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Every now and then we find an essay that neatly summarizes everything that is going on in a certain area. Here is a piece by James Howard Kunstler, who believes that "peak oil" will ultimately mean the end of the American way of life, especially in terms of two automobiles in every garage and a nice house in the suburbs. In this offering, he summarizes everything that is wrong with the economy at this time, and to no one's surprise, his list seems to mirror our list.
Moreover, his title seems to suggest that he gives our current way of life, thanks to the convergence of all these things, "Six Months To Live."
Step up to the Whiskey Bar and read on, folks, and see if you don't think the pitchforks are being sharpened and the kerosene on the torches is being freshened.
Six Months to Live
By James Howard Kunstler
For Whiskey & Gunpowder
January 12, 2010
Saratoga Springs, New York, U.S.A
The economy that is. Especially the part that consists of swapping paper certificates. That’s the buzz I’ve gotten the first two weeks of 2010, and forgive me for not presenting a sheaf of charts and graphs to make the case. Just about everybody else yakking about these thing on the Web provides plenty of statistical analysis: Mish, The Automatic Earth, Chris Martenson, Zero Hedge, The Baseline Scenario…They’re all well worth visiting.
Bank bonus numbers are due out any day now. The revolt that I expected around the release of these numbers may come from a different place than I had imagined earlier — not from whatever remains of “normal” working people, but from the thought leaders and middling agents in administration (including the prosecutors) who, for one reason or another, have been diverting their attention, or watching and waiting, or making excuses for a couple of years now. When Frank Rich of The New York Times starts calling for Robert Rubin’s head, then maybe the great groaning tramp steamer of media opinion is turning in the water and charting a new course for the port of reality.
Anyway, the grotesque carnival of rackets and lies that the US economy has become — held together with the duct tape of stimulus cash, gamed accounting, mortgage subsidies, carry trades, TBTF bailouts, TARPS, TALFS, shell-game BLS reports, and MSNBC “green shoots” cheerleading — gives every sign of tipping into collapse at a moment’s notice. There are just too many obvious things that can go wrong, and that means there are many less obvious, hidden things that can go wrong, and isn’t it tragically foolish to tempt Murphy’s Law, since it operates so well without any help from us? The call is even going out lately for criminal prosecution of the current Treasury Secretary, Mr. Geithner, for engineering AIG’s $14 billion credit default swap payoff to Goldman Sachs as part of the AIG bailout. Okay then, why not Paulson, Bernanke, Blankfein...?
But the other rings of the circus are fully occupied by clowns and dancing bears, too. Even with sketchy-looking stock market prospects for 2010, it’s hard to explain why the world would run into US treasury bonds, especially a few months from now, after the initial rush-to-safety — that is, when you could just as easily buy Canadian or Swiss franc denominated short-term bills. And then what happens when the Federal Reserve has to eat all the uneaten treasuries, while it’s already choking to death on collateralized debt obligations and related worthless toxic trash securities? After all, the greenbacks we swap around are called Federal Reserve Notes.
Why would anybody think that the housing market is going to keep levitating? A big fat “pig” of adjustable rate mortgages (i.e. mortgages that will never be “serviced”) is about to move through the “python” of the housing scene, shoving millions more households into default and foreclosure. Meanwhile, local and regional banks are choking on real estate already in default that they are afraid to foreclose on and have been keeping off the market through 2009 in order to not send the price of houses down further and put even more households “under water” for houses worth much less than the face value of their mortgage. I doubt that the banks are doing this out of the goodness of their hearts, but whatever the motive, this racket of just sucking up bad loans can’t go on forever. At some point, a banking system has to be based on credibility, on loans actually being paid back, or it will break, and we are close to the breaking point.
The pathetic truth at the center of the housing fiasco is that prices have to come down further if any normal wage-earner will ever afford to buy a house again in America on anything like normal terms. Anyway, sooner or later the banking system is going to have to upchuck the “phantom inventory” of un-foreclosed-on houses, and sell them off for whatever they can get, or else a lot of banks are going to go out of business.
