AIG (NYSE: AIG) continues to try to pay back the $182 billion bailout that it received from the federal government, which means from the taxpayers. It announced another stage in the process. It will sell a piece of its large Asia operation — AIA — for about $6 billion. The U.S. government owns 44% of AIG and wants to continue to chop down that stake. The trouble with the effort to recoup the money is similar to attempts with General Motors (NYSE: GM), Chrysler, Fannie Mae and Freddie Mac. The money that was invested will never be paid back entirely. That leaves the government, and taxpayers, to answer the question of whether the bailouts were worth it.
China’s Budget
China has made two announcements about its budget. One was that it has revised its growth forecast to 7.5% for 2012. For an economy that has grown at a rate of 10% over the past decade, the lower level is practically a recession. China says it will try to hedge its challenge with exports due to a slow global economy with a drive to increase consumption within its own borders. That decision may not make sense. China’s consumer activity relies on factory employment, which relies on exports. China also said it would increase its defense budget by 10.5%. The total is only about a quarter of the U.S.’s, but the People’s Republic believes it has to make the investment. To some extent that is because of America’s military presence in Japan, South Korea and Taiwan. Of course, one advantage to the spending is that it will create jobs. Perhaps that will help China’s other goal of increase consumer spending.
Tesco to Add Jobs
Tesco (NASDAQ: TESO), the largest retailer in the UK, will add 20,000 jobs. It already employs 270,000 people in the country. The government lauded the investment by Tesco as the kind of decision that will help get the UK economy on track. Britain is close to another recession. Some economists argue that its austerity programs have gone too far, triggering the layoffs of tens of thousands of government workers. Tesco’s action cannot entirely offset those jobs cuts, but the decision is a sign that private enterprise in the UK is not altogether crippled.
Apple in the News
It is impossible to keep Apple (NASDAQ: AAPL) out of the headlines. The company announced its App Store had reached its 25 billionth download. Just behind that news are reports that the Apple iPad 3, which is supposed to be launched in the next few days, will cost the same as the iPad 2. The decision could cause more than the normal surge in interest that most new Apple products get. The new iPad is the first of any Apple devices to run on superfast 4G wireless networks. These networks have been the most widely promoted service of the big wireless companies in the U.S. Apple, in essence, will enter an entirely new market with a new product. And the iPad 3 likely will be followed soon by a 4G-enabled iPhone 5. It is another entirely new cycle to boost Apple’s already staggering sales increases.
Douglas A. McIntyre
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