seattleSavant.com

So long WaMu. I’m done with you. (For those of you ready to join me, and not interested in the story, jump to my escape plan.)

The last straw was two month’s statements closing with a missing $18. I still use paper statements and checks for my banking, and balance my checkbook every month—like my grandfather taught me. For similarly cautious reasons, when WaMu collapsed and was seized by the FDIC, I printed out a current statement from online and suggested you do the same. I’m still getting ridicule for this. Bankers seem to think anyone foolish enough to mistrust their honesty or competence are fools. Digging after my missing $18, Chase finally fessed up to a ’service charge’ on my formerly free checking. My account predated the current WaMu free checking program. Upon the transfer over to Chase, it became a $1500 minimum account. Chase quietly started pocketing money from my account. I caught them. I’m done.

Chase’s business strategy for years—to the extent the financial industry has any strategy at all beyond ultra-short-term greed—has been to fee the shit out of their retail banking customers. Failing at the idiotically simple task of lending at slightly higher interest rate then they pay to their depositors, all of the remaining superbanks are resorting to ever higher and pettier fees to return to profitability, while still reliant upon public funds to operate. It’s sociopathic; as for-profit businesses, they must be sociopathic. What’s going on here are the banks are switching from being incompetent sociopaths to competent sociopaths. Their stocks have been rising on the good news.

Back when I was still living in Baltimore, I left (what was First National when I joined, then Allfirst, and then finally became) Bank of America after a similar pocketing of cash. Bank of America cashed a check I had deposited in their ATM, but failed to credit my account. Faced with the canceled check, with my account number and name clearly on the front and back and the Allfirst stamp indicating they had cashed the check, they refused to credit my account. I demanded all my money and walked right across the hall to the Johns Hopkins Federal Credit Union. Bank of America’s latest innovation in screwing over customers is something called balance chasing. It’s a brilliant way to take advantage of the newly draconian consumer bankruptcy bill and make a qick profit from the total downfall of people who otherwise would be likely to make it. Nice work, boys! Short term private profit at the cost of long term public debt.

In my opinion—and as many note time and time again, I’m a biologist not an economist or financial adviser. Take my thoughts seriously or as advice at your own peril—anyone still doing retail banking at one of the huge, bailout dependent banks, is a sucker. The banks think you’re a sucker, and are rapidly proliferating the ways they can separate you from whatever meager savings and financial security you can muster. Leave them.

Yes, all of these banks are FDIC insured. And the FDIC is amazingly competent at what it does. Staying with one of these failed banks is like getting into a car of a totally drunk friend because he has insurance “and dude, it’ll cover whatever medical costs of anyone I hurt would have to pay.”

Why do we need banks? The multiplier effect. For every dollar you deposit in your bank, the bank is legally allowed to lend out several dollars. Those lent dollars allow people to buy cars, homes or other stuff now. These spent dollars can, in turn, be saved or spent again. With a bank, your dollar allows the economy to grow and expand. A bank’s biggest societal benefit is to lend money wisely; it’s the task these huge banks have proven totally incapable of.

So, if you’re ready to leave the big banks, there’s an obvious place to go: Credit Unions. Like banks, you can deposit, write checks and even earn a bit of interest for lending your money. And like banks, credit unions give out loans—typically carefully vetted mortgages and auto loans. Credit unions have their own Federally-backed insurance system, very much like the FDIC, called the NCUA. The biggest difference between credit unions and banks? Credit unions are non-profit. A credit union has all the societal benefits of a bank with none of the sociopathy. A winner.

A Chase exec will tell you “all this hippy non-profit shit sounds great now, but what are you going to do when you need an ATM and your little crappy credit union, with only one branch, is across town?” Credit unions have banded together, allowing members of one to use the ATMs and even the branches of others.

Here’s my escape plan:

1. I opened an account at the Boeing Employee Credit Union. The ATM card works for free at the Group Health Co-op credit union, WSECU and BECU ATMs right next to my house and workplaces.

2. For when I just need an ATM, I opened a Schwab high-yield saving account. Schwab, for now, will pay any ATM fee for withdrawals at any ATM. WaMu ATMs. Chase ATMs. Shitty high fee ATM at the corner store. Any.

It took a month for my last WaMu checks to clear and now I’m done and about to get the cashier’s check for the rest of my remaining balance. It’s working. I couldn’t be happier going back to not worrying about my bank. You might want to join me.

