Billions More for Bank of America

The cost (to us) of Bank of America's Merrill Lynch acquisition keeps on climbing. The Wall Street Journal writes that the Treasury Department is set to "give billions in additional aid" to BoA to help close the deal because of the stricken securities firm's "larger-than-expected losses in the fourth quarter." BoA got $25 billion from the Troubled Asset Relief Program back in October, and its need for more money at this point illustrates a "deepening fragility among the nation’s largest banks," writes the New York Times. That's the view from Treasury, anyhow. It is worrying that if the deal falls through, it will further undermine the stability of U.S. financial markets, adds the WSJ. The fourth quarter wasn't kind to Deutsche Bank. It warns that heavy trading losses will force it to take a $6.3 billion loss on the back of the global financial meltdown. Meanwhile, JPMorgan's chief executive has been looking forward and—surprise—2009 looks pretty bleak. In an interview with the Financial Times, Jamie Dimon says: "[T]he worst of the economic situation is not yet behind us. ... In terms of our sector, we expect consumer loans and credit cards to continue to get worse.”

The shock news (or is it?) out of Silicon Valley is that Apple CEO Steve Jobs is taking a temporary medical leave of absence, the New York Times reports. In a letter to employees, Jobs writes that his medical problems are more complex than first thought and says he will cede day-to-day control of Apple to longtime Chief Operating Officer Timothy D. Cook until his return in June. Shares of Apple tanked on the revelation, writes the WSJ's All Things D: Investors immediately wiped 8 percent in value and $6.4 billion off the company’s market cap. How will Apple fare without, as Business Week describes Jobs, its "core"? His gurulike status at the company he co-founded gives him enormous sway over his employees and outsiders alike. "Only Jobs is capable of convincing the 32,000-person company that it can wade into new business—like music or cell phones—and rewrite the rules of competition." The fear now, notes Business Week, is that "Jobs may never return—and Apple won't be the same company without him."

Staying on the jobs—with a small j—beat, no industry is being spared, it seems, in the latest wave of corporate downsizings. After the layoffs in the banking sector announced earlier this week, now the tech, telecom, and media industries are joining in. How bad is it? Even Google is laying off, it announced in a corporate blog post yesterday, saying it was cutting 100 positions in its "recruiting organization," Marketwatch reports. It's not so much the numbers but the fact that the company is signaling its days of aggressive expansion are over. The contagion in the tech sector isn't ending there. In another rare move, Microsoft is planning job cuts of its own, the WSJ reports. Meanwhile, Motorola announced it would shed 4,000 jobs amid particularly weak holiday sales, the WSJ reports. And Nortel, at one point Canada's largest company in the go-go tech-boom days, announced on Wednesday it would be filing for Chapter 11 bankruptcy protection  the day before a $107 million interest-rate payment comes due, the FT writes. And finally (for now), Gannett told its 31,000 employees yesterday that they each would be furloughed for one week to avoid layoffs, the NYT writes. Gannett, the nation's largest newspaper publisher, which publishes papers including USA Today, has announced layoffs of several thousand employees over the past two years as the industry's woes have deepened, the newspaper adds.

All these layoffs are leading to an increasingly grim economic outlook, the Federal Reserve reported Wednesday in its latest regional roundup. In its so-called "Beige Book" report, the Fed signaled two particularly problematic sectors—retail and real estate—that were pulling down the economy, CNNMoney.com writes. The report comes the same day as the latest Commerce Department figures on retail sales, which showed a worse-than-expected consumer pullback over Christmas. Business Week reports, "December retail sales dropped 2.7%, more than double the 1.2% decline that Wall Street expected." Things are getting so bad in the sector that retailers are now pushing lawmakers for a federal stimulus plan of their own—"sales-tax holidays," Business Week reports. Overall weakness in consumer demand has gone so far that it's once again put deflation in the spotlight. According to CNNMoney.com, deflation has become the No. 1 fear of most economists.

Finally, never mind all the tea in China—it looks like that nation's coffee is getting a boost, thanks to Starbucks. Yesterday the Seattle chain launched its Chinese-brand coffee South of the Clouds (the translation of Yunnnan, the province where it is grown) to mark its first 10 years in China, Xinhua reports.