[R-G] [BillTottenWeblog] State of Cringe

[Bill Totten]

Clusterfuck Nation

by Jim Kunstler

Comment on current events by the author of
The Long Emergency (2005)

www.kunstler.com (January 26 2009)


Just as Mr Obama has danced into the oval office, we've arrived at a
moment when a lot of people have a hard time imagining the future. This
includes especially the mainstream media, which has reached a state of
zombification parallel to that of the banks. But even in the mighty
blogosphere, with its thousands of voices unconstrained by craven
advertisers or pandering managing editors, the view forward dims as a
dark and ominous fog rolls over the landscape of possibilities.

For at least a year several story-lines have been slugging it out
inconclusively for supremacy of the Web-waves. The main event has been
the Deflationists versus the Inflationists. The first group basically
says that so much "money" is being welshed out of existence that it
dwarfs the new "money" being shoveled into existence in the form of
bail-outs, tarps, and office re-decoration stipends. The Deflationists
see the tattered remnants of the consumer credit economy auguring ever
deeper into a hole until it is buried so far down that all the back-hoes
ever sold will not be able to dig it out. The competing Inflationists
say that the massive truckloads of shoveled-in "money" will soon
overtake vanishing "wealth" and, in the process, make the US dollar
worthless.

Some of us see both outcomes in sequence: the deflationary "work out" of
bad debt currently underway - of loans that will will never be paid
back, of acronymic paper securities revealed as frauds, of
"non-performing" contracts entering the swamps of foreclosure, of banks
pretending to still exist, of hallucinated "wealth" rushing into the
cosmic worm-hole of oblivion - can only go for so long before everyone
who can go broke will go broke. Then, just as we find ourselves a nation
of empty pockets, the tsunami of shoveled-in "money" designed to "reboot
the consumer" (created not from productive activity but just printed
recklessly), will start churning through the "economy," chasing products
and commodities that became scarce during the deflationary phase - and
the result is hyper-inflation, the eraser of debt, destroyer of
fortunes, and suicide pill of feckless governments.

I guess the basic difference is that the hardcore Deflationists seem to
think that their process can go on forever. The society just gets poorer
and poorer until we're back at something like a scene out of Pieter
Bruegel the Elder. The Inflationists see a fork in the road leading to
more overt destruction, especially political turmoil as a lot of
negative emotion joins the work-out orgy and overwhelms government.

But in this moment, the week after a new president's inauguration, the
deadly fog has rolled in and absolutely everyone dreads what lurks on
the other side of it, without being able to discern the path through it.
For example, the "bail-out fatigue" being reported suggests that
congress may just call a halt to money-shoveling. Where would that leave
Mr Obama's urgent call for "stimulus?" Not to mention further TARP
injections for redecorating bank offices.

I've been skeptical of the "stimulus" as sketched out so far, aimed at
refurbishing the infrastructure of Happy Motoring. To me, this is the
epitome of a campaign to sustain the unsustainable - since
car-dependency is absolutely the last thing we need to shore up and
promote. I haven't heard any talk so far about promoting walkable
communities, or any meaningful plan to get serious about fixing
passenger rail and integral public transit. Has Mr Obama's circle lost
sight of the fact that we import more than two-thirds of the oil we use,
even during the current price hiatus? Or have they forgotten how
vulnerable this leaves us to the slightest geopolitical spasm in such
stable oil-exporting nations as Nigeria, Mexico, Venezuela, Libya,
Algeria, Columbia, Iran, and the Middle East states? And we're going to
rescue ourselves by driving cars?

I know it is difficult for Americans at every level to imagine a
different way-of-life, but we'd better start tuning up our imaginations,
because endless motoring is not our destiny anymore. The message has not
moved from the grassroots up, and so at this perilous stage the message
had better come from the top down. Mr Obama needs to go on TV and tell
the American public that were done cruisin' for burgers. He could do
that by drastically reviving his stimulus proposal as it currently stands.

