I just charge it
Where do I sign?
Charge it
Show me the dotted line
Charge it
I don’t have the time to waste

Credit-card industry may cut $2 trillion lines

(Reuters) - The U.S. credit-card industry may pull back well over $2 trillion of lines over the next 18 months due to risk aversion and regulatory changes, leading to sharp declines in consumer spending, prominent banking analyst Meredith Whitney said. …

Closing millions of accounts, cutting credit lines and raising interest rates are just some of the moves credit card issuers are using to try to inoculate themselves from a tsunami of expected consumer defaults.

My Astyk-influenced wife is now bugging me to cut back on the credit card. I use it for almost everything, then send off a huge payment every month, telling myself that’s OK, but she’s right of course. Or they’re right. I don’t think as hard about buying extra groceries when it all comes down to a swipe of plastic at the end. I’d gladly use the debit card, but reports of card number hijacking put me in fear of overdrafts and whatnot. For all their flaws, credit cards offer some protection against fraud. And carrying enough cash to pay for gasoline just worries me.

Astyk also noticed that McDonalds “food” has become the second most-charged purchase in the USA. Astyk-Hat also has my wife cutting out meat, replacing it with beans and rice.

Full lyrics to Charge It, by Tim Curry:

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Update: China’s #3 Dongfeng Definitely Casts Eyes On GM

Now, there are fresh and more concrete indications about a possible Chinese move on GM. Hu Xindong, Secretary to the Chairman of China’s third largest auto maker Dongfeng, said they have been contacted by financial groups which have close relationships with GM. Topic of the discussions: A possible takeover. This according to China’s National Business Daily via Gasgoo. …

Meanwhile, Shanghai Automotive Industry Corp (SAIC) has concluded their own negotiations, and officially said they are not considering buying GM. That because of “GM’s huge costs of compensating workers and other follow-up expenditures,” as Wang Liusheng, an auto analyst at China Merchants Securities did put it.

Subtext: Taking over GM nuts and all would have been nuts in Chinese eyes. The Chinese are interested in the assets, but they balk at the liabilities, especially the ones with a UAW attached. Any other outside investor who owns some sanity would look at it the same way.

The pistonheads at TTAC have been predicting the demise of GM for about four years now, and see little of value coming out of the Cash-Starved Three’s revised plan:

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Times are tough all over, but governments are trying to prime the money pump:

Detroit Rescue Plan

General Motor’s board is currently reviewing the rescue plan that will be released on Tuesday and will be considered by Congress next week. GM said on November 7th that it may not have sufficient cash to operate after December. A 10-12 page summary of the plan will be released to the public and a more detailed 80 page version will be sent to Congress. The plan is rumored to entail closing factories, eliminating half the US brands, delaying health care benefit payments, and converting some of the companies’ $43 billion debt into equity in the company.

Sounds like voluntary reorganization.

Spanish car sales fall 50 pct, worst since 1993

Spanish car sales fell 49.6 percent in November, marking the biggest fall in nearly 16 years as Spaniards slashed spending amid credit restrictions and soaring unemployment, industry data showed on Monday. … Spain’s government last week budgeted 800 million euros ($1.04 billion) towards its struggling car industry amid fears the sector could lose 50,000 jobs. … Spain’s unemployment rate was by far the highest in Europe in October at 12.8 percent, according to the European Union.

Awaiting comment from our Spanish correspondent.

Manufacturing Slows Sharply In China

Manufacturing activity declined sharply in November, as measured by the official purchasing managers’ index. The PMI fell to 38.8, from 44.6 the month before, the China Federation of Logistics and Purchasing said Monday. A reading below 50 indicates contraction. … After the pace of economic growth slowed in the third quarter to 9.9%, a half-decade low, the government announced on Nov. 9 a 4 trillion yuan ($585 billion) stimulus package focused on upgrading infrastructure, raising rural incomes via land reform and implementing social welfare projects such as affordable housing and environmental protection.

