[R-G] [BillTottenWeblog] Full Commanding Denial

[Bill Totten]

Clusterfuck Nation

by Jim Kunstler

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

www.kunstler.com (March 23 2009)


If central casting called for a poised, straight-talking, and
capable-seeming president, it would be hard to come up with someone
better than the Barack Obama who walked and talked around the White
House grounds with Steve Croft on "60-Minutes" Sunday night. He may
perfectly represent the majority who elected him, though, because he
also appears to be in full commanding denial of the realities overtaking
our American experience.

Those realities include the fact that we can't possibly return to the
easy credit and no money down "consumer" economy no matter how many
nominal dollars get shoveled into the fiery furnaces of banks
too-big-to-fail. As Treasury Secretary Geithner's underling, Stephanie
Cutter, said last week, "Our singular focus is on increasing lending to
support economic recovery. Everything we do to stabilize the financial
system is done with that goal in mind."

Lending on the scale that became normal over the last decade is for sure
the one thing that we will not recover. We turn around in 2009 to find
ourselves a much poorer nation than we thought we were a year ago,
especially among that broad range of formerly middle-class wage-earners
who lived so luxuriously until yesterday. The public can't process this
reality and the president, for all his relaxed charm, is either not
ready to articulate it, or can't process it himself.

Everything that we're doing right now is engineered to avoid reality, to
sustain the unsustainable, to recover the unrecoverable, when the
mandate of reality compels us to face our losses in order to move on to
the next chapter of a collective American life. The next chapter would
be a society that runs on a much more local and modest scale, centered
on essential activities like growing food, requiring harder physical
work, and focused attention - in other words, the opposite of a society
lost in abstractions, long-range daisy chains of off-loaded
responsibility, and incessant pleasure-seeking.

In retreat from this reality, we've set in motion two forces that are
pretty certain to bring us to grief. The first proceeds from the fateful
FMOC decision last week at the Federal Reserve Bank to begin buying
massive amounts of our own treasury bonds and bills. This is predicated
on the idea that the mechanisms of wealth production - even of illusory
wealth, such as the fortunes created by trading securitized unpayable
debt - can keep chugging along, spinning off limitless additional
suburban villas, chain stores, car trips, and deep-fried snacks. It
would be sententious to explain how this destroys currencies, but
wherever "monetizing debt" has been tried before in history, that is the
outcome. The result would be ruinous at every level and would lead
straight to the second terrible force: social upheaval brought on by the
conversion of economic problems into political turbulence.

Those two forces are underway right now, in fact, since the overt
monetizing of last week was preceded by the shoveling of bail-outs,
which tacitly guaranteed a collapse of credibility in US debt
instruments. I'm not in favor of violence and anarchy, but after the AIG
bonus affair, it's hard to imagine that we are not one more corporate
misdeed away from a rocket-propelled-grenade, or something like that,
being fired into a glass office tower somewhere - and then the
"first-broken-window" rule of social disintegration comes into play.
Meanwhile, I stick to my time-table of six-to-eighteen months before the
reckless creation of new money-for-nothing filters through the system,
overcomes even compressive mass bankruptcy, and starts expressing itself
in the sinking value of dollars and the revved up velocity of their
circulation in pursuit of tangible commodities.

We're already seeing the first twinges of that in the up-creep of oil
prices, busting through the $50-a-barrel barrier last week. Since
scarcity tends to express itself in gross volatility, it's easy to
imagine oil prices rising swiftly beyond the $147-per-barrel record
level of last year. As that occurs, the most basic premises of everyday
life in the USA will be called into question. If you think car sales
have been bad lately, with oil in the $35-a-barrel range most of the
winter, just wait. The newly-minted unemployed will be marooned in their
subdivisions. They will not be buying GMC Yukons on 48-month installment
contracts, let alone X-boxes on their Visa cards. They might be very
very hungry, though. All bets are off as to how these social classes may
organize themselves to alleviate their hunger (and express their anger
about it).

Given all this, it's kind of hard to believe that the savvy, thoughtful
Mr Obama is going along with such a disastrous program as the one his
"team" is rolling out. Perhaps his ease and confidence masks a
tragically conventional world-view, an incapacity to imagine "change"
outside a very narrow range of possibility. I must say I doubt this is
the case. I think, he is going along, for the moment, with a consensus
of wishes to prop up life as we know it at all costs. This consensus
emanates from the top down and the bottom up. The millions of "Joe the
Plumber(s)" out there don't want to rethink the terms of existence
anymore than the lords of Goldman Sachs. I also think that circumstances
will force Mr Obama's hand before long - specifically that a moment will
arrive when he goes on TV and tells the American public that things have
changed way beyond the scope of what they even imagined when they pulled
the levers last fall and voted for an uncharted future.

Capable observers are calling, meanwhile, for a robust bear market rally
moving through Spring, on technical grounds that have little to do with
the greater forces roistering in the background. Reality is a cruel
mistress. If the stock market rally rolls out as predicted, it will
surely fake-out the mainstream media. They'll conclude wishfully and
foolishly that something like "recovery" is underway. They may even
interpret rising oil prices as a "positive sign" that the great groaning
enterprise of the something-for-nothing economy is back "on track".

They'll be shocked sometime after Memorial Day when it all comes off the
rails again. We have a lot to sort out and very little time to get on
with job. Notice, I haven't even mentioned the potential for mischief
and instability coming out of the rest of the world - enough black swans
to blot out the sun. Want some concrete advice? For those of you sitting
on US Treasury bonds and bills, now would be a good time to get out.
_____

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

http://jameshowardkunstler.typepad.com/clusterfuck_nation/2009/03/full-commanding-denial.html


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