Updated:

Just be clear, as I’ve gotten a few concerned emails, these mystery fees showed up on the detailed, end of month, printed balance sheet and online a few days after they were assessed. But only as a “service fee” with no details of why I was charged. I caught the discrepancy when I noticed an ATM balance of my account was off. The discovery of this $1500 minimum took a few calls and messages.

I also love using QuickenOnline or Mint.com to keep track of all of my spending, and discover fees before the end of the month.

For credit card holders, particularly with Chase or Bank of America, watch out for a sudden decrease in your grace period (the time they give you to pay off your balance in full if you don’t want a finance charge.) The banks are looking for a way to gouge people who rigorously avoid finance fees. Discover has never fucked with me in this way.

The bailout of the financial sector—costing us about a half-trillion dollars—has resulted in massive zombie banks incapable of righting themselves, perpetually on the government dole just to survive. The individuals responsible for destroying their institutions, and taking down the entire global economy, can only muster the introspection to whine about a proposal to limit their salaries—to a meager half-million dollars per year.

Take this asshole, for example, willing to be quoted in the New York Times whimpering:

“That is pretty draconian — $500,000 is not a lot of money, particularly if there is no bonus,” said James F. Reda, founder and managing director of James F. Reda & Associates, a compensation consulting firm. “And you know these companies that are in trouble are not going to pay much of an annual dividend.”

And we bitch about public schoolteacher accountability.

So, it makes sense for many of you to be weary as the auto industry now comes, hat in hand, expecting their turn at the public till. Take this as a small comfort: some of the most skeptical economists out there, the ones we might still trust, agree that GM’s bailout plan, announced yesterday, is pretty damn good. (CalculatedRisk called the plan a start—high praise from him for any bailout plan.)

I’m somewhat lonely here, among The Stranger writers, in my support for the auto industry bailout. This one I like. The plan lays out a realistic plan to recover the company to independence from taxpayer support (unlike the banking bailout.) Everyone, from line workers to executives, takes a cut in compensation (unlike the banking bailout.) The most obscene and absurd products are being dumped (unlike the banking bailout.) Hundreds of thousands of skilled workers’ knowledge and talent will be protected by the plan (unlike the banking bailout.) And, it’ll cost a fraction of what the financial bailout has already cost the taxpayers.

Welcome to bailouts in the Obama-era. Compared to the Paulson-led, Bush administration plan for the banks, this one has a very good shot of succeeding. At stake is a huge piece of the global industrial economy and the future of some genuinely innovative green technology. With the collapse of the mercantilist US-China trade of the past couple decades, Americans must start making things again worthy of export. It’s about time we work out a proper industrial policy. As CalculatedRisk noted, this is a good starting place.

From the Financial Times via Naked Capitalism:

More than 20m rural migrant workers in China have lost their jobs and returned to their home villages or towns as a result of the global economic crisis, government figures revealed on Monday.

Or, as Naked Capitalism notes:

To the sighting du jour: a Chinese official, citing Agricultural Ministry data, pegged the number of rural migrants to coastal factories who are returning home at 20 million. This figure is far higher than any to date (readers may have other sources that are more in line with this tally, but the biggest estimate I have seen so far is 10 million, although Wen fessed up to 12 million yesterday, so the new data is a stunner). And that is only the level of reverse migration. The figure does not include those who remained in cities and are still looking for work.

This would in turn suggest that the falloff of economic activity is as severe as some of the less watched proxies suggest (electrical output, which some contend is a good measure of economic activity, fell 9.6% in November, a dramatic one-month change) and that the government will increase its stimulus efforts sooner rather than later.

I never understood the fatalistic thinking, at the start of this economic crisis, that the US was done as a financial power and the rise of China was inevitable.

What the Chinese government wanted from this expansion was not wealth, not economic dominance–what the Chinese communist party needed more than anything else was jobs, millions upon millions of jobs. Even with all those jobs, the country has barely held a growing social unrest–fury against religious persecution, the deaths of children due to poorly constructed schools or poisoned formula, the environmental decay or a long list of other grievances–under control.

Busy people don’t revolt. The Faustian deal of the Dengist movement (currently in power in China, as they have been since the end of the Cultural Revolution) was the exchange of jobs for freedom. Central control would be tolerated so long as jobs and economic opportunities continued to flow.

It worked for a bit, during the froth of the past decade-plus of economic expansion. But the Chinese employment growth was false, artificially maintained by a policy of actively pushing Chinese wages downward through currency manipulation. It was, in every literal sense of the word, unsustainable.