China and Growth

Unlike most of the world’s economies, China is widely believed to need a minimum of 7 percent annual growth to maintain social stability. New jobs are required for the millions of young workers graduating from school each year and the millions more that continue to migrate from rural areas into the industrialized urban economy.

As a major consumer of world energy supplies, the state of China’s economy will play a major role in oil demand for a long time to come. Officially the Chinese government remains optimistic that it has the internal resources to continue to grow even with faltering exports. Last week Beijing cut interest rates by the most in 11 years and unveiled a $586 billion stimulus plan to keep the economy growing in the midst of a global recession.

On Black Friday, we only bought a few used books at the thrift store. My wife bought several of the mysteries that she and her mother enjoy, and I found a copy of 1984, which I remember a lot about, but don’t remember reading anymore.

That night was all reruns, so we watched internet videos, one of which was a BBC dramatisation of The Machine Stops, a 1909 short story by EM Forster.

You may know EM Forster from reading or watching A Room With a View, Howard’s End or A Passage to India.

Forster’s story envisioned a world in which everyone mostly stays put in their below-ground, climate-controlled quarters, communicating with others only across a video screen network. Needs are met and lives are managed by machines, known collectively as The Machine. Asimov wrote many short stories with a similar theme of humans served and managed by a well-meaning central computer, THX-1138 showed medicated humans in underground cells, and the recent film Wall-E portrayed a space ark of chubby passengers tended by an evil device, but in Forster’s story the Machine is neither good nor evil. When working perfectly, the Machine is as good as designed, but humans only remember how to make limited repairs. Entropy prevails:

… But for the most part panic reigned, and men spent their strength praying to their Books, tangible proofs of the Machine’s omnipotence. There were gradations of terror - at times came rumours of hope - the Mending Apparatus was almost mended - the enemies of the Machine had been got under- new “nerve-centres” were evolving which would do the work even more magnificently than before. But there came a day when, without the slightest warning, without any previous hint of feebleness, the entire communication-system broke down, all over the world, and the world, as they understood it, ended.

Peak oil and climate doomers present tales like The Machine Stops as a perfect analogy for our faltering financial system, or even our industrial society, but I’ve been reading repeated predictions of impending doom for almost a decade now.

While I drove us back to Baltimore, my wife read a few chapters of Sharon Astyk’s Depletion and Abundance aloud to me. She had latched on to the book as soon as it came out of the box. Astyk addresses the current situation in practical terms that other homemakers can understand. While no Pollyanna, she believes that if we prepare, we can fashion decent lives while using much less energy. Now my wife wants to cancel some utilities and rebuild the kitchen without the refrigerator.

The Great Gazoo has returned to Earth again. He’s too busy to bother with nonsense like TPM registration, so he has asked me to convey his heartfelt regrets:

Well, dum-dums, now you’ve gone and done it. Since my brief stay on Earth during your Stone Age, I have devoted a small amount of my valuable time on Zatox monitoring your transmissions to see if any of my incredibly useful advice would take hold. (I am always right, you know - it’s a curse, but it is true.) On Zatox, I am the acknowledged expert on human affairs. If I but had the time, I could solve all of your problems in the blink of an eye. But I’m hard at work on another invention, and anyway, it’s more fun seeing you Earthlings try to get something right.

So imagine my profound disappointment at the recent election. Faced with intractable war, environmental calamity, energy depletion, financial panic, do you take the intelligent course and fall into hopeless despair and pessimism? No! You elect an intelligent, hard-working leader. One bent on solving all your insoluble problems instead of enriching his cronies! What a colossal waste of time.

I’m not the only one who feels this way; everyone on Zatox is stunned. From my observations and lectures, all of us on Zatox have developed such an intimate knowledge of your situation, indeed of your puny Earthling souls, that any of us would assure you that your noble efforts are doomed to certain failure. If only your forebears had listened to me.

Thanksgiving, indeed.

P.S. I would gladly send you a smaller version of my universal doomsday device, if the authorities would only allow it. (Philistines!)

M: Ah. I’d like to have an argument, please.

R: Certainly sir. Have you been here before?

M: No, I haven’t, this is my first time.