Putting aside whether this "stimulus" represents reckless money-printing
in an insolvent society, let's just take it at face-value and ask where
the "money" might be better directed:

-- We have to rehabilitate thousands of downtowns all over the nation to
accommodate the new re-scaled edition of local and regional trade that
will follow the death of national chain-store retail of the WalMart ilk.
Reactivated town centers and Main Streets are indispensable features of
walkable communities. The Congress for the New Urbanism (CNU.org) ought
to be consulted on the procedures for accomplishing this and for
rehabilitating the traditional neighborhoods connected to our Main Streets.

-- We have to reform food production (aka "farming"). Petro-dependent
agri-biz will go the same way as the chain stores. Its equations will
fail, especially in a credit-strapped society. That piece of the picture
is so dire right now, as we prepare for the planting season, that many
crops may not be put in for lack of front-money. This portends, at
least, much higher food prices at the end of the year, if not outright
scarcities and shortages. And the new government wants to gold-plate
highway off-ramps instead? Earth to Rahm Emanuel: screw your head back on.

-- As mentioned above, we have to get passenger rail going again because
the airlines are going to die the next time there is an uptick in oil
prices, or a spot shortage of oil. Let's not be too grandiose and
attempt to build expensive high-speed or mag-lev networks - certainly
not right now - because they require entirely new track systems. Let's
fix those regular tracks already out there, rusting in the rain, or
temporarily replaced by bike trails.

Those are three biggies for moment and enough to keep this society busy
for a couple of years. But more to the point of this blog, observers of
all stripes are having trouble imagining any way out of our multiple
predicaments. All the possible actions tried so far have have seemed
absurd. Why even try to prop up inflated house values when the single
most crucial need in this sector is for house prices to return to parity
with incomes so the shrinking pool of ordinary people still employed can
begin to think about buying one? Well, the obvious explanation is that
politicians can't bear the pain of watching mass foreclosures and the
ruination of families. This is pretty understandable, and it is tragic
indeed. Frankly, I don't know of any political narcotic that can
mitigate the pain that results from having made poor choices in life -
even if those choices were promoted and reinforced by the mighty
ideology of "American Dreaming". Anyway, the foreclosures are well
underway now, and perhaps the salient question is how long will the
public's fury remain constrained while they hear about Wall Street
executives buying $80,000 area rugs? Surely there is a tipping point of
collective distress that is not too far from where we're at now.

In the realm of TARPS and other continued bail-outs aimed at the banks,
the car-makers, and a host of other corporate special pleaders, I wonder
if we have already reached the saturation point. But opinion on the Web
is starkly divided and a prime manifestation is the debate over whether
it was a terrible blunder or the right thing to let Lehman Brothers sink
into bankruptcy. Both sides make valid arguments, but virtually all the
other super-banks right now have lurched to death's door and we have no
clear guidance on what we should do about them. Each one is touted as
"too big to fail", as well as being interlocked with the others on
credit default swaps that would bring them all crashing down if one
counter party truly failed. It seems to me that this is what lies at the
heart of the present situation. Nobody I've encountered in the sphere of
opinion-and-comment thinks that these banks will survive, and this
outcome beats a short path to the conclusion that the entire banking
system is fatally ill - leading directly to a super-major crisis of
political economy in which the whole reeking, leaking system just
crashes. I think this is what lies behind Mr Obama's appeals for very
urgent action.

But then we're back to square one: nobody, including Mr O himself, has
really proposed a set of actions that have not already been tried in the
way of money-shoveling. So this will be a week in which, perhaps, some
wise and intrepid figures - perhaps even the president - will articulate
something we haven't heard before, perhaps even something like bearing
our hardships bravely. It'll be a very interesting week, I'm sure.
_____

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

http://jameshowardkunstler.typepad.com/clusterfuck_nation/2009/01/state-of-cringe.html


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