Science has determined that people need to know 7.5 things per day, on average, about the world of business. You can't argue with science. Lucky for you, The Huffington Post has an email newsletter, delivered first thing every weekday morning, boiling down the day's biggest business news into the 7.5 things you absolutely need to know. And we're giving it away free, because we love you, and also science. Here you go:
Mark Gongloff is off the newsletter this week, so today's 7.5 Things are brought to you by Jillian Berman.
Thing One: Merger To Take Off: As if it wasn’t enough of a pain, flying may soon get worse for consumers. American Airlines and U.S. Airways are set to announce a merger later this week, making the new airline the biggest in the country, according to The New York Times. Though the move will make the airlines healthier and allow for more money to invest in newer planes, it could mean less service to smaller cities, which was a result of past airline mergers. Consumer advocates also say the giant airline will mean less competition and therefore higher ticket prices, as well as possible job losses, The Huffington Post’s Eleazar David Melendez reported last week.
Still, the Justice Department is likely to approve the merger, according to the Wall Street Journal. Even though the Feds have been particularly active in anti-trust suits this year, currently litigating seven which include such varied industries as beer and e-books. The merger, which would help get American Airlines’ parent company out of bankruptcy, may not be a great deal for consumers, but it might not be totally terrible either. A Brookings Institute economist told the WSJ that airline mergers don’t usually result in a boost in ticket prices.
But they sometimes result in frustration for travelers. As airlines try to combine different staff cultures and computer systems, the experience can often be worse for consumers, according to the NYT. Last year a United Airlines merger resulted in flight delays and cancellations for fliers.
Thing Two: Obama Hearts The Middle Class: During his State of the Union address tomorrow, President Obama will focus on a cause everyone can get behind: boosting the middle class. The speech will mark a change from the progressive tone he struck during his second inaugural address, instead highlighting his plans for bringing manufacturing jobs back to the U.S. and pushing a budget deal that includes both spending cuts and tax code changes to raise revenue, according to the Financial Times. Though Obama has been focusing on immigration reform and gun control since his election, the economy is a make-or-break issue for the President, according to Reuters. He’ll probably face an uphill battle, since Republicans oppose boosting spending, which is one of the main avenues Obama plans to use to increase economic growth.
Thing Three: Apple May No Longer Rule The World: The era of Apple world domination may soon be coming to an end. Samsung’s Galaxy III is the first smartphone to have sales that are neck and neck with the iPhone, according to The New York Times. And Samsung is the first company in years to pose a real threat to Apple, Blackberry, HP, Dell and others never came close to challenging the company. Apple may have new shiny device on the way though. The company is experimenting with watch-like devices that would do some of the same things as a smartphone, according to the Wall Street Journal. It might be just us, but a watch doesn’t exactly seem like a game changer.
Thing Four: S&P's Victims: Big banks were allegedly some of the biggest victims of S&P’s, knowingly giving shoddy mortgage bonds higher ratings than they deserved, according to a Bloomberg report. The article notes that executives at companies like Citigroup never thought twice about all the mortgage bonds being added to their balance sheet because those bonds didn’t seem risky because they had top ratings from S&P. Of course, some of the bigger victims were those with more to lose, who didn’t get bailed out. Investors in the mortgage bonds that ultimately went sour included public pension funds, The Huffington Post’s Ben Hallman reported earlier. In addition, S&P’s wrong top ratings may have helped fuel the collapse of Lehman Brothers, which ultimately crippled the U.S. economy. The company gave top ratings to Lehman-backed CDOs, even though they were tied to subprime mortgage bonds carrying much lower grades, according to a separate Bloomberg report.
Thing Five: Don't Let The Revolving Door Hit You: In a revelation that is surprising to no one with common sense, the revolving door between government and Wall Street may have derailed some regulation efforts. Former SEC staffers, who jumped to private firms, helped stop an effort last year to better regulate the money market fund industry, according to a report from the Project on Government Oversight, cited by Reuters. The report cites a variety of former SEC staffers, who questioned the proposed money market funds at the time. And the revolving door swings the other way too. The report notes that SEC officials, who once worked in the money market industry, also helped to derail the regulation.
Thing Six: Companies And The Poor Are On The Same Team This Time: Poor people aren’t the only ones suffering from some Republican governors’ decision to take a stance against Obamacare; companies are hurting too. Republican governors from a slew of states rejected the Medicaid expansion included in Obamacare, a move that will deny coverage to their states’ poorest residents. It also means many companies will have to pay more to insure their workers. Under the Medicaid expansion, lower-paid workers would be covered by Medicaid at no cost to the boss. But in states where officials are rejecting the expansion, the companies will have to cover the workers themselves or pay a fine of at least $2,000 per person, according to the Wall Street Journal. Some states, including New Mexico, which approved the Medicaid expansion, have taken business’ concerns into account. While others, like South Carolina said the Medicaid expansion would allow companies to dump the responsibility for insuring their employees on to the state.
Thing Seven: College Just Ain't What It Used To Be: Paying for college just isn’t what it used to be. As tuition costs rise far out of pace with inflation, many students have lost the ability to work their way through college, The New York Times reports. Instead only students with extraordinary sources of income -- like the money they earned for fighting in Iraq and Afghanistan -- have the ability to use a paycheck to pay for school. Forty years ago when college cost $4,000 per year in today’s dollars, the idea of a student working their way through college wasn’t that outrageous. But now, with even a public college education costing as much as $80,000, that dream is out of reach, saddling more students with debt.
Thing Seven And One Half: Dressing For Success: Last night, everyone from Taylor Swift to Elton John gathered to celebrate the Grammy’s and apparently they were all hungry. As Buzzfeed notes, many of the celebs in attendance dressed kind of like food.
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Heard On The Tweets:
@moorehn: Maroon 5 is the guy in that Citi commercial just happy to be near Alicia Keys.
@kevinroose: At a Microsoft store for the first time in my life. It's actually kind of... impressive? What is going on? Is Microsoft cool again?
@ReformedBroker: For the record, I was WAY early on the Lumnineers http://www.thereformedbroker.com/2012/05/26/saturday-night-video-ho-hey/ … now, of course, I hate them because you all like them.
@morningmoneyben: George Will goes all "Occupy Wall Street" and says break up the big banks. http://m.washingtonpost.com/opinions/george-will-break-up-the-big-banks/2013/02/08/2379498a-714e-11e2-8b8d-e0b59a1b8e2a_story.html?hpid=z6 …
And you can follow us on Twitter, too, if you want, no pressure: @JillianBerman and @MarkGongloff
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