Strange Days (James Kunstler)

[Tace]

The executives of Citibank, Goldman Sachs, J.P. Morgan, and a long list of hedge funds, will be found cringing in their wine-lockers behind a measly layer of privet hedge when the tattooed minions of Glen Beck come a'calling.

James Kunstler -- World News Trust

April 6, 2009 -- Even while a wave of reflex nausea washed over America last week, and the unemployment rolls swelled by much more than another half million, the greatest stock market suckers' rally in seventy years pulled in the last of the credulous.

These are strange days. The earth is heaving and the buds swelling again -- at least north of the equator, where most of the action is -- and the global economy, which was supposed to be a permanent new add-on to the human condition, is sloughing away in big horrid gobs. But no one in charge of anything can believe it. The banking fiasco has introduced so much noise into the system that world leadership can't think straight.

What they're missing is real simple: peak oil means no more ability to service debt at all levels, personal, corporate, and government. End of story. All the other exertions being performed in opposition to this basic fact-of-life amount to a spastic soft-shoe performed before a smokescreen concealing a world of hurt.

If the "quantitative easing" (money creation) and fiscal legerdemain (TARPs, TARFs, et cetera) happen to jack up the "velocity" of the new funny-money, and the world resumes its previous level of oil use, the price of oil would rise again -- this time astronomically because the previous crash of oil prices crushed the development of new oil projects to offset depletion -- and the global economy will crash again. Only the next phase of the disease is liable to move beyond the financial and into the social and political realms. Disorder of various kinds will rule -- toppled governments, civil unrest, international tension and conflict.

The United States is doing everything possible to avoid these awful realities, but probably the worst self-deception is the idea that everything would be okay if we could just "re-start lending." That's just not going to happen. There is no more capacity to service the debt we've already piled on. Americans borrowed too much, and the bankers who made obscene fortunes in fees and bonuses in fraudulent lending managed to leverage this unpayable debt into the greatest collective swindle the world has ever known. The swindle has sent poison into every cell of the macro socio-economic organism, and further swindles are unlikely to revive it.

The rally in stocks, the financials in particular, could go on for another month or two. In the meantime, banks are striving desperately to avoid calling in more bad loans -- especially in commercial real estate, malls, strip malls, Big Box power centers -- because they don't want any more losses on their balance sheets. That can only go on for so long, too. Sooner or later the daisy chain of credibility in the fundamental transactions of business lose legitimacy and something's got to give.

more

http://www.worldnewstrust.com/wnt-reports/commentary/strange-days-james-kunstler.html

[acmavm]

1. BOTTOM LINE: And everyone needs to get this throught their

pro-bailout heads:

<snip>

Americans borrowed too much, and the bankers who made obscene fortunes in fees and bonuses in fraudulent lending managed to leverage this unpayable debt into the greatest collective swindle the world has ever known. The swindle has sent poison into every cell of the macro socio-economic organism, and further swindles are unlikely to revive it.

<snip>

[DemReadingDU]

2. peak oil

peak oil means no more ability to service debt at all levels, personal, corporate, and government. End of story.

[Kolesar]

4. What exactly does that mean?

Kunstler takes long leaps in his writing and does not tie his stories together well.

[DemReadingDU]

5. I believe it means the world revolves around oil

The supply of existing oil fields is declining, and there aren't enough new fields opening. Look around, just about everything is made of a petroleum product or is transported to your store by a gasoline powered vehicle. I have no idea when the oil supply will run out or get so expensive that we can't afford to fill up the tanks in our cars.


Edit: If we can't drive around in our gas powered vehicles, how can we buy anything, who will deliver it to our house? I suppose the military will always have a supply available to them though.

[Kolesar]

6. And we need oil to address the debt in the world

IIRC, labor and energy supplies are the drivers of our economy and the latter is in short supply. See what I mean about Kunstler's long leaps of logic?

[tama]

8. Exactly

AFAIK Kunstler's (et alii) narrative is pretty tightly knit and the logic is simple and basic. World economy is based on debt which is 1) to be payed by future growth 2) based on firm belief (against physics and logic) that exponential growth is going to continue exponentially ad infinitum, 3) based on unlimited resources of cheap energy to power and enable unlimited exponential growth.

See where the actual leaps of logic are?

[ananda]

3. I have this constant nagging feeling..

.. that we're in the end of days.

[Tace]

7. I Know What You Mean About That Feeling...

I feel the same way, sometimes. Yet, I believe that we are heading for a better future, that is not predicated on an apocalypse, or somesuch.

[Kolesar]

9. Mom and Dad made it through the Great Depression

Emotionally scarred, yes, but they did make it through. We won't be the first people to experience deprivation.

[4dsc]

10. But we'll be the first to experience peak oil

What make's this period of time interesting is the belief's of many that we can somehow grow our economy indefinitely. So when speaking of "deprivation" in a consumer based society, you have to realize that most people have never experience going without or doing with less.

When the age of oil starts is dreadful decline, its going to be devastating to most people and will catch them by surprise..

[Kolesar]

11. None of the Kolesar kin had automobiles until WW2

And when I was young, Dad only used the Ford to drive to work.

I expect that property on the bus routes is going to rise in value. In Cuba, they created fifth-wheel bus trailers until they could afford to buy a real bus fleet. Public officers would flag down motorists and order them to take on passengers for a ride into town. This is gonna stink. I want to move to a house up a mountain valley and subside on produce. Too bad I don't know how to clean a deer carcass.