They may go down anyway, because the catastrophe of commercial real estate is following right on the heels of the fiasco in residential real estate. The vast oversupply of malls, strip malls, office parks, and other furnishings of the expiring “consumer” economy is about to become the biggest liability that any economy in world history has ever seen. Who will even want to buy these absurd properties cheaply, when they will never find any retail tenants for the badly-built structures, nor be able to keep up with the maintenance (think: leaking flat roofs), or retrofit them for anything? In a really sane world, a lot of these buildings would go straight to demolition-and-salvage — except that it costs money to do that, and who exactly right now will make a market for used cinder blocks and aluminum window sashes? I expect these places to become squats for the desperate homeless.
Then there are the bankrupt states, led by the biggest, of course — California and New York — but with plenty more right behind, whirling around the same drain (probably forty-nine of them with the exception of that fiscal Nirvana, North Dakota!). Even if they manage to con bailouts from the bailout-weary federal government, the states are still going to have to winnow down the ranks of their public employees (throwing more middle-class households into foreclosure and penury), while they hugely reduce public services, especially to the poor, the unwell, and the unable. That alone will redound into very visible realms of daily life from public safety (rising crime) to the decay of roads and bridges.
Perhaps the most troubling buzz in the air this first month of 2010 are rumors of coming food shortages due to widespread crop failures around the world in the harvest seasons of 2009. If the US Department of Agriculture hasn’t flat-out lied about crop numbers in 2009, the signs are that their statistical reports are at least inconsistent with real grain storage numbers and commodities prices. And why would the USDA tell the truth if every other federal agency is reporting gamed numbers? Given the crisis in capital and lending, one also has to wonder how farmers will be able to borrow money to get their crops in this year.
Finally there’s the global energy scene. The price of oil starts this week over $83 a barrel. That puts it about $1.50 from the price “danger zone” where it begins to kill economic activity in the USA. Things and procedures just start to cost too much. Gasoline. Deisel fuel (and, by the way, that means another problem for food production going into the 2010 planting season). One especially eerie situation the past few weeks has been the de-coupling of moves upward in oil from moves in the value of the dollar. Lately, oil has been going up whether or not the dollar has gone up or down. Two weeks ago the dollar went below 1.42 against the Euro and today it’s above 1.45, and oil has been rising steadily from the mid $70 range all the while. 2010 may be the year that we conclusively realize that world oil demand exceeds world oil supply — and that global oil production cannot hold above 85 million barrels-a-day no matter what we do.
These are the things that trouble my mind at three o’clock in the morning when the wind rises and things bang around spookily. Gird your loins out there for a savage season or two.
James Howard Kunstler
This is quite a list, and we here at the Chembio headquarters have covered them all:
Whew! Until we looked back over the list, we didn't quite realize the immediacy of the oncoming crisis of confidence. What will it take, folks, to cause this house of cards to tumble into the abyss? We believe it is likely to be something quite unforeseen, something unexpected — a "Black Swan" event, in other words.
When it happens, many will look back and realize they "should have seen it coming," but they preferred to believe in all those phony "green shoots" and leave the preparations to the fringe elements (namely, us!). At least, that's what they will realize after they've torched and pitchforked everything in sight, and they find themselves sitting in the ashes of a ruined way of life and wondering what they're going to eat for supper.
...And we still have the Earth Changes to complete that we are now going through and will become even more severe....quickly now.
All this spells chaos and confusion! Be Prepared!
- The lying FDA and the looming, catastrophic food shortages;
- The refusal of banks to lend to farmers for the spring planting,
- The bankrupt states, counties, and cities;
- The ongoing commercial real estate collapse;
- The resetting of ARMs and option-ARMs this year;
- The government merry-go-round of bailout crises; and most of all,
- The building public anger at the government and the bailed-out, profligate banks.
Viva La Revolución !!!
"Is it a rebellion?" asked Louis XVI of the count who informed him of the fall of the Bastille.
"No, sire," came the reply. "It is a revolution."
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