[R-G] [BillTottenWeblog] All Fall Down

[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 (October 06 2008)


God knows what manner of deals went down this past weekend in the
Hamptons wine cellars and below-decks among the Chesapeake Bay sailboat
fleet. All these hidey-holes must have been dank and fetid with the
sweat of mortal fear. Will the US Government declare itself a subsidiary
of General Electric? Will Vlad Putin be roped in to save Goldman Sachs?
Meanwhile, the whole noisome rat maze of international counter-party
deals was taking on sewer water and rodents of every nationality were
seen leaping for daylight all over the fusty old motherlands of Europe.
A cascading collapse of international finance is underway. While many
fixers may jump heroically into the tumbling wreckage hoping to rescue
this-and-that, the outcome by Friday is liable to be an unrecognizable
smoldering landscape of the G-7's hopes and dreams.

Some big questions for the week: will the Euro survive as a currency?
Will the rush into the US dollar continue even as the US financial
system dematerializes in a Fibonacci fever of accelerating de-leveraged
infinitude? Will the remaining Big Boyz, Goldman Sachs and JP Morgan
succumb to the counter-party hemorrhagic fever? Will great rows of
lesser banking dominoes now start clacking onto their faces? Will all
fifty states follow the leads of California and Massachusetts and line
up at the US Treasury's hand-out window. Will the entity that calls
itself the civilized world be left at week's end with anything
resembling money?

Your guess is as good as mine. We've entered the realm of phase change,
where everything is slipping and nothing has settled. The final result,
when the dust settles - and that may not be for weeks to come - will
certainly be a poorer western world. Will it be so poor that it can no
longer afford to import anything? Including oil from the land of the
date palm? If so, we are really in for a rough ride, poised as we are at
the edge of the heating season here in the temperate regions. Notice, by
the way, that the $700 billion just approved by congress to bail out
Wall Street is exactly the same sum of money that we send to the oil
exporting nations this year.

Will millions stop receiving paychecks due to the turmoil in banking?
It's certainly possible, starting with the poor drones in Mr
Schwarzenegger's motor vehicle bureau and eventually ranging to every
payroll office in the land. Will Sarah Palin's fellow Six-packers line
up around the parking lagoons of the suburban banks trying desperately
to withdraw the last seventy bucks in their checking accounts? (And will
their thoughts in the event be: this economy is fundamentally sound ...)
Will the supermarket shelves of chipoltle-flavored crunchy snacks and
power drinks go empty as truckers refuse to deliver their loads without
up-front payment? And how long does it take a hungry public to turn mean?

We could see a parallel problem in the motor fuel supply sector. So far,
gasoline shortages have only appeared in parts of the Southeast USA, due
to interruptions caused by two hurricanes. If the oil tankers quit
offloading now for lack of credible payment, then the whole nation will
get an interesting lesson in the shortcomings of the suburban
development pattern.

The candidates' debate Tuesday night should be interesting. I don't
expect too much give-and-take on the subject of East Ossetia this time
around.

Even at this point, the current crack-up in world finance makes the 1929
crash and the events of the 1930s look in comparison like an orderly
small town auction of somebody's grandmother's effects. Back in that
sepia day, America had plenty of everything except ready cash. We had,
especially, plenty of our own oil, and - you're not going to believe
this but it's true - the stuff was selling for as little as ten cents a
barrel, it was so abundant. And yet still, America in the 1930s plunged
into a dark depression of inactivity, loss of confidence, and
impoverishment.

This time around, things could get more disorderly. Personally, I think
we may be beyond the reach even of fascist authoritarianism, because
unlike the programmed industrial masses of the 1930s, we are unused to
regimentation, to lining up at the factory gates and the movie theaters.
Back then, society was so regimented that everybody wore uniforms
in-and-out of the military. Look at movies from the 1930s. Every
man-jack wore either a necktie and hat or overalls. The industrial
masses behaved like termites. Once unemployment hit, they were waiting
to be told what to do, to line up for something. It worked fabulously
for Hitler, who took every advantage of this mentality. Luckily, the US
went for Roosevelt (both FDR and Hitler entered office the same winter
of 1933, by the way). FDR was more like everybody's kindly Uncle Frank,
and his reassuring persona enabled Americans to suck up their bad luck
and altered circumstances. Many of them retreated to the family farm
(which still existed then) and waited things out - and, anyway, the
melodrama of the Great Depression soon resolved in the Second World War
when Hitler's love of regimentation led him into military misadventure.
He shouldn't have picked a fight with someone who had so much petroleum
- end-of-story.

Okay, what happens here and now? To this point (9 am Monday October 6
2008) events have been proceeding under a veneer of
still-just-barely-credible authority. We (as represented by congress)
have allowed Mr Paulson to advance and activate his remedies. As things
unspool further, he will be out of credibility, perhaps in a few days,
and it's unlikely that his successor will have any either. Mr Bernanke
has simply gone AWOL. Notice, he has vanished from the media landscape.
We may soon be hearing the declaration of various "emergency" measures
involving the allocation of food and the rationing of oil products. The
Big Bailout of last week may be partially rescinded as it becomes
obvious that it has had no effect - I believe about half the $700
billion has already been allocated, which is to say: lost. I realize
these things sound pretty extreme. But forces have been set in motion
and momentum rules. One thing for sure: the American public is about to
undergo a severe mood adjustment. There will be fewer American Idol fans
and worshippers of Donald Trump by the close of business on Friday.

_____

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

http://jameshowardkunstler.typepad.com/clusterfuck_nation/2008/10/all-fall-down.html


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