (Reuters) Credit Mutuel beat out Germany's Deutsche Bank to buy the unit, which is Germany's market leader for consumer loans. "Citibank gives the French lender a great foothold in the German retail market," said Merck Finck & Co. analyst Konrad Becker. (Bloomberg) Separately, General Electric agreed to sell its Japanese consumer lending business, GE Consumer Finance, to Japan's Shinsei Bank for $5.4 billion. (Nikkei in CNNMoney)

U.S. mulls Fannie, Freddie takeovers

The Bush administration is reportedly considering a plan to take over one or both of the government-sponsored mortgage giants Fannie Mae and Freddie Mac. If the companies, buffeted by rising foreclosures and declining asset values, are placed under conservatorship, their shares would be worth little or nothing and taxpayers would be responsible for any losses. (The New York Times) The two companies have lost $11 billion in recent months, and their shares have plunged to 1991 levels as investors fear for their viability. They own or guarantee more than $5 trillion in mortgages. (MarketWatch) "The government has to step in and do something," said Friedman, Billings, Ramsey & Co. analyst Paul Miller. (AP in Yahoo! Finance)

Beating conventional wisdom, speedily

Americans are buying fewer cars, as gas rises and credit falls, but Fiat has found a road to growth: sell a 12 mpg sports car that retails for $115,000. Sales of Fiat's Maserati luxury sports cars jumped 20 percent last month and are up 16 percent this year, even as luxury-car sales as a whole are down 15 percent. Fiat started selling Maseratis in the U.S. in 2002, after an 11-year hiatus, and the sales bump is helped by expanding dealerships and new models. But Maseratis also fit a niche for rich people who want something more exotic than a Mercedes. "If you've got money, you want people to know you've got money, and people want to find something that not everybody has," said Iceology analyst Wes Brown. (Bloomberg)

BEST COLUMNS OF THE DAY

A little flexibility, please

We've reached a "delicate point" in this financial crisis, says Steven Pearlstein in The Washington Post, where "even the usual cheerleaders have hung up their pompoms, consumer and business confidence has disappeared, and investors are driven mostly by fear rather than greed." But now that we're in this mess, we've got a new threat looming: "strict adherence to economic orthodoxies" by regulators and policymakers. It's good that accounting and banking regulators have learned from this crisis, but they need cool heads and flexibility to fix it. "A financial crisis is not a morality play," and what matters most is not the principles, but rather getting out quickly and with as little damage as possible.

The S&P 500 and its bubbles

With trillions of dollars linked to its performance, the S&P 500 is "effectively a stock-picker for millions of investors," says Daniel Gross in Slate. As such, it has burned millions of investors. That's because, due to the way companies are chosen for the popular index, the S&P 500 is particularly vulnerable to bubbles. The makeup of the index is always shifting -- to be added, a company needs four consecutive profitable quarters and a market cap of $5 billion. So in the '90s tech boom, "supernova" companies -- grow huge fast, explode -- dragged down the index a lot. This bubble has seen fewer "total wipeouts," but with banking stocks out, belatedly, and energy phasing in, the S&P still has its "congenital bubble problem."

GOOD DAY FOR: Net neutrality, after FCC Chairman Kevin Martin proposed punishing cable giant Comcast for restricting Internet access among subscribers, in violation of FCC principles. Martin's remedy, which requires approval by the entire commission, would order Comast to stop "arbitrarily" blocking Web access and let the FCC and consumers know the details of its network management. (AP in Yahoo! Finance)

BAD DAY FOR: Fondue-set makers, as Israeli wedding parties can now rent an ATM-like machine that lets credit-card-wielding guests charge their wedding gift at the reception. The machine, which spits out a receipt with the giver's name and gift amount, costs about $155 to rent. "It's very convenient," said Aya Alon Kaufman of the Gan Oranim hall in Tel Aviv. "Guests can give a gift even if they forget their checkbooks." (Reuters)

NOTED: In a reversal of its earlier stance, U.S. beer giant Anheuser-Busch is in active talks to sell itself to Belgium's InBev, The New York Times reported. InBev reportedly agreed to raise its $65-a-share bid for the company. Also, leading shareholders like Warren Buffett were leaning toward backing InBev in the brewing hostile takeover battle. (The New York Times)

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