[R-G] [BillTottenWeblog] Not Your Grandma's Depression

[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 (June 30 2008)


This isn't so funny anymore. Intimations of a July banking collapse
rumbled though the Internet this weekend while mainstream news orgs like
The New York Times and CNN pulled their puds over swift boats and Amy
Winehouse's performance technique. Something is happening, and you don't
know what it is, do you Mr. Jones ...? to quote the master.

What's happening is that American society is sliding into a greater
depression than the one Grandma lived through. On the technical side,
there has been unending controversy as to whether we're gripped by
inflation or deflation. It's certainly deceptive. Food and gasoline
prices are rising faster than the rivers of Iowa. But the prices of
assets, like houses, stocks, jet-skis, GMC Yukons and pre-owned Hummel
figurines are cratering as America turns into Yard Sale Nation.

We're a very different country than we were in 1932. In that earlier
crisis of capital, few people had any money but our society still
possessed fantastic resources. We had plenty of everything that our land
could provide: a treasure trove of mineral ores and the equipment to
refine it all, a wealth of oil and gas still in the ground, and all the
rigs needed to get at it, manpower galore (and of a highly disciplined,
regimented kind), with fine-tuned factories waiting for orders. We had a
railroad system that was the envy of the world and millions of family
farms (even despite the dust bowl) owned by people who retained age-old
skills not yet degraded by agribusiness. We had fully-functional cities
with operating waterfronts and ten thousand small towns with local
economies, local newspapers, and local culture.

We had a crisis of capital in the 1930s for reasons that are still
debated today. My own guess is a combination of a bad debt workout that
sucked "money" into a black hole (since money is loaned into existence,
but vanishes if the loans are not systematically paid back) plus a gross
saturation of markets, meaning that every American who had wanted to buy
a car or an electric toaster had done so and there was no one left to
sell to. (The first round of globalism - 1870 to 1914 - had shut down
after the fiasco of World War One.)

Our debt problems today are of a magnitude so extreme that astronomers
would be hard pressed to calculate them. By any rational measure our
society is comprehensively bankrupt. From the federal treasury down to
the suburban cul-de-sacs so much loaned money is either not being paid
back, or is at risk of never being paid back, that the suckage of
presumed wealth has passed through an event horizon out of the known
universe into some other realm of space-time, never to be seen again in
this realm. This would seem to be the very essence of monetary deflation
- money defaulted out-of-existence.

This condition is partly disguised by both the loss of credibility of US
currency and real-world scarcities of oil and food, but the upshot will
be something at least twice as bad as the Great Depression of the 1930s:
people with no money in a land with no resources (with manpower that has
no discipline), hardly any family farms left, cities that are
basket-cases of bottomless need, comatose small towns stripped of their
assets and social capital, an aviation industry on the verge of death,
and a railroad system that is the laughingstock of the world. Not to
mention the mind-boggling liabilities of suburbia and the motoring
infrastructure that services it.

The banks have been doing their death dance for an entire year now,
pretending that their problems are those of mere "liquidity" (that is,
cash-on-hand) rather than insolvency (no cash either on hand or in the
vault and nothing else to sell to raise cash except worthless "creative"
securities that nobody would ever buy). But the destruction of money
(resulting from loans not paid back) is now so intense that the game of
pretend has reached its terminal point. The question for the moment is
exactly who and what will be crushed as these institutions roll over and
die.

Complicating matters is a global oil predicament that is really not hard
to understand, but which the organs of news and opinion have obdurately
failed to explicate for an anxious public. Call it Peak Oil. There are
only a few elements of it you need to know. (1) that demand has now
permanently outstripped supply; (2) that new discoveries are too meager
to offset consumption; (3) That under under the circumstances, the
systems we rely on for daily life are crumbling. I've called this
situation The Long Emergency.

Our chances of mitigating this, and of continuing our current way of
life is about zero. I've tried to promote the idea that rather than
waste remaining resources in the futile attempt to sustain the
unsustainable (that is, come up with "solutions" to keep suburbia
running), that we should begin immediately making other arrangements for
daily life - mainly by downscaling and re-scaling everything from
farming to commerce to the way we inhabit the landscape - but my
suggestions have proven unpopular even among the "environmental" elites,
who are too busy being entranced by new and groovy ways to keep all the
cars running.

So where we are at now is the equivalent of standing in the slop by the
ocean shore under a gathering hundred-foot-high wave that is about to
come crashing down on our heads. Since I sure don't know everything, I
can't say how this will all play out in the months ahead, especially
with the presidential election coming at the exact moment that voters
will be turning on their furnaces for the cold and dark winter beyond. I
would venture to say that so far our society as a whole has done a
piss-poor job of comprehending the situation. But there is still the
possibility, with four months of politicking left, that the nature of
our predicament can be articulated in a way that few can fail to
understand, the way Mr Lincoln articulated the terms of the Civil War on
the eve of its fateful outbreak.

_____

My new novel of the post-oil future, World Made By Hand, is available at
all booksellers.

http://jameshowardkunstler.typepad.com/clusterfuck_nation/2008/06/not-your-grandmas-depression.html



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