We just got our copy of Depletion and Abundance. I assumed that Sharon Astyk was too busy making an Abundance of food for Thanksgiving to post about Depletion, but George Monbiot roused an article out of her. And a good one.

George Monbiot is Arguing with Me…That Has to be Good

In the Guardian, Monbiot writes:

The costs of a total energy replacement and conservation plan would be astronomical, the speed improbable. But the governments of the rich nations have already deployed a scheme like this for another purpose. A survey by the broadcasting network CNBC suggests that the US federal government has now spent $4.2 trillion in response to the financial crisis, more than the total spending on the second world war when adjusted for inflation. Do we want to be remembered as the generation that saved the banks and let the biosphere collapse?

This approach is challenged by the American thinker Sharon Astyk. In an interesting new essay, she points out that replacing the world’s energy infrastructure involves “an enormous front-load of fossil fuels”, which are required to manufacture wind turbines, electric cars, new grid connections, insulation and all the rest. This could push us past the climate tipping point. Instead, she proposes, we must ask people “to make short term, radical sacrifices”, cutting our energy consumption by 50%, with little technological assistance, in five years.

There are two problems: the first is that all previous attempts show that relying on voluntary abstinence does not work. The second is that a 10% annual cut in energy consumption while the infrastructure remains mostly unchanged means a 10% annual cut in total consumption: a deeper depression than the modern world has ever experienced. No political system - even an absolute monarchy - could survive an economic collapse on this scale.

Astyk replies:

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Pop psychologists tell us we’d be happier without so much stuff. DJ and Dmitry Orlov try to make the case that we’d be better off with hardly any stuff at all.

The Case For Resilient Community

For 50 years, Ariyaratne has been describing a similar concept in terms of other benefits: a “no poverty - no affluence” society which promises political, emotional, and spiritual development at the individual, family, and community level. Ariyaratne argues that awakened communities can participate in an awakened central government for those needs that cannot be met at the community level. The central government depends on the communities of its membership, not the reverse. And an awakened central government can participate in global affairs without fear of losing its power, for its power comes from within.

Poverty an asset; assets a burden

Chris writes of a paradox: lack of assets may be the greatest asset of all. I don’t believe that this is a paradox: the higher you climb, the harder you fall. A place that is used to an artificially high standard of living inevitably develops artificially high standards. These standards cannot be undone overnight, as soon as the standard of living collapses, delaying commonsense adaptations until it is too late. Prosperous places have expensive infrastructure, and, once it can no longer be maintained, it becomes much worse than no infrastructure at all. Lastly, poverty takes practice, and a sudden lapse into poverty is far more traumatic than the habit of a stable but constrained existence.

Sorry for the early Xmas image, but I can’t resist Gahan Wilson.

Alan Colmes, Hannity’s liberal punching bag on Hannity & Colmes, is leaving the show.

A) Who should replace him?

B) Who will really replace him?

The Washington Post’s car guy, Warren Brown, slams the punditocracy, saying the fault is not in our auto industry, but in ourselves:

Pundits Peddle Revisionism in Attacking U.S. Automakers

Go ahead and look at (the Prius), preferably in Japan, where the Ministry of International Trade and Industry (MITI) has done a marvelous job of coordinating industrial and energy policy into a vehicle development and consumption strategy that makes sense. We have no such government-industry cooperation in the United States. We have no industrial policy, no energy policy, which largely is why we now have a core segment of our natively owned manufacturing infrastructure teetering on the brink of collapse.

Neither the Japanese, nor the Germans, nor the Chinese, nor the Koreans have been as stupid as we’ve been in this country in the management of the automobile industry.

Brown also defends union pay:

It is the rankest hypocrisy for well-paid journalists to decry the “high” pay of UAW-represented employees. I doubt that there is one UAW critic in the media, or on Capitol Hill, who would be willing to settle for a UAW paycheck. I’m almost certain there isn’t one who would be willing to trade his or her relatively cushy employment for a year on an auto plant assembly line.

