Obama Pledge To Control Bailout Cash

The Loan Dept

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More from the You Just Can’t Make This Up Department: (h/t JammieWearingFool for link source)

Magical Thinking

Obama’s Pick To Lead GM: “We need to go deeper, go harder, go faster”

You just can’t make this stuff up.

From CSM:

General Motor’s new CEO, Frederick “Fritz” Henderson, says he gets President Obama’s message: that the troubled automaker has a very short window – 60 days – to fix itself or go into bankruptcy.

“We need to go deeper, go harder, go faster,” said Mr. Henderson in his first press conference as GM’s CEO. “We need to reinvent General Motors in the next 60 days.”

What this might mean is that General Motors will cut its operations further. Some plants that don’t have enough business could be shut down or combined with other plants. Yet more layoffs are possible as well.

GM is also trying to sell some of its brands. Henderson had hoped to have Hummer sold by Tuesday but now says any sale will take longer. He has yet to make a decision on what to do about the Saturn operation.

At the same time, GM is scrambling to keep its marketing plans competitive with other automakers, announcing payment protections for buyers and a guarantee in the retail value of vehicles.

No matter what, Henderson says, the goal is to make GM profitable in any type of economic scenario.

As part of that effort, GM says it will try to “clean up” its balance sheet. Henderson says he agrees with the Obama administration that the company has too much debt. GM is already in the process of negotiating with its bondholders about taking a “haircut” on their holdings. The deadline of 60 days will give those negotiations an even greater sense of urgency.

Henderson has not ruled out the possibility that GM may need to accomplish some of these goals through bankruptcy. “It is clear we will either do it in or out of court, but we will get it done,” he said.

More immediately, however, GM is rolling out new marketing initiatives. On Tuesday, it announced it would offer payment protection to a buyer for the first 24 months of ownership, in case the owner loses his or her job. The protection means that GM will make up to nine payments for up to $500 a month.

Hyundai, a Korean carmaker, started a similar program in January. On Tuesday, Ford followed with its version of the plan.

GM has also announced that if a car owner wants to trade in his or her vehicle within the first two years, it will guarantee the retail value. The declining value of used cars has meant that some car owners owe more than the value of their vehicle. GM will thus guarantee that won’t happen.

In addition, GM is making its popular OnStar emergency alert system standard for new-car buyers to use for one year.

On Sunday, the Obama administration forced out Rick Wagoner, who led GM during this tumultuous period. And Mr. Obama’s auto task force said it had doubts about the economic viability of Chrysler Corp., suggesting it might have to go into bankruptcy. The task force gave Chrysler 30 days to return with a revised business plan.

Any new plan by Chrysler may well include an investment by Fiat, which in January said it wanted to take a 35 percent stake in the company. However, according to press reports, the Obama administration wants to limit the Fiat stake to 20 percent.

“This alliance does have a real industrial rationale, as Fiat has a good product portfolio that is complementary to Chrysler’s,” writes Josh Whitford, a Columbia University professor who specializes in global manufacturing, in an analysis. “Fiat would give Chrysler access to distribution networks in other parts of the world, particularly Europe.”

As the auto industry tries to right itself, one key issue is how the auto unions will respond to various moves. The unions were key Obama supporters during the election campaign.

Obama has taken several steps that could resonate with the unions. On Monday, he said he directed government agencies to accelerate federal fleet purchases. He also said the Treasury would work with the auto finance companies to increase the flow of credit to consumers and dealers. And he said the Internal Revenue Service would begin to promote a new tax benefit for consumers who bought a car after Feb. 16 or will buy one before the end of the year. The benefit will allow car buyers to deduct sales and excise taxes for the vehicle on their federal tax return. The benefit may grow: Obama has said he wants to work with Congress to find a way to expand it without increasing the federal budget deficit.

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Europe: ‘Eventually, we will all hate Obama too’

Barack Obama, en fête around the world, will one day learn that there is no magical cure for the envy of others. What makes America the indispensable power (and even more indispensable in the era of the new China), is precisely what makes anti-Americanism inevitable…

The Times of London:

It amuses me that some of those who criticise the present US Administration for its Manichaeism – its division of the world into good and evil – themselves allocate all past badness to Bush and all prospective goodness to Obama. As the ever-improving myth has it, on the morning of September 12, 2001, George W. and America enjoyed the sympathy of the world. This comradeship was destroyed, in a uniquely cavalier (or should we say cowboyish) fashion, through the belligerence, the carelessness, the ideological fixity and the rapacity of that amorphous and useful category of American flawed thinker, the neoconservative. They just threw it away.

But there isn’t anything that can’t be fixed with a sprinkling of genuine fairy dust. What Bush lost, Obama can find. Where the Texan swaggered, the Chicagoan can glide. Emotional literacy will replace flat iteration, persuasion will supplant force as the preferred means of achieving what needs to be achieved, empathy will trump narcissism. Those who hate America may find their antipathy waning, those who were alarmed by unilateralism will warm to softer, moral leadership. A new dawn will break, will it not?