With the bursting of the global economic bubble, it’s hard to find a country more fucked than the Chinese. Naked Capitalism starts his post by hemming and hawing that the grim economic news coming out of China doesn’t necessarily predict a violent rebellion–despite a history of such catastrophic movements at previous stress points. I’m less certain than he.

I’m not the only one finding this report quite telling:

More Wall Street employees received bonuses for 2008 than were expecting to in October, though many remained unhappy with them, according to an online poll.

EFinancialCareers.Com said about 79 percent of workers who responded to an online poll this month said they received a bonus for 2008, more than the 66 percent of respondents who expected to get a reward in October. Still, 46 percent said they were dissatisfied with their bonus.

“What it shows is the bonus culture is very deep-set in the securities industry,” said John Benson, founder and chief executive officer of the Web site, a unit of Dice Holdings Inc. “There’s an entitlement culture amongst a number of people in the industry, which I think in the current environment is very misplaced.”

Or, as Naked Capitalism cynically quipped:

In the stone ages on Wall Street, most everyone understood it was better to lodge a C performance in an A year than an A performance in a C year. Clearly, the clock is being rolled back.

The justification of the bonus culture is to promote merit. Do a better job, as measured by some metric based on short-term gain, and you are lavishly rewarded.

Let’s think through the consequence of this. You’re a smart and responsible trader, circa 2005. You recognize the coming collapse in the mortgage-backed securities market, and thus stop trading in them. In retrospect, this is A performance. Sadly, you’re too smart. The bubble is still going. Your colleagues pouring money into the froth do way better in 2005 than you do. They get a bonus. You don’t.

Fast forward to today, if you still have a job. You made the right choices, but the market has sunk into the bursting bubble. Nobody does well. It’s a C year, and you don’t get a bonus again. You leave finance.

Rather than thinking of the proposed restrictions on Wall Street bonuses as intentionally punitive, I’m starting to think of a ban as intrinsically beneficial, stopping a powerful incentive to follow with the crowd up the steep slope of bubbles.

I wanted to make a different kind of gaming best-of list this year, but it’s hard. Indie gaming is growing, but there’s just not enough for a catch-all critical list like you’d find at Pitchfork Media for music. But I do my best for now. Here, you will not find Metal Gear Solid 4, LittleBigPlanet, Wii Fit, or most any other bloated crapware in this list. Sorry. I did mention a couple of those in my buyers’ guide a few weeks ago, and I apologize for that as well.

Best Gaming Award: “Soulja Boy Award for Games To Play If You Drink And Get Drunk or Smoke And Get High”
GiantBomb.com isn’t great, but it is good.

Best Interactive Art: Braid
No release this year better combines creative puzzles and artistic design with an emotional goal. It’s remarkable when you press a button to make time rewind in Braid. It’s more remarkable when, a few levels in, your attempts at memory recall are jumbled because some things don’t follow you to the past. And when the character’s emotional toil in the game catches up to express why this gameplay trick exists? The result is beyond literary.

But there’s an important question to ask before diving in: when you close your eyes, can you see exactly how the original Mario jumps? His bounce, his weight, his gravity? You better, because this game demands that you jump all over the place, carefully, repeatedly, in tricky situations. Rewinding time helps here, but old-school frustration doesn’t do Braid’s storytelling any favors. Oh well. Still incredible.

Best Toy: World of Goo
On the other end of the spectrum—games as shameless toys—World of Goo wins handily. You’re given clumps of stringy goo and are told to build towers, bridges, and ladders from point A to point B. Cartoony architecture. But you can’t just throw digital Legos on a screen and expect success; here, half the fun is in the learning curve. Each new type of goo and each gameplay tweak is eased into the game so that most puzzles serve as an instruction manual without the player realizing it. The strain-to-satisfaction ratio is divine as a result, helped even more by a unified, quirky aesthetic experience that’s more Seussian than any motion picture tribute in the past decade. With everything WoG gets right, consider it a living design primer.

Most Inconvenient Game to Love: Left 4 Dead
Do not play this game alone. Do not play this game with anonymous assholes on the Internet. Fanboys have complained about L4D’s relatively small size, but there’s a reason—it’s hard to round up three other friends for this game’s hour-long zombie kill-gasms, and you need a four-strong team to make it work. And as a short-burst group game, L4D spends its resources not on more maps, but on the thrilling bits that have made it infinitely replayable since its release last month. The game’s balanced thrills do not wane. Shame that they damn near require a LAN setup in the basement—pizza is not optional.

