White House Utters the R-word

Not that you needed the White House to tell you, but it's official: Parts of the United States have already slipped into recession. Yes, Edward P. Lazear, chairman of the White House Council of Economic Advisers, used the R-word on CNN's "Late Edition" on Sunday. It's an astonishing admission, the Washington Post notes, considering "the White House has been loath to discuss whether the U.S. economy is in recession, in part because the word carries such a negative connotation." But the indisputable facts are making it impossible to sugar-coat the situation. "Unemployment could hit 7.5 percent or higher by next year. Many analysts predict the economy will shrink later this year and early next year, meeting the classic definition of a recession. Some believe the economy already jolted into reverse during the July-to-September quarter," the Associated Press reports.

With this backdrop, President George W. Bush, with France's Nicolas Sarkozy and EU President José Manuel Barroso, announced this weekend a series of economic summits starting next month to find a global fix "to avoid a repeat of this crisis." That's about all they could agree on though, the London Times reports. Bush continued to champion the virtues of a free market to get the world out of this mess, while Sarkozy "advocated a new form of 'regulated capitalism' because there is 'no liberty without some regulation and stability.'" Meanwhile, Russia may just sit these talks out, the Moscow Times reports.

In China, they are not talking "recession," but the word "slow-down" is in the air. The mighty Chinese economy is decelerating, to 9 percent in the third quarter, its slowest rate of growth in five years, the New York Times reports. The global financial crisis is beginning to affect China's manufacturing hubs in the South, triggering massive layoffs and factory closings, AP writes. If toy prices creep up at Christmas, this could be the culprit, the article continues. Meanwhile, in yet another effort to shore up the domestic banking sector, South Korea on Sunday announced it would guarantee up to $100 billion in foreign debt held by its banks and would pump $30 billion more into the banking sector, the NYT reports. The move sent Asian markets higher on Monday, Reuters reports.

It appears Tuesday will be Yahoo's day of reckoning (the latest in a series of such defining moments for the struggling dot-com). Yahoo is plotting cost cuts and more than 1,000 layoffs to be revealed as soon as tomorrow, the Wall Street Journal writes, citing people in the know. Yahoo's expected move is part of a "wave of job losses" spreading across Silicon Valley, the Financial Times writes. The Yahoo restructuring is expected to apply further pressure on embattled CEO and co-founder Jerry Yang. Some investors still grumble he walked away from a tempting Microsoft offer this summer. Since the rejection, "Yahoo's stock price has slid 43% in the past three months," the WSJ writes. All eyes will be on Apple tomorrow as well as it unveils its latest quarterly figures. Analysts reckon Apple's forecast will reveal just how deep a consumer spending fall-back will be seen across the board this Christmas, the WSJ reports. Google, meanwhile, has got the earnings call out of the way last week and is looking ahead to Nov. 4. CEO Eric Schmidt hits the campaign trail this week in support of Sen. Barack Obama. Schmidt says the Obama endorsement is a personal decision, not a business decision, the WSJ reports. Isn't it always?

The morning wouldn't be complete without a major bank bailout, would it? Happy to report then (courtesy of the FT) that Dutch banking and insurance giant ING has taken a $13 billion capital injection from the Dutch government, following "the revelation that it would make its first quarterly loss" and a precipitous drop in its share price. At the same time, ING has decided to offload its Taiwan subsidiary for $600 million to Taipei Fubon Financial Holding Co. At least one area of the banking sector isn't hurting (and it's not executive hunting trips, either). The big banks—including Merrill Lynch, Wells Fargo and Morgan Stanley—last quarter all continued to heavily "lobby lawmakers and regulators as the government scrambled to assemble its Wall Street rescue plan." Given the new public stake in the financial sector, it would appear these banks now are spending our money to influence our elected officials—guess that's what they mean by the saying all politics is local.

Anyone turned down for a GMAC auto loan in recent weeks might see the irony of parent company GM's current woes. The WSJ reports the auto giant's "hopes of buying longtime rival Chrysler LLC are floundering because the auto maker remains unable to secure the financing necessary for the deal." Nevertheless, both GM and Chrysler want to seal the merger "before the presidential election and are lobbying for government financial assistance to help clinch the deal," writes USA Today. Cerberus Capital Management, which controls Chrysler, wants the 50 percent of GMAC it doesn't already own, but GM doesn't want to give up its stake, says the story. Meanwhile in big energy news, electricity generator Exelon Corp. wants to buy rival NRG Energy Inc. for $6.2 billion in an all-stock bid. The acquisition would create the largest power company in the U.S., says Marketwatch.

Finally, perhaps it was asking a bit too much of America to head to the cinema this weekend to see a biopic about one of the least popular presidents in history while he was still in office. When faced with the choice, America opted for talking chihuahuas, The Secret Life of Bees and the video-game adaptation Max Payne over Oliver Stone's depiction of the rise of No. 43 in W., the Los Angeles Times reports. Stone's W. finished fourth at the box office, netting $10.6 million. But Hollywood was still smiling. The total box-office take for the top four films was "$86.4 million, up 10 percent from the same weekend last year," AP reports.