Some on the Left are getting their count-me-outs in already, realising that Mr Obama is, after all, a big-game hunter, a full-trousered American candidate. They, I think, are more realistic than those who manage on one day to laud the Democrat as not being a real politician, and on the next to praise him for his sensible left-trimming when seeking the party’s nomination and his equally sensible centre-hugging once it was in the bag. I say the antis are more realistic because, eventually, we will hate or ridicule Mr Obama too – provided, of course, that he is elected and serves two full terms.

George W.Bush, of course, represents a particular kind of offence to European sensibilities. He blew out Kyoto, instead of pretending to care about it and then not implementing it, which is what our hypocrisies require. He took no exquisite pains to make us feel consulted. He invaded Iraq in the name of freedom and then somehow allowed torturers to photograph each other in the fallen dictator’s house of tortures. He is not going to run Franklin Roosevelt a close race for nomination as the second greatest president of the US.

But even if he had been a half-Chinese ballet-loving Francophone, he would have been hated by some who should have loved him, for there isn’t an American president since Eisenhower who hasn’t ended up, at some point or other, being depicted by the world’s cartoonists as a cowboy astride a phallic missile. It happened to Bill Clinton when he bombed Iraq; it will happen to Mr Obama when his reinforced forces in Afghanistan or Pakistan mistake a meeting of tribal elders for an unwise gathering of Taleban and al-Qaeda. Then the new president (or, if McCain, the old president) will be the target of that mandarin Anglo-French conceit that our superior colonialism somehow gives us the standing to critique the Yank’s naive and inferior imperialism.

Often those who express their tiresome anti-Americanism will suggest, as do some of the more disingenuous anti-Zionists with regard to anti-Semitism – that they, of course, are not anti-American, and that no one really is. But, coming as I do from an Anti-American tradition that wasn’t afraid to proclaim itself, I think I know where the corpses are interred. For example, the current production of Bernstein’s Candide at the English National Opera is a classic of elite anti-Americanism, in which we are invited to laugh at the philistine invocation of “Democracy, the American Way and McDonald’s”. The laughter that accompanied this feeble satire showed our proper understanding that we, the audience, had a proper concept of democracy, and would never soil ourselves with an Egg McMuffin.

The true irony went way above the sniggerers’ heads, which was that Leonard Bernstein was the American cultural import that we were, at that very moment, enjoying. But the prejudice is that American culture has had a negative influence on the world, tabloidising our journalism, subverting the gentle land of Ealing with the violent pleasures of Die Hard 10 and commercialising our most intimate lives. And so we have ever complained; my father, back in the early Fifties, once wrote an entire communist pamphlet about the terrible effect of Hollywood and jazz on the land of Shakespeare and Elgar.

This week you could hear the author Andrew O’Hagan on Radio 4, reading from his collection of self-conscious essays, The Atlantic Ocean, in which – despite his own claims – every impact of American life on Britain is somehow configured negatively. He writes of an exported popular culture “born in the suburbs of America” and defined as “Spite as entertainment. Shouting as argument. Dysfunction as normality. Desires as rights. Shopping as democracy.” This in the country that has sent Big Brother, Pop Idol, Wife Swap and Location, Location, Location over the Atlantic in the other direction, while taking delivery of Curb Your Enthusiasm and The Wire.

I should admit that I am irked by O’Hagan’s dismissal of the “idiots who supported that bad and stupid war (ie, Iraq)” and am willing to match my idiocy against his intelligence in any debating forum that he cares to name. More interesting, though, is the desire to blame America. For all that O’Hagan claims that the US has lost its purchase on the world’s affections, it remains the chosen destination for the most ambitious of the planet’s migrants. For all that he claims that this change in sentiment is recent, I can’t help recalling those – the most honest – who commented, in journals he writes for and on the very day after September 11, that the Americans had had it coming.

In part I think that anti-Americanism is linked to a view of change as decline. The imagination is that dynamic capitalism, associated with the US, is destroying our authentic lives, with our own partly willing connivance. It is a continuing and – at the moment – constant narrative, uniting left and right conservatives, which will usually take in the 19th- century radical journalist William Cobbett (conveniently shorn of his anti-Semitism), and end with an expression of disgust over the Dome, the Olympics or Tesco. Just as bird flu is a disease from out of the East, runaway modernity is a scourge originating to the West.

So Barack Obama, en fête around the world, will one day learn that there is no magical cure for the envy of others. What makes America the indispensable power (and even more indispensable in the era of the new China), is precisely what makes anti-Americanism inevitable.

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The Disappearing Shopping Mall

The vanishing shopping mall

Enclosed shopping centers, long the cathedrals of American consumerism, are closing their doors by the hundreds as the recession continues to clobber retail sales. Is America’s love affair with the mall over?

Are malls dying?