Best Arcade Game: Primeval Hunt
At Seattle’s GameWorks, Big Buck Hunter meets Jurassic Park. Not a typo; this showed up in town maybe a month or so ago. Shoot a Diplodocus in the head with a crossbow. Nail a T-Rex in its abdomen with a shotgun. Jonah will never have to write one of these posts again.

Best Game to Play Badly: Burnout Paradise
You can play this racing game the “right” way—win races, pull off stunt runs—and have a fine time. But Burnout Paradise is far more fun as a wreckfest. Fling your SUV off a bridge into a rocky river. Drive to the top of a parking garage and try to jump your car on top of a bus. Earn the super-powered van and clear the roads with your Bub Rub driving skills. It’s the best-looking driving game of the year, which makes endless wrecks through a massive gameworld all the more satisfying. I have played no game more this year than Burnout Paradise.

Most Interesting PS3 Game: Pixeljunk Eden
The PS3 is a disaster, which is sad, because Sony’s Santa Monica studio has been quietly pumping out gold for the thing—typically cutesy, 2D designs under the Pixeljunk moniker. Their Monsters game is a cool mod on the Desktop Tower Defense craze, but Eden, whoa boy. You hop around a living screensaver, revealing floral forms across the screen that you then hop and swing along. Up to three can play together. Music’s awesome; progression is breezy and rewarding. Nothing transcendental here, but you’re wasting your PS3 if you miss this.

Best Game For Assholes: Fallout 3
You can blow up an entire fucking town. And you should, asshole. Quit griefing me in online games, and go screw with the virtual citizens of post-nuclear Washington, DC instead. Fallout 3 has hookers, booze, and makeshift rocket launchers, too. Combine all three and write to Dan about it.

Most Interesting Wii Game: Cubello
This WiiWare puzzler isn’t perfect, but who wants another recommendation for Smash Bros. or Mario Kart? For $6, you can get the first great 3D mod to the Puyo Puyo/falling-blocks puzzle genre. Cubello is a rare bit of joy in the Wii’s otherwise awful 2008. Maybe Nintendo will smarten up and pound out a sequel next year, fixing blatant errors and adding an obvious multiplayer mode. Or maybe they’ll fart out Wii Music 2: Caribbean Queen, and I will shit my heart in exasperation.

Best Fighter: Hulk Hands
No, I do not mean some Incredible Hulk video game. Go buy Hulk Hands and punch your friends in real life. Until someone makes a fighting game that does something new—uses the Wii remote for motion-controlled combat, or uses analog sticks to control individual limbs—everything else is a rehash, and you’re better off with fake, green glove-fists. If you disagree, you are a fanboy who already owns Favorite Fighting Game Part 7, so what do you care?

Most Interesting DS Game: Space Invaders Extreme
Space Invaders finally gets some speed and replayability, and it’s not a bastard to figure out. Play it to shoot stuff, or learn the new combo systems and go nutty for the high score. Professor Layton is a very close second, even if the game is worthless after one playthrough. And the new Phantasy Star game out this week in Japan is a treat—here’s to hoping it sees American release next year.

Most Interesting DS “Lifestyle Application”: KORG DS-10
Lots of dinky, adult-focused stuff on the DS lately—like when CD games first came out for PC, and all you’d find on shelves were Mavis Beacon and Encarta. Guh. Same thing nowadays, with Jamie Oliver Cooking and the Quit Smoking game topping the current DS lists, but stuff like the fully-fledged KORG synthesizer actually proves worthwhile, as its touch-screen techno party is a rare case of requiring the DS. My hope for 2009? That the Quit Smoking game gets a sequel done in the style of those weird boy-boy touch-fests for Japanese DSes. You wouldn’t want your habit to disappoint poor, shirtless Yahto, would you?

Most Interesting Gaming Machine: Xbox 360
The Xbox 360’s Community Games portal is a monster, and it’s the perfect platform to attract indie developers with any hope of making money, a huge contrast to piracy-stricken PC development. There are other big games on the Xbox as well, sure, and its Xbox Live Arcade selection is stellar, but the community portal is the most hopeful thing a major gaming corporation has done since id Software welcomed game modders with open arms in the mid-90s.

Worry not, computer purists. This award will go back to the PC as soon as someone comes up with an MMO that doesn’t hang for dear life from Dungeons and Dragons’ fender.

This just in to the Dear Science SNOWPOCALYPSE 2008 ™ (Hannukah eve again, bitches) crisis center war room control:

Dear Science,
Do AWD or 4WD help me STOP my vehicle faster in inclement weather? I’ve always assumed that even with my extra weight and wider tires this was true… hence my absent mindedness when tailgating other drivers and driving 5mph above the posted speed limit (cops are too busy dealing with traffic accidents to be shooting a radar gun anyway) when it snows.

