Kunstler at his best
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
— We have to reform food production
(a.k.a. "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
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.
nice post mike
give my mates on kiel mountain a big jai baba when you see them
especially the issac- youngs
Well, here’s something we HAVE heard before. Many times. Timmy, too, believes in a strong dollar —
Geithner also has affirmed the U.S. “strong dollar” policy.
“A strong dollar is in America’s national interest,” he said
last week. “Maintaining confidence in the long-term strength of
the United States economy and the stability of the U.S. financial
system is good for America as well as our trading and investing
Now if you REALLY believed in a ‘strong dollar,’ you probably would
not double the monetary base in six months. Because in principle, after
the usual lags, that should cut the purchasing power of each dollar in
Of course, Timmy believes in paying taxes on time, too.
I continue to be reminded of that classical (purportedly Chinese) phrase, "May you live in interesting times."
Each new day brings wonderment and bewilderment.
I can hardly wait for tomorrow – I think!
Will we see a banking "holiday" this time? It didn’t happen last time (oct last) and I for one don’t mind admitting that I was expecting it. So if we do then money, at least on a national and world scale becomes irrelevent. Oil stops, food stops people starve and get cold. Are there any indicators that might be said to precipitate such a holiday?
Machine head. According to me; we/ you only loose half or more of the value if the printed money gets leggs. That means people have to work for it. When or if that happens then we will begin to see inflation in those areas where people do things. It will make no difference to things already done initially but their value will be seen to rise as the cost of replacing them rises.
Store fed is store owned
I did not read the title and thought Damnthematrix wrote it. Then I saw the phrase "Happy Motoring" and I said, naw, this has gotta be Kunstler…
Excellent post!! One of my first major reads on the subject of Peak Oil and Sustainability was James Howard Kunstlers book ‘The Long Emergency’. Google Book Review leaves me no words to add other than my name here…