The Long Crisis

Posts Tagged ‘James Howard Kunstler’

With the stock market well about 9,200 on the Dow and the S&P Index above 1,000 the green shoots con men and cheerleaders are about to pee in their pants from excitement. The recession is over or nearly over they say.

Apparently, none of the team Obama guys who didn’t foresee the popping of the bubble economy and are now so pleased over a second wave recovery move have any knowledge of a third wave. We are probably near the end of the second recovery wave now and the mother of all third waves will soon sweep over the market, much to the surprise and destruction of those still bullish or newly bullish on American stocks and the revival of the consumer driven American dream world economy.

Our cyberspace friend James Howard Kunstler has a few observations of his own to make this week about the neverland dream like vision of the recovery. He and a few other insightful reporters on the true state of America, like Bill Bonner and Robert Prechter, are pretty darn certain that the American dream is about to become a frigging nightmare, one worse than we can now even imagine.

For now I’ll let James Kunstler tell his story in his unique mind bending style.

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Hunky Dory
By James Howard Kunstler
on August 3, 2009 7:36 AM

Whenever the herd mentality lines up along a compass point leading to “permanent prosperity,” or a yellow brick road lined with green shoots, or something like that, I tend to see the edge of a cliff up ahead. We are now completely in the grips of the deadly diminishing returns of information technology. The more information comes to us about How Things Are, especially from TV, the more confused or wrong the conventional view gets it.

A broad consensus has formed in the news media and among government mouthpieces and even some “bearish” investors on the street that “the worst is behind us” in this tortured economy. This view is completely crazy. It will only lead to massive disappointment a few weeks or months from now, and that disappointment might easily transmute to political trouble. One even might call the situation tragic, except a closer look at the sordid spectacle of what American culture has become — a non-stop circus of the seven deadly sins — suggests that we deserve to be punished by history.

The reason behind this mass delusion is not hard to find: it’s based on wishing, especially the wish to retain all the comforts, conveniences, luxuries, and leisure that had become normal in American life. These are now ebbing away in big gobs for most of the population — while a tiny fraction of the well-connected pile on ever larger heaps of swag, enjoying ever more privilege. Those in the broad bottom 95 percent were content as long as there was a chance that they, too, could become members of the top 5 percent — by dint of car-dealing, or house-building, or mortgage-selling, or some other venture enabled by easy credit and a smile. Those days and those ways are now gone. The bottom 95 percent are now left with de-laminating houses they can’t make payments on, no prospects for gainful work, re-po men hiding in the bushes to snatch the PT Cruiser, cut-off cable service, Kraft mac-and-cheese (if they’re lucky), and Larry Summers telling them their troubles are over. (If I were Larry, I’d start thinking about a move to some place like the Canary Islands.)

Too many disastrous things are lined up in the months ahead to insure that we’re entering a new phase of history: The Long Emergency.
Government at every level is worse than broke.
Our currency, the US dollar, is hemorrhaging legitimacy.
Inability to service old debt at all levels or incur new debt.
Bad (toxic) debt lurking off balance sheets everywhere.
The housing bubble fiasco is far from over.
Unemployment rising implaccably.
So-called “consumers” unable to consume consumables.
Crucial energy import supply lines fragile.
Food supply subject to energy problems and climate abnormalities.
A world full of other societies who would enjoy watching us fail and suffer.

When The Long Emergency was published in 2005, I said then that the greatest danger this society faced would be its inclination to gear up a campaign to sustain the unsustainable at all costs — rather than face the need to make new arrangements for daily life. That appears to be exactly what has happened, and it didn’t happen under the rule of some backward-facing, right-wing, Jesus-haunted crypto-fascist, but rather a “progressive” party led by a dynamically affable young man unburdened by deep cultural allegiance to Wall Street. Barack Obama has been sucked in and suckered. “Change you can believe in” has morphed into “a status quo you will bend heaven and earth to hold onto.”

Whatever else you might think or feel about Mr. Obama’s performance so far, this strategy on the broader question of where we go as a nation pulses with tragedy. What’s remarkable to me, to go a step further, is the absence of comprehensive vision — not just in the president, but in all the supposedly able and intelligent people around him, and even those leaders not in government but in business and education and science and the professions.

History is clearly presenting us with a new set of mandates: get local, get finer, downscale, and get going on it right away. Prepare for it now or nature will whack you upside the head with it not too long from now. Attempting to maintain anything on the gigantic scale will turn out to be a losing proposition, whether it is military control of people in Central Asia, or colossal bureaucracies run in the USA, or huge factory farms, or national chain store retail, or hypertrophied state universities, or global energy supply networks.

These imperatives are so outside-the-box of ordinary experience right now, that to drag them into the arena of politics can only evoke blank stares or nervous giggling. But whether we like it or not, these are the things that will really matter in the years ahead — not whether General Motors can ever make a profit again, or what Target Store’s sales figures are next quarter, or whether the latest high-rise condo-and-gambling complex in Las Vegas will be successfully marketed.

Here, in the dog days of summer, it seems to me that the situation in the USA is so fundamentally bad, so unpromising, so booby-trapped for failure, that I wonder if there has ever been a society so badly deluded as ours. We’re prisoners of our wishes, living in a strange dream-time, oblivious to the forces gathering at the margins of our vision, lost in a wilderness of our own making.