Thanks Dear Science!

Your all-wheel or four-wheel drive does not help you stop or steer. It only helps you reach a speed at which you will be unable to control anything. So, stop tailgating. Stop now. Stop. Park your car and stop. Stop. Do not drive. Stop. Go home and eat soup. Have you stopped yet?

If you want the science, read on at dearscience.org.

But here’s what you need to know: The amount of frictional force generated by your tires determines how fast you can change the speed of your car–up or down–and how fast you can turn. The less friction, the slower you can make your car change speed or direction. Snow and ice on the road reduce the friction.

Let’s play this out. You’re attempting to go up Denny Way, despite the road closed sign. Your (idiotic) strategy? Floor it, fuckers!

Just before you start, your tires are still stuck to the road; that’s static friction. You press the gas all the way down, causing the tires to apply a huge force to the road, speeding you up a bit. Pretty quickly, this force exceeds the modest static frictional force your tires are producing. They start to spin. Force exceeding the static friction dumps you into kinetic friction, and that means you’re slipping.

Not only is your car not going forward, now you cannot steer or stop as you slowly drift into a pole. You panic and slam on the brakes, figuring you should at least be able to stop since the brakes worked a few seconds ago. But they don’t. Because the kinetic friction generated by your tires is so much less than the static friction you had to work with before, even the modest force generated by braking exceeds it.

Once your tires start slipping, it’s really difficult to get them stuck to the road again. The solution? Do things slowly. Accelerate slowly. Turn slowly. Brake slowly. Go unbearably slow, slow enough that the forces you’re applying to turn, accelerate or brake are less than static friction.

If you start to skid, you’re told to take your feet off the gas/brakes and turn into the skid. And now you know why–because you want your tires moving at about the speed your car is moving relative to the road, which shifts you back from kinetic friction to static. Then you’re back in charge and can start steering.

And this is why tailgating is such a profoundly bad idea. If you try to stop too quickly, you’ll totally lose control and fuck over someone more responsible than you. Stop.

Lips
(Microsoft/iNiS, Xbox 360)

I’d like to prattle about the potential of Lips, Microsoft’s first-ever karaoke game, but I’m just as tempted to merely say that my family adored it, and my nerdy friends did not.

Mom and sis each had favorites out of the 40 songs spread across all genres (John Denver and Rihanna, respectively). They liked the songs’ original videos as the backdrop while they sang; they liked the focus on duets and people taking turns singing; they liked the no-fail aspect and not having to “unlock” any songs. And they liked having a reasonable scoring system that proved the “winner” on a given song’s duet.

On the other hand, I’ve had short spurts of play that ran out of steam quickly with friends. Like when Savant co-creator Jon Golob came by and put his special atonal twist on Destiny’s Child and “Survivor.” You have a limited song selection, not much progression for solo play, and a lack of Rock Band’s bells and whistles. Fun, full of laughs, but brief. (Though if each copy of the game came with a shlub who badly sang the Beyonce tracks, replay value might skyrocket.)

I should note that Singstar on the PS3 is just about the same. Licensed songs with videos. Duets. Easy to learn and use. You probably don’t own both of these game consoles—and if you do, you’re possibly not the target audience for owning every karaoke game ever made. So, sure, you’ll be fine with either, though Lips has a couple of things going for it. First off are its slick microphones. Wireless is good; motion-controlled “dance moves” are not, as the sensors in the things aren’t perfect. You can ignore the dance stuff, and well you should. Lips also has some cheeky battle modes, which I tend to ignore, but they’re there if you really want to make your on-screen avatars, um, kiss.

More interesting is the ability to import songs from a networked PC or an MP3 player. The game will sift through whatever’s connected to the Xbox, show a list of songs, and let you pick favorites to import. Bad news—no lyrics or official music videos are on the screen while singing these songs. You’ll have to bust out a laptop, Google a given song’s lyrics, and wing it.

If you’re okay with that hurdle, Lips’ vocal recognition is pretty durn good. In repeat tests on imported MP3 songs, the scoring reflected who was superior—even after I attempted to cheat my way to a win by mouthing the guitar noises in a song or two, since the game will give you points for any noise you make mid-song. Besides, why pay $2 per track—TWO BUCKS, REALLY??—when you can rig up the iPod and have a Beatles karaoke-off for free instead? The official Lips song store for extra songs is currently barren, so MS is making your mind up for you there.

