Yahoo and Microsoft Finally Team Up

Microsoft (MSFT) and Yahoo (YHOO) announced a partnership yesterday, ending what the New York Times calls a "bumpy, marathon mating dance" between the two companies. Under the new 10-year deal, Microsoft's Bing will be used as the Internet search service on Yahoo Web sites, and Yahoo will sell ads alongside search results to large companies on behalf of both Microsoft and Yahoo. While the pact is sure to face some opposition from regulators worried about competition in the field, both companies argue that forging an alliance was the only way to have a fighting shot against Google (GOOG)—which currently claims 65 percent of the U.S. search market. The Wall Street Journal explains why the deal means so much for Microsoft's CEO, Steve Ballmer, who has been stuck in "the worst slump in his career," according to the paper: "For Mr. Ballmer, the agreement provides some redemption in an area he has stressed is critical to Microsoft's future. In an interview, he says the Yahoo deal received 'more of my personal attention over the last 18 months than anything else we're involved with,' including focusing on its most important new product in years, Windows 7."

The New York Times reports that Irving Picard, the trustee in charge of recovering money for the victims of Bernie Madoff, sued the swindler's wife, Ruth Madoff, for $44.8 million yesterday. According to the paper, in the complaint, Picard "claimed that Mrs. Madoff had no ‘good faith basis' to believe she was entitled to the money she received over the years from Bernard L. Madoff Investment Securities. Three days before Mr. Madoff confessed last December that his celebrated investment firm was in fact a fraud, Mrs. Madoff transferred $11 million from the firm's bank account to a real estate partnership in which she owned a stake." Though Picard made it clear that Ruth Madoff profited from financial ties to her husband's business, he still does not allege that she was aware of his illegal scheming.

The Washington Post reports on the Federal Reserve's "beige book"—its compilation of anecdotal impressions collected from businesses across the United States—which was released yesterday. The report offered some hopeful signs of stabilization in the economy: improving conditions in residential real estate markets, some pick-up in manufacturing activity, and indications that "the threat of inflation appeared to be in check." Still, the report said that business travel is down, retail store traffic is slow, and many businesses are still reluctant to take out loans.

According to the New York Times, many mortgage companies are reluctant to relieve troubled homeowners because of the hefty fees they're collecting on delinquent loans. The article says that's the main reason why the companies are working to block the government's $75 billion program to prevent foreclosure. They have little incentive to do so: "Even when borrowers stop paying, mortgage companies that service the loans collect fees out of the proceeds when homes are ultimately sold in foreclosure. So the longer borrowers remain delinquent, the greater the opportunities for these mortgage companies to extract revenue—fees for insurance, appraisals, title searches and legal services."

According to the Wall Street Journal, wealthy taxpayers have flooded the IRS with confessions of past tax evasion in recent weeks. A spokesperson said that last week, the agency saw 400 applicants—four times as many as it reviewed in all of last year. There are two big reasons for the rush: First of all, the IRS disclosure program, which began in March and is set to end Sept. 23, offers the possibility of lower penalties for volunteering details of tax evasion. Second, the IRS and the U.S. Justice Department are moving forward with the investigation of taxpayers who have not reported income earned from secret accounts with the Swiss bank UBS AG (UBS).

Finally, CNNMoney.com reports on the cities hit worst by foreclosures in the first half of 2009. According to a report issued by RealtyTrac, "Cities in just four states—California, Florida, Arizona and Nevada—captured 29 of the top 30 places with the highest foreclosure rates." In Las Vegas, which surpassed Stockton, Calif., as the "foreclosure capital," one in 13 properties received a foreclosure filing in the first six months of 2009. Seattle had the biggest increase in the rate of filings—up 72 percent from this time last year. On the bright side, some cities fared much better: Filings fell substantially in Greater New York, Boston, and Houston.