[A-List] Back to School

[Bill Totten]

Clusterfuck Nation by Jim Kunstler

Comment on current events by the author of
The Long Emergency (Atlantic Monthly Press, 2005)

www.kunstler.com (August 27 2007)


Bad financial paper, like rust, never sleeps.

We may be in the traditional torpor zone of late summer when the whole
nation takes off on vacation, but worms are still turning in the compost
heaps of securitized alphabet debt (MBSs, CDOs, CLOs, et cetera) behind
the glass banking towers in places like Wall Street, London, Frankfurt,
and Shanghai, and the odor from all this garbage blowing 'round the
world grows stronger by the day.

Transfusions of loss-cover loans from the Federal Reserve have enabled
the The Big Fund Boyz to spend a last weekend or two rubbing elbows in
the Hamptons with transcendent beings like Diddy and Kelly Ripa. The
Boyz gather along the dunes at twilight, bongs in hand, to gaze at Hedge
Fund Island, looming off-shore in the gray Atlantic mist, and they
notice something alarming: the island, which the The Big Fund Boyz built
themselves over the past ten years, seems to be either floating out to
sea or perhaps just sinking!

The scores of billions of dollars and euros that central banks have
poured into the maw of losses lately will only paper over the essential
problem for another few weeks, at most. The damage to global structured
finance has been done, and it can be stated rather precisely: a
widespread recognition that it's not possible to get something for
nothing, after all. And that when you hold a lot of paper that was
gotten for nothing, and put it up for sale, nothing will be offered for
it. What a surprise.

The task of people holding power now in the finance sector (which itself
may be a conceit at this point) is to manage the rapid dissolution of
hallucinated wealth in such a way that as few people as possible notice
that x-trillions in dollar denominated pixels have vanished from the
hard drives. Sooner or later, though, millions of shlubs dependent on
pension checks, or annuities, or monthly payouts of one kind or another
will notice that something has stopped landing in the mail box. Re-po
men with bad haircuts and tattoos will be driving other peoples' cars to
the auction barn. Young people accustomed to thrilling paydays will
discover that their services are no longer required in the mortgage
origination business, and will instead have to memorize dozens of
excruciating formulas for different sorts of beverages more or less
based on coffee. Millions of realtors will enter second childhoods as
they move back in with Mommy and Daddy, who themselves must now change
their plans, since it is no longer possible to flip the 1956-vintage
raised-ranch in Hempstead to buy that half-million condo in Maui.

Reality is biting hard. As with the little marmot caught in the Gray
Wolf's jaws of death, the body simply surrenders and God's grace of
physical shock softens the translation from free-willed joyful creature
to dead meat. That is where we are at here in the final days of August,
2007. Digestion follows. The Big Fund Boyz and all their minions will
end up as mere worm castings in the aforementioned global compost heaps.

Terrible shocks are going to rip through the socioeconomic fabric of the
USA as we turn the corner past these late summer doldrums. The fiasco of
bad debt won't be contained. The choices for those who find themselves
financially underwater in the fall of 07 will be (1) liquidation, (2)
bankruptcy, or (3) destroy whatever remains of confidence in the US
dollar in order to erase debt by hyperinflation. People holding power
don't like the first two, which translate into Depression (let's make it
capital "D".) When a nation turns into a fire sale from sea to shining
sea, and bankrupt citizens don't even have enough cash-on-hand to buy
things desperately cheap - well, that's a Depression. Everybody from Fed
officials to news editors have favored the softer term "recession" the
past half century because it implies a mere pause in the inexorable
march of progress toward economic nirvana. That's not what we're heading
into.

There will be so many assets up for sale across the USA in the months
and years ahead that the very sun in the heavens will take on a K-Mart
blue-light-special glow. Houses with miles of granite countertops,
Maybach automobiles, cabin cruisers that burn thirty gallons of diesel
an hour, and much much more. There will be so much slightly used (or
barely "pre-owned") stuff for sale that manufacturing another unit of
anything (or importing it) will seem like a sick joke. Alas, there may
be very few buyers, at least here among the current natives of North
America. And so you get "new pricing", and a deadly downward spiral.

Of course, all that creates a problem for the masses of human beings who
theoretically support themselves by working to produce new things of
value to be bought and sold . But let them watch Nascar! Let's take
whatever little remains of our tax revenues (or bonding ability) and
build a dozen more speedway ovals around the country, and tweak the
stock car engines so those suckers can run on ethanol, and shower the
fans with Little Debbie snack cakes as they count the laps. Bring on
Britney Spears or Paris Hilton at half-time (do they have half-time in
Nascar?) and let Justin Timberlake cut their hearts out on the hood of a
Dodge Avenger. Believe me, the public will be so deliriously entranced
by the spectacle, they won't notice anything else going on in the
background of our nation.

This is how America enters the Long Emergency - in a Nascar rapture,
with Jesus directing the pit crews and the Holy Ghost working the
barbeque concession.


I apologize for what has been a rather excessive spewage of mixed
metaphors this week, but the extreme abnormality of events has just got
me going. The bottom line, though, is simple and straightforward: things
may appear normal for the moment, but we are heading into a shit-storm
as sure as Sam Walton's descendents contracted to buy all the
three-ringed loose-leaf binders made west of the international date
line. America, you're about to go back to school the hard way.

http://jameshowardkunstler.typepad.com/clusterfuck_nation/


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