Government Takes Over Fannie Mae and Freddie Mac
The United States government seized control of Fannie Mae and Freddie Mac yesterday in "a dramatic bid to restore faith in the embattled mortgage giants and arrest a vicious cycle that has driven the nation's economy into a steep downturn," the Washington Post reports.

In what MarketWatch calls "the biggest government bailout in U.S. history," Treasury Secretary Henry M. Paulson Jr. announced the takeover to try to stabilize the deeply troubled housing and financial markets. Fannie Mae and Freddie Mac, with a combined 11,000 employees, have funded more than two-thirds of U.S. home loans in recent months, and doubts over their ability to continue doing so had threatened to immerse the economy into even more turmoil.

"Under a sweeping plan," MarketWatch explains, "the two companies will be run by the government indefinitely, with the two current chief executives to be replaced and the government investing up to $100 billion in each firm to keep them solvent." "Under the terms of the government rescue, outlined Sunday, the firms will shrink, take on new senior management and ultimately lose the dominance they once enjoyed," says Forbes.

August Auto Sales Fall
"Nearly every major automaker saw its U.S. sales drop in August, but many are seeing signs that the worst slump in recent history may have bottomed out," according to the Associated Press. Overall U.S. auto sales declined 15.5 percent compared with the previous year. This is the fifth consecutive month of double-digit declines.

Despite "some of the largest discounts ever offered," the car companies "were unable to sell many of the pickups and sport utility vehicles clogging dealers' lots," the New York Times adds. "Meanwhile, shortages of many popular, fuel-efficient cars hurt sales of those models."

Detroit 3 to Request $50 Billion in Federal Loans
Due to weak sales and declining market share, not to mention miserable credit ratings, the Detroit Three automakers are now turning to the U.S. government for help. The Wall Street Journal reports that General Motors Corp., Ford Motor Co. and Chrysler LLC will be launching a campaign in the coming days to secure as much as $50 billion in low-cost loans to help get past the current economic malaise.

Originally, the Detroit automakers "were after $25 billion in loans from the Feds," notes Autoblog, "but after lawmakers authorized a loan in last year's energy bill, the domestics now want Congress to grant loans up to $50 billion over the next three years."

The automakers' goal is "to have new legislation in place for the aid package by the time Congress adjourns in late September or early October," Agence France-Press reports. "The possibility of one or more of the Big Three seeking bankruptcy protection — which could have an enormous economic impact — has created a sense of urgency."

"The loans would be available to foreign automakers, but those companies are not expected to seek the money because they are in a better financial situation and priority would be given to companies with plants 20 years or older," according to Detroit News.

"This isn't a bailout," a spokesman for GM tells AFP. "These are direct loans that we have to pay back," adds a Ford spokesman.

Boeing Workers Get Mad and Vote to Strike. Then Don't Strike. Then Get Madder. Then Strike.
After last-minute negotiations and an unusual two-day contract extension, Boeing Co. shuttered its commercial aircraft manufacturing operations over the weekend.

Members of the International Association of Machinists and Aerospace Workers (IAM) voted overwhelmingly on Wednesday to strike for an unprecedented second time in three years. IAM members, 87 percent of whom voted to strike, then learned both sides had agreed to a 48-hour contract extension at the request of Washington Gov. Chris Gregoire and federal mediators, the Seattle Post-Intelligencer says.

According to the Seattle paper, IAM members were furious at the meeting earlier in the week that the talks had been extended. "Everyone is upset," said a machinist who did not wish to be named. "They are mad at the company, mad at the offer, even mad at the union leadership."

Now, after a last-minute effort to agree to a contract with machinists broke down on Friday night, more than 27,000 aircraft assembly workers went on strike over pay and production has halted at the aerospace giant.

"Boeing was apparently blindsided by the rejection of its offer, one that the company calls outstanding," according to National Public Radio. "It contained, among other things, an 11 percent wage hike over three years, increased money for pensions and thousands of dollars in bonuses. But workers say the company could give more."

"Boeing says it has offered more than $34,000 per employee in pay and benefits," BBC News reports. "Analysts say that the stoppage could cost Boeing at least $100 million each day in lost revenues — as well as delays in delivering the Dreamliner."

Fed's Beige Book Portrays Downbeat Economy
"Conditions in the U.S. economy continued to be extremely difficult in the month to August 25 amid sluggish consumer spending, declining manufacturing activity and slow demand for property," the Financial Times reports on last week's Federal Reserve data.

The Fed's beige book notes that business conditions were "weak," "soft" or "subdued" across most of the country. "Businesses reported strains brought on by a battered real estate market, tapped-out consumers and stubbornly high prices for staples," the Washington Post reports.

However, last week's Fed report also offered some bright spots in the economic outlook, including in the agricultural, energy and mining sectors, and from international tourism. "Energy and mining activity were strong and expanding in all of the districts that reported on those sectors," the beige book said, reflecting continued high prices for raw materials.

U.S. Economy Sheds 84,000 Jobs in August; Manufacturing Loses 61,000
The American economy lost 84,000 private non-farm jobs in August, the eighth straight month of job losses, according to the latest data from the Department of Labor. The unemployment rate jumped to 6.1 percent in August, the highest in nearly five years.

"The rate has steadily climbed this year from a cycle low of 4.4 percent and now sits just below the peak of 6.3 percent seen during the last recession, says MarketWatch.

Manufacturing employment fell by 61,000 in August. The largest decline occurred in motor vehicles and parts, which has lost 128,000 jobs over the past 12 months. In August, Employment also fell in wood products and furniture (and related) products, two industries related to home building. Computer and electronic products manufacturing added 5,000 jobs over the month.

Revised Q2 Productivity
U.S. workers' productivity "soared in the spring while labor costs declined, two welcome outcomes that should relieve concerns that inflation is getting out of hand," AP reports. "The Commerce Department reported Thursday that productivity, the amount of output for every hour of work, jumped 4.3 percent at an annual rate in the April-June quarter [in both the business sector and non-farm business sector], a full percentage point higher than economists expected."

Meanwhile, the Labor Department also reports that manufacturing productivity decreased 2.2 percent in Q2. The 3.7 percent fall in manufacturing output was the largest quarterly decline since a 2.5 percent decrease in the second quarter of 1989.