Criticism of “improvident labor contracts” thus smacks of class bias. It reeks of the notion that some work, such as that involving manual labor, inherently deserves less compensation than others, such as expressing one’s opinion. It’s more baloney.

Update: AutoSavant has a brief history of the decline of Detroit:

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1949 Buick Roadmaster Sedanet

My Regal has been a real champ, and I’d love to replace it with the almost identical LaCrosse, but should I ever buy another Big 3 car? Business forecasting bastion Kiplinger considers the obvious question:

Kiplinger: Should You Buy a Detroit Car?

Loyalty to the American carmakers is low and getting lower. When it comes to cars, Americans have a long memory. We remember the Cadillac Cimarron (a Chevy Cavalier masquerading as a luxury car), the Ford Taurus (which languished as a rental lot staple while Detroit focused on trucks), the Hummer H2 (a symbol of Detroit’s myopia).

We remember the years of quality and reliability problems as well as the inept management decisions. We bristle because Detroit neglected fuel-efficient cars, gave expensive perks to the unions, and even paid workers while production lines were idled.

Detroit has made great strides fixing its problems and designing better cars, but it may be too late. As Americans have fled to foreign makes, many of which are made right here in the U.S.A., Detroit’s market share has dwindled to 482% (sic), compared with more than 60% five years ago.

Well, no:

I wish the U.S. carmakers, and the industrial Midwest, all the best. No one wants to see the pain associated with job losses. But although I’d love to play the patriot card and recommend that you support the American carmakers, why take the chance? You have enough problems with your retirement and college funds to risk another hit on your personal finances.

Stein at TTAC makes a debatable point that we want mobility more than just cars and references this NY Times op-ed: Have You Driven a Bus or a Train Lately?

The Obama administration should ask the companies, as a condition of financial assistance, to begin shifting from being just automakers to becoming innovative “transportmakers.” As Barack Obama’s new chief of staff, Rahm Emanuel, recently said: “You don’t ever want a crisis to go to waste. It’s an opportunity to do important things you would otherwise avoid.”

As transportmakers, the companies could produce vehicles for high-speed train and bus systems that would improve our travel options, reduce global warming, conserve energy, minimize accidents and generally improve the way we live.

This better way forward has been kicking around Washington for more than 35 years. In a prescient 1972 article in The Atlantic, Stewart Udall, an interior secretary under John F. Kennedy and Lyndon B. Johnson, warned of America’s excessive dependence on cars and called for this approach.

At a time when almost no politicians and industry leaders were paying attention to this problem, Mr. Udall made a bleak but accurate prediction. He wrote that “the oil needs of the other industrialized countries are growing faster than ours” and that this “surge of demand will soon begin to send shock waves through the American economy and transportation system.”

I think people vastly prefer the safety and convenience of an enclosed auto for their mobility, but that they may have to learn to do without.

Although Fox anchors and pundits like Ben Stein laughed him off, guest economic analyst Peter Schiffer accurately, and repeatedly, predicted a collapse of the financial markets:

About ten minutes long. If you have trouble with embeds, watch on Youtube here.

h/t Andrew Sullivan

BTW, I won’t be disabling comments. :-)

After the break Michael Lewis, who exposed Wall Street shenanigans in Liar’s Poker, talks about the current crisis.

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The Office of the President-Elect?

Obama Pushes for $50 Billion for Automakers, Oversight Czar

By injecting himself into the talks about how to save General Motors, Obama is making an exception to his decision to steer clear of policy-making until he takes office.

The president-elect also wants the Federal Reserve to extend emergency loans to General Motors, Ford Motor Co. and Chrysler LLC, according to Obama aides who spoke on condition of anonymity.

The failure of those companies would likely bring down parts-makers, dealerships and suppliers in addition to inflicting a deep psychological blow.

If the plan were to offer no strong guarantees against layoffs it would likely draw fire from unions. But Obama advisers have been persuaded that the impact on current workers and retirees would be staggering if the companies went into bankruptcy.

Any auto czar or committee would presumably have the job of overseeing a restructuring of the auto industry.

