[R-G] [BillTottenWeblog] A Real Freak Out

[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 (March 17 2008)



Note: This is the official publication week of my new 'post-oil' novel,
World Made By Hand", a vivid depiction of life in The Long Emergency.
Visit the book's website:
http://www.worldmadebyhand.com/


Things are getting very weird very fast - and will probably get even
weirder, faster, as the train wreck of bad debt meets the Saint Paddy's
Day Parade of bacchanalian excess at the grade-crossing of destiny. The
train is carrying America's financial system, but the engine driving it
is peak oil, because declining energy resources necessarily means
declining capital wealth - and declining value of all the institutions,
instruments, and markers that denote that wealth or hope to profit by
trading in it. The fiasco leads straight to the necessary reinvention of
American life on other terms and by other means.

I've maintained for a long time that, even among those who recognize we
have a big problem, there are many impediments to imagining a credible
outcome. One thing I've noticed is that in any given public meeting (or
lecture hall) you can divide participants into two groups: those who
believe we will 'high-tech' our way out of this predicament; and those
who believe we'll organize our way out.

I don't subscribe to either point of view, strictly speaking. Both
points of view assume that there will be an orderly transition between
where we're at now and where we're headed. They're tainted by the
kindergarten ethos of entitled happy endings and outcomes, which has
been the chief operating system for the Baby Boomers, a therapeutic bias
for placing 'good feelings' ahead of reality - which also has
obliterated the tragic sense of life that acts as the only brake on
humanity's inherent hubris.

Ultimately, in my view, the issue of what happens next will be settled
not by the fantasies of the algae-biodiesel geeks or the wishful
thinking of the sustainable futures organizers, but by the natural,
self-organizing properties of a society responding 'emergently' to new
circumstances. One of the implications of destiny-as-emergence is the
probability that we will try any damn fool thing besides the right
things to keep the old game going for a while - even in the face of
obvious failure.

I'm sure our political leaders will mount a campaign to rescue the
futureless infrastructure of suburbia. It will necessarily be an
exercise in futility. But it has already started. That's what the
swindle of ethanol has been all about. And the touting of hybrid cars,
and the flimflam of "energy independence". Even the "environmental"
crowd" squanders most of its attention these days on how to keep all the
cars running on something other than gasoline. They don't question the
assumption that we will remain a car-dependent society.

As much as I loathe the suburbs in their grotesque late-stage
efflorescence, I can understand why those stuck in them would wish to
defend their misinvestments. I just hate to think of the political
consequences when their disappointment catches up to the reality that
the suburbs will not be rescued. And by that I mean not just the houses
but the way-of-life associated with them and all its accessories,
furnishings, and activities. Bewilderment will soon turn to rage out in
the highway-strip and-cul-de-sac empire.

Now, apparently, we'll also opt for a bail-out of all those who tried to
become rich by getting something for nothing at both ends of the Ponzi
scheme called the housing bubble - the "little guys" who signed mortgage
contracts they could never hope to pay off, and the Wall Street playerz
who bundled these hopeless contracts into fraudulent securities (and
their enablers in the ratings agencies, plus the hedge fund smoothies
who tried to cash in by using recondite algorithms to dissolve the risk
associated with imprudent lending.) The bail-out is likely to accomplish
nothing except the more rapid bankruptcy of government at all levels and
a second Great Depression at ground level (worse than the first one).

Over the weekend, the Federal Reserve engineered a $30-billion dollar
Saint Paddy's day present for the JP Morgan bank by handing them the
corpse of Bear Stearns. The object of the game is to prevent the
"assets" of Bear Stearns from going to the auction block, on which they
would be discovered to be nearly worthless, which would instantly render
all similar assets held by the other big banks to be similarly
worthless, and would result in a universal margin call that would pretty
much unwind the hallucinated "wealth" acquired the past ten years.

Despite the heroics around the fate of Bear Stearns, it looks like the
financial system is tottering anyway. Perhaps the last trick left in the
rescue bag will be the 100-basis-point drop in the Fed rate rumored to
be announced tomorrow. It won't help any of the big banks, since their
problem is holding liabilities in excess of assets. Almost certainly it
would crater the US Dollar.

The next thing in store for America, in my opinion, will be a rather new
surprise: oil-and-gasoline shortages. While frightened money pours into
the oil futures markets, driving the price up, strange behavior will
start brewing in the actual physical allocation process. Imports of oil
and gas to the US may not be as reliable as it had been when America
seemed to be a solvent nation. The exporters may be changing their terms
of doing business with us - and that's nearly two-thirds of all the oil
we need. The public would probably suck up oil price increases
indefinitely, but shortages are going to be something else. A real freak
out.

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

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