Once the iPod’s in the equation, you can use Lips as a party’s stereo system, and the game’s promo videos encourage this. Import your favorites to the game, delete the default game songs you don’t like (peace out, Trace Adkins), and hit “jukebox.” Your Xbox will then play all of its tunes on shuffle mode. During a party, if people decide they’re drunk enough for karaoke, they can shake the remotes and get a duet battle going for whatever song is playing. Or you can totally ignore the Xbox and let it play on as a stereo system, no harm, no foul. It’s this implementation that kinda blows my mind—treating Lips as a party centerpiece, rather than a dedicated game, makes more sense when you consider that the title has nothing in the way of progression, unlockables, or other typical game shit.

But what are you paying for, then? Two nice microphones, a half-decent set of songs that’ll run out of steam too quickly, and a chance to sing over songs on your iPod without lyrics on the screen to help you along. The potential for an infinite karaoke machine is interesting, but the hassle makes it less than ideal, and I gotta wonder if another, less massive company would’ve greenlit the ability to type in your own lyrics and give the import feature actual legs. Still, for a music game without the intimidation of plastic drums and guitars, Lips is slick and interesting enough, and Mom still loves it, so I guess Microsoft deserves credit for a decent music product… for once.

The big Hank Paulson-lead bailout has failed by all objective measures. It’s a complete, trillion dollar, failure.

(For those of you needing a refresher, here’s the present crisis in a nutshell. The banks, filled with lazy and overpaid assholes, fucked up. Trillions of dollars in money that could not be lost, were shoveled into pyramid schemes that, inevitably, collapsed. Burnt, and well aware of their total incompetence at what should be the easiest task imaginable (lending at 6%, paying out depositors at 3%, pocketing the difference), the banks stopped lending to just about everyone. Businesses suddenly had their lines of credit evaporate. Lines of credit are critical for almost all companies to function on a daily basis.

In order to restart this sort of critical lending, Paulson shoveled money into the hands of the banker fuckups—paying taxpayer dollars for the detritus from the failed pyramid schemes, buying chunks of their failed banks with the same pool of cash and so on. The banks still didn’t lend, and continued to freeze lines of credit. Without credit, businesses were forced to rapidly shrink and scale back, leading to the largest monthly job losses in decades.)

In other words, the economic team of these waning days of the Bush administration are like Slim Pickins in Dr. Strangelove:

Obama’s crisis management plan—laid out this weekend-is better, but still does little to solve the underlying dynamic that lead to this disaster. In other words, Slim Pickins again:

Americans have been living beyond their means, right? That’s the line we’ve been fed. We’re just adjusting, being forced down to earth after decades of flying higher than our wings could support. It’s an odd explanation, a bit like telling someone dying of cancer that their problem was letting the cancer go metastatic. “Why’d you allow those cancer cells spread all over? That’s your problem right there!”

For most of the Americans drowning in debt, it wasn’t extravagance that lead to their downfall. It was the mundane—trying to keep themselves living indoors, to return themselves to health, to educate themselves—that precipitated collapse. In real dollar terms, Americans have been paid steadily less for decades. As wages for work decreased, costs of living increased. The typical worker in the United States has no more control of this dynamic than the weather.

It’s not like the productivity—how much a worker can get done for a given amount of money—of American workers has declined. In fact, this period of stagnated and declining wages corresponds to a time of fantastic increase in American worker productivity. Americans, going over the lip of this collapse, are among the world’s most productive people—second only to the Norwegians.

Yes, American workers tend to be expensive in absolute terms. It doesn’t matter. This productivity, by definition, means American workers should be some of the most competitive in the world—capable of producing more for less than just about any other person. American workers—factory lineworkers, service industry workers, agricultural workers earn their high wages by being better at their jobs than just about anyone else on the planet. Those are the numbers.

If “free-trade” worked, Americans should be among the winners. And yet, the United States accrues a massive, growing and ongoing trade deficit year after year.

It’s this imbalance, more dollars leaving the United States in trade for goods and services than return, that is at the rotting core of the present fiasco. As a consequence, our trade partners built up massive piles of dollars—dollars that had to be invested by government bureaucrats, who gave the money to self-aggrandizing idiots on Wall Street, who promptly shoveled the dollars into get-rich-quick schemes.

Why can’t Americans sell goods abroad? How does China, whose workers don’t even make it into the top fifty of productivity, maintain a massive trade deficit? Manipulation.