Anything can happen now. I certainly wouldn’t rule out international mischief as we arc around into fall. The air is so full of black swans that the white swan now seems like the exceptional thing. Whatever else happens, it sure will be interesting to see the public’s reaction to Wall Street’s announcement of Christmas bonuses. The folks at Rockefeller Center better be thinking about getting a fireproof tree.
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James Kunstler’s novel of America’s post-oil future, WORLD MADE BY HAND, is now available in paperback. He is at work on the sequel.

Honestly, until now for most of my life I’ve been an optimistic guy. I grew up in a rah, rah USA military family , was a boy scout, loved baseball and football, served in the US Navy Seabees, had a tour of duty in Vietnam, started my own business while going to college on the GI Bill, and in general have had an adventurous life while often being an expatriate American living in eight nations along the way. Until recently I thought America was a nation that could overcome any set of problems although the Vietnam War did give me reason to question the motives and judgement of our leadership.

No longer do I believe that we will emerge from our present circumstances as a stronger, better nation. The American Empire has peaked and we are on the slippery downhill slope. In order to solve a problem you have to identify the problem and take steps to fix the cause. I do not see that happening at any level of US government. The nation is flying off a cliff and as we have not hit bottom yet the green shooters and the cheerleaders are all saying no problem. They say as with one voice that we will soon fully recover and be in fine shape.

The real question should be “recover” to what? We are in the early stages of a depression with so many depressing factors involved (see Kunstler’s list above) the old American Dream way of life will not be recovered. Far from it. Read Kunstler’s essay again. Let what he is saying sink in. Then be smart and start working on your own survival plan. Don’t expect the same guys who brought you stage one and stage two to save you from the third wave and the long crisis. That is the stage of true destruction and it is not far away from descending upon us.

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Credit default swap contracts are beginning to be better understood by the American public. Those who understand the details of CDS’s are becoming outraged at the audacity of the banking and hedge fund managers who gamed the system by making risky bets camouflaged as AAA rated investments under the cover of CDS’s.

In addition, the public is saying “enough” to a government that has been throwing billions of Dollars at those institutions that used the cover of CDS financial instruments to justify making over sized risky investments. When the underlying investments soured they demanded payment from institutions, like AIG, that were happy to collect up front premiums from writing contracts and serving as counterparties for CDS’s. So happy in fact that they wrote CDS policies far beyond their ability to pay should payout ever be required. To say that risk was mispriced is a gross understatement.

The more that the public understands the use of CDS’s the more they should be enraged. So far AIG has soaked up at least $160 billion of bailout funds and a good bit of that taxpayer money is flowing right out the back door into the grubby hands of those banks that made the over sized risky bets. The banks, like Bank of America, have even used part of the bailout funds to pay huge bonuses to their managers. It is an unholy system that rewards bad behavior and penalizes not only current but future generations of Americans.

James Howard Kunstler is an American writer who has set forth in readable and thought provoking detail where all of this financial meltdown, poor economic management, and misallocation of America’s resources is likely to take us. A portion of one of his posts is given below. James Kunstler thinks that the American public may soon move from shock to rage and a call for prosecution. Read his material and then see what you think.
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March 9, 2009
Forget about “Recovery” by James Howard Kunstler

I maintain that there are countless constructive tasks waiting to occupy us on a long national “to do” list for rebuilding a national economy, but they are way different than the ones currently preoccupying government and the mainstream media. The Obama White House, Congress, and The New York Times are hung up on exercises in futility — “rescuing” banks and insurance companies that cannot be rescued (because they are hopelessly trapped in “black hole” credit default swaps contracts), and re-starting a “consumer” binge that was completely crazy in the first place, based, as it was, on a something-for-nothing standard-of-living.

Meanwhile, if the buzz on the blogosphere is a measure of anything — and I think it is — then a new consensus is forming out there about where to start doing things differently. Unfortunately after less than two months in office, President Obama finds himself awkwardly behind-the-curve on this. It begins with the understanding that a general bank rescue is hopeless and, going a step further, that the people who caused the train wreck of “innovative” securities have to be prosecuted. The public’s collective voice on this is muted but growing. It has been muted by the general air of blackmail that the banks have used to enthrall policy and opinion — the “too big to fail” idea — in effect holding the nation’s future for ransom.

I maintain that there are countless constructive tasks waiting to occupy us on a long national “to do” list for rebuilding a national economy, but they are way different than the ones currently preoccupying government and the mainstream media. The Obama White House, Congress, and The New York Times are hung up on exercises in futility — “rescuing” banks and insurance companies that cannot be rescued (because they are hopelessly trapped in “black hole” credit default swaps contracts), and re-starting a “consumer” binge that was completely crazy in the first place, based, as it was, on a something-for-nothing standard-of-living.

Meanwhile, if the buzz on the blogosphere is a measure of anything — and I think it is — then a new consensus is forming out there about where to start doing things differently. Unfortunately after less than two months in office, President Obama finds himself awkwardly behind-the-curve on this. It begins with the understanding that a general bank rescue is hopeless and, going a step further, that the people who caused the train wreck of “innovative” securities have to be prosecuted. The public’s collective voice on this is muted but growing. It has been muted by the general air of blackmail that the banks have used to enthrall policy and opinion — the “too big to fail” idea — in effect holding the nation’s future for ransom.

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For the completion of this article visit the James Howard Kunstler website under the “The Clusterfuck Nation Chronicle”, March 9th, 2009 posting. You will quickly determine that we have a Long Crisis to try to deal with.

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