With the right sort of restructuring, I’d be in favor of providing guaranteed loans, much as was done with Chrysler.

Update 2:G.M.’s Troubles Stir Question of Bankruptcy vs. a Bailout

But not everyone agrees that a Chapter 11 filing by G.M. would be the disaster that many fear. Some experts note that while bankruptcy would be painful, it may be preferable to a government bailout that may only delay, at considerable cost, the wrenching but necessary steps G.M. needs to take to become a stronger, leaner company.

Although G.M.’s labor contracts would be at risk of termination in a bankruptcy, setting up a potential confrontation with its unions, the company says its pension obligations are largely financed for its 479,000 retirees and their spouses.

Shareholders have already lost much of the equity that would disappear in a bankruptcy case. Shares of G.M. rose 16 cents Wednesday, to $3.08, but they have fallen 90.5 percent over the last 12 months, amid sharply lower auto sales and fears about G.M.’s future.

And as companies in industries like airlines, steel and retailing have shown, bankruptcy can offer a fresh start with a more competitive cost structure to preserve a future for the workers who remain.

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Americans get our kicks on Route 66 and regard the anywhere, anytime road trip as part of our modern birthright, but will our love affair with the automobile continue? The Big Three automakers alternate between inattentive and needy, and we’ve turned a cold shoulder to their showrooms lately, but Democratic lawmakers and some TPM commenters cringe at the spectre of millions of unemployed auto industry workers. And so does President-elect Obama. The Wall Street Journal says Obama trade adviser Daniel Tarullo will, “lead the auto-company transition efforts” (transition efforts?), while Automotive News (sub) is already calling him the Car Czar. What are the Big 2.8 transitioning to, and what will Obama have to promise Bush to bail out Detroit before Congress goes on another well-deserved vacation?

Democrats Plot Detroit Rescue (sub)

The president-elect doesn’t want to take office Jan. 20 with the auto industry — long the backbone of the nation’s industry — in a shambles, according to aides. “He wants to prevent a situation like Lehman, where you flail yourself into an uncontrolled bankruptcy,” a senior Obama aide said Tuesday, referring to the sudden and damaging collapse of Lehman Brothers Holdings Inc. “This can’t wait until Jan. 20.”

Dan Tarullo, a Georgetown University law professor and a top Obama adviser on trade, has been appointed to lead the auto-company transition efforts, according to Rep. Sander Levin (D., Mich.), a key lawmaker involved. Obama aides said Mr. Tarullo is one of a number of advisers assigned to the issue. Michigan Gov. Jennifer Granholm and former Michigan Rep. David Bonior have been given prominent seats at the table.

Obama Asks Bush to Back Rescue of Automakers (reg)

Chinadialogue reprints a campaign speech:

Obama and a new energy future

What will a Barack Obama presidency mean for the global environment?

In a policy address delivered in Portsmouth, New Hampshire, in October 2007 - shortly after George W Bush hosted a Washington conference on energy security and climate change — Obama set out his plan. It included a strong focus on energy efficiency and the use of a “cap-and-trade” system. Obama also emphasised his commitment to investing in clean technology, saying that new technology from the United States can help countries like China to fight climate change.

“[W]e will share our technology and our innovations with all the nations of the world,” Obama said. “If we can build a clean coal plant in America, China should be able to as well.”

…

“There are some in this [presidential election] race who actually make the argument that the more time you spend immersed in the broken politics of Washington, the more likely you are to change it. I always find this a little amusing. I know that change makes for good campaign rhetoric, but when these same people had the chance to actually make change happen, they didn’t lead. When they had the chance to stand up and require automakers to raise their fuel standards, they refused. When they had multiple chances to reduce our dependence on foreign oil by investing in renewable fuels that we can literally grow right here in America, they said no.”

“Now, I know that some of these policies are difficult politically. They aren’t easy. But being president of the United States isn’t about doing what’s easy. It’s about doing what’s hard. It’s about doing what’s right. Leadership isn’t about telling people what they want to hear - it’s about telling them what they need to hear.”