Nearly a year ago, I wrote on this very question after reading an exemplary Atlantic Monthly article lucidly describing the mechanism and effect of these manipulations by James Fallows.

Here’s James’ description:

Let’s say you buy an Oral-B electric toothbrush for $30 at a CVS in the United States. I choose this example because I’ve seen a factory in China that probably made the toothbrush. Most of that $30 stays in America, with CVS, the distributors, and Oral-B itself. Eventually $3 or so—an average percentage for small consumer goods—makes its way back to southern China.

When the factory originally placed its bid for Oral-B’s business, it stated the price in dollars: X million toothbrushes for Y dollars each. But the Chinese manufacturer can’t use the dollars directly. It needs RMB—to pay the workers their 1,200-RMB ($160) monthly salary, to buy supplies from other factories in China, to pay its taxes. So it takes the dollars to the local commercial bank—let’s say the Shenzhen Development Bank. After showing receipts or waybills to prove that it earned the dollars in genuine trade, not as speculative inflow, the factory trades them for RMB.

This is where the first controls kick in. In other major countries, the counterparts to the Shenzhen Development Bank can decide for themselves what to do with the dollars they take in. Trade them for euros or yen on the foreign-exchange market? Invest them directly in America? Issue dollar loans? Whatever they think will bring the highest return. But under China’s “surrender requirements,” Chinese banks can’t do those things. They must treat the dollars, in effect, as contraband, and turn most or all of them (instructions vary from time to time) over to China’s equivalent of the Federal Reserve Bank, the People’s Bank of China, for RMB at whatever is the official rate of exchange.

With thousands of transactions per day, the dollars pile up like crazy at the PBOC. More precisely, by more than a billion dollars per day. They pile up even faster than the trade surplus with America would indicate, because customers in many other countries settle their accounts in dollars, too.

The PBOC must do something with that money, and current Chinese doctrine allows it only one option: to give the dollars to another arm of the central government, the State Administration for Foreign Exchange. It is then SAFE’s job to figure out where to park the dollars for the best return: so much in U.S. stocks, so much shifted to euros, and the great majority left in the boring safety of U.S. Treasury notes.

And thus our dollar comes back home. Spent at CVS, passed to Oral-B, paid to the factory in southern China, traded for RMB at the Shenzhen bank, “surrendered” to the PBOC, passed to SAFE for investment, and then bid at auction for Treasury notes, it is ready to be reinjected into the U.S. money supply and spent again—ideally on Chinese-made goods.

At no point did an ordinary Chinese person decide to send so much money to America. In fact, at no point was most of this money at his or her disposal at all. These are in effect enforced savings…

Both James and I publicly wondered how this imbalance would unravel—gracefully or in a sudden and sharp panic. For the former to happen, the Chinese government would have to recognize that such schemes are unsustainable. They didn’t. It’s ending now in the panic.

To this very moment, a scant 35% of China’s gross domestic product is consumed by Chinese people—down from about 50% in the 1980’s. That’s astonishingly low.

If Chinese workers and factory owners were allowed to keep more of what they earn, everyone would benefit. The Chinese would be able to enjoy a plusher life, as well as the trappings of a modern industrial society (such as, ahem, pollution controls and nonpoisonous infant formula.) Some of these goods would be made by Americans—such as smokestack pollutant scrubbers—starting a proper flow of goods back and forth between the countries—rather than just a huge pile of dollars growing on one side. China, as a trading partner, must become more like Canada.

The US government printing dollars, to maintain the illusion for a short bit longer that ongoing trade deficits don’t matter, won’t fix the global economy. Nor will throwing more Americans into poverty. Instead, ending this crisis will require the Chinese to become wealthier. That’s the policy we should focus on, rewriting trade deals and industrial policy to make it so, if we are to ever recover.

A few months ago, after testing the new Animal Crossing game for the Wii — Nintendo’s cutesy “life sim” where the fun is in the mundane — I yawned and passed on seeking a review copy. What story could I break? Same game as the last version: wander around a little town, grow fruit trees, talk to virtual neighbors, buy decorations, obsess over feng shui. Meant to be played in 5-10 minute chunks on a daily basis, so it was an interesting twist in 2005. Now, not so much.

Boy, do I feel dumb bailing on that press racket. I could’ve gotten the limited, press-only nigga edition.

(image lifted from Kotaku’s report)

Explanation’s in order: Nintendo wanted game writers to test the new version’s wireless function, in which it talks to the older DS version. So the company mailed out old DS carts and loaded them with an employee’s complete “save file,” full of “rare” game items and new virtual neighbors.