The vital signs are not good. Even before the recession hit, consumers had developed mall fatigue, and the classic enclosed shopping mall was in decline. More than 400 of the 2,000 largest malls in the U.S. have closed in the past two years. The last new major mall in the U.S. opened in 2006, and only one big mall is scheduled to open this year—the troubled Xanadu mega-mall in Rutherford, N.J. (See below.) With some 150,000 retail stores projected to fail in the U.S. this year, more mall closings are imminent. Mall mainstays such as Mervyn’s department stores, Linens ’n Things, and KB Toys have already disappeared into bankruptcy, and mall vacancy rates topped 7 percent last year, the highest level since 2001. “It’s an absolute disaster,” says Howard Davidowitz, an investment banker specializing in retailers. “What a mall represents is discretionary spending, and discretionary spending is in a depression.”

Is it really that bleak?

The data suggests that it is. For decades, American consumers could always be counted on to spend more than they did the year before—the only question was, by how much. But in the past 12 months, retail sales in the U.S. have dropped an unprecedented 9.8 percent. The economic collapse has landed especially heavily on the old-line department stores, such as Sears and JCPenney, that anchor many malls. As their sales and profits have tanked, they’ve been pulling out of malls, to the distress of the smaller merchants that depend on the larger stores to feed them traffic. The Turfland Mall in Lexington, Ky., recently lost Dillard’s as an anchor tenant, setting off a cascade of closings. “We have no choice but to leave now that Dillard’s is leaving,” says Bill Parker, who just closed his shoe store.

Have people simply stopped shopping?

No, but they’re increasingly patronizing discounters such as Wal-Mart and Target, not the full-price department stores and high-end boutiques. Sales are growing at Wal-Mart, where shoppers can pick up groceries, fill their prescriptions, and buy socks without leaving the store. Many consumers are also shopping online. “I can’t take a couple of hours out of my weekend to drive down and browse the mall,” says Burlington, N.J., teacher Kari Holderman. Hard times have also meant that consumers are passing up the nonessential items that malls specialize in—things like scented candles, $25 baseball caps, $250 back massagers, and battery-operated guinea pigs spinning on exercise wheels. “The most important fact about our shopping malls,” says social scientist Henry Fairlie, “is that we do not need most of what they sell.”

What happens when a mall dies?

It can devastate the surrounding community. The mall’s site can rapidly turn into a wasteland of overgrown weeds, cracked concrete, and stray animals, with looters picking sites clean of copper tubing, light fixtures, and anything else that can be sold for scrap. When the Riverside Center in Utica, N.Y., closed around Christmas 2007, its owner didn’t even bother to take down the holiday display. The following July, says Peter Blackbird of Deadmalls.com, the roof sprang a leak that drenched the display’s cotton “snow,” which quickly “turned into mold stew.” The fallout goes beyond aesthetics, of course. When a mall closes, unemployment rolls in the region swell, and the loss of property, sales, and business taxes can leave municipalities with serious shortfalls. The city of North Randall, Ohio, is nearly bankrupt following the closing late last year of the Randall Park Mall, once the largest mall in the Cleveland area. “It could simply cease to exist as a city,” says Cuyahoga County Commissioner Peter Jones.

Will anything replace the mall?

Some are being razed to make room for “big box” stores such as Home Depot and discount clubs such as BJ’s and Costco. Still others are being turned into open-air “lifestyle centers,” ersatz Main Streets to replace the real Main Streets that were decimated when malls lured away their customers in the first place. The stores in these centers are at ground level and have entrances facing the street, which helps boost store traffic and sales. Like real Main Streets, lifestyle centers include restaurants, movie theaters, and pedestrian plazas, as well as shopping. The amenities “draw the consumer in for reasons other than to just purchase items,” says Erin Hershkowitz of the International Council of Shopping Centers.

If malls go, could downtowns come back?

In this economy, not likely. Some developers have already tried building “lifestyle centers” in downtown areas left blighted when stores and shoppers fled to the outskirts. But there is no single “big fix” that will pump life back into downtowns full of boarded-up stores, says development expert Teresa Lynch. That means some communities will soon be without a mall or a thriving shopping district, leaving them with no central gathering place. “One of the biggest consequences of mall closings is the loss of a sense of community,” says David Birnbrey of The Shopping Center Group, “a place where people gather and socialize.” And exercise. Retirees Dick and Anne Saplata work out by walking around the largely empty halls of the Metcalf South Mall in Leawood, Kan. It’s likely to close soon, and there’s talk that a developer will raze the place. If the mall goes under, Dick Saplata asks, “where are we going to walk?”

The last mega-mall?

Talk about bad timing. June is supposed to mark the opening of the Xanadu mall on a stretch of New Jersey swampland just across the Hudson River from Manhattan. But it might not happen. When developer Larry Siegel broke ground on the $2.2 billion, 2.4-million-square-foot mall in 2004, he promised that Xanadu would be the ultimate “shoppertainment” experience, with an indoor ski slope, a fishing pond, and even a 30-foot-high chocolate waterfall. But as the recession has deepened, plans have been repeatedly scaled back. Prospective tenants, including Virgin Megastore and Borders, have bailed out, and no anchor tenants have yet been signed. Siegel is vowing to carry on. “We’re not building this for the next 18 months,” he says “but the next 50 years.” The chocolate waterfall, though, has been scaled down to 4 feet.

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