In the DS version, you can customize the neighbors’ text—give them new exclamations, make them give you nicknames. Creative gamers can get over that part’s vulgarity filter, as evidenced by this press copy’s use of the ñ and á. Two outlets have already confirmed getting the same chatty sheep; lord knows how many of these editions were sent out to “mainstream” outlets.

Jonah, I know you’re tops on the fired Nintendo employee beat, so have at it. But I don’t bring this up to join the overreaction party. This is pretty fucking stupid on Nintendo’s part, but far as I’m concerned, there’s a lot more gaming content out there that gets away with wanking on racial stereotypes. Have you seen the commercial for Call of Duty 5, in which a Japanese narrator talks about seeking revenge while a bright-eyed white kid with a Wii controller flashes on the screen, creating his own mental version of World War II on the spot? How about Saint’s Row 2, the Grand Theft Auto clone that overjoys in racially insensitive content, then throws out the word “satire” in a lame attempt to claim innocence?

And, good Christ, what about the “hip-hop” options tossed into the shitfest that is Wii Music?

Federal regulators announced late Sunday night that the government had approved a radical plan to stabilize Citigroup in an arrangement in which the government could soak up billions of dollars in losses at the struggling bank. President Bush said on Monday that more such rescues could be arranged if they became necessary.
….
The complex rescue plan calls for the government to back about $306 billion in loans and securities and directly invest about $20 billion in Citigroup. The plan, emerging after a harrowing week in the financial markets, is the government’s third effort in three months to contain the deepening economic crisis and may presage other multibillion-dollar financial rescues.

Nominally, in my posts this would be the time where I make a nicely reasoned discussion of the negatives and positives of the latest action. I can’t. I’m apoplectic–consumed with rage beyond rational thought.

Citigroup is eponymous for the sort of financial bullshit that sank all of us–the entire fucking global economy–into what is increasingly likely to be a decade (or decades) long period of abject misery. I. Cannot. Even. Start.

In 1998, the formation of Citigroup unilaterally ended the Depression-era Glass-Steagall act. That’s right, this fucking financial monstrosity simply decided a cornerstone of American financial regulation shouldn’t exist, and acted accordingly.

At a dinner in Washington in February 1998, Sandy Weill of Travelers invites Citicorp’s John Reed to his hotel room at the Park Hyatt and proposes a merger. In March, Weill and Reed meet again, and at the end of two days of talks, Reed tells Weill, “Let’s do it, partner!”

On April 6, 1998, Weill and Reed announce a $70 billion stock swap merging Travelers (which owned the investment house Salomon Smith Barney) and Citicorp (the parent of Citibank), to create Citigroup Inc., the world’s largest financial services company, in what was the biggest corporate merger in history.

The transaction would have to work around regulations in the Glass-Steagall and Bank Holding Company acts governing the industry, which were implemented precisely to prevent this type of company: a combination of insurance underwriting, securities underwriting, and commecial banking. The merger effectively gives regulators and lawmakers three options: end these restrictions, scuttle the deal, or force the merged company to cut back on its consumer offerings by divesting any business that fails to comply with the law.

The lawmakers–lead by professional Republican asshole Phil Gramm, triangularization expert Rubin and President Clinton–moved out the way.

It took a decade for the repeal of these protections to crater the economy.

And now they want a bailout. The same fucking management team, the same collection of self-important idiots.

Let me tell you something. I could pick twenty random people off the street, hand them a billion dollars each, and I’d be confident they’d create a better bank than these shitheads. And if these random men and women fucked up, I’m absolutely certain their collective mistakes would total less than $300 billion. Starting a bank, particularly an inept and greedy bank isn’t that fucking hard.

In comparison, the shitty management teams running other US companies–the airlines, the auto companies, the energy companies–are pure amateurs at colossal fiascoes. Even the guys who green lit the AMC Gremlin? Better at their fucking jobs.

Citigroup attempted to cover up their losses–their own epic fuckups–through the government financed purchase of Watchovia. Only Wells Fargo’s last minute bid revealed their latest deceptive depravity. The morons at Citigroup couldn’t even build a headquarters successfully.

I’m heading home to Detroit in a few days, for Thanksgiving, where I will witness firsthand the agonal struggles of your countrymen to feed, clothe and house themselves–people who have done nothing but work hard, design well, and vote to care for one another. They’re, we’re, failing–with no bailout in sight.

Citigroup just got theirs.

Apoplectic