Bill Totten's Weblog

Friday, March 24, 2006

The Clusterfuck Nation Chronicle

Commentary on the Flux of Events

by Jim Kunstler

March 20 2006

An acquaintance told me a weird story yesterday. Let's call him "E". He runs an Internet consulting company here in Saratoga Springs. It employs about twenty-five people in a downtown building E put up a few years ago.

Last month a freak windstorm ripped through here and took down the electric power for three days. E lost communication with the payroll service (a separate company) that issues his employee's salaries. The storm happened in the middle of the day, Friday, payday.

The power came back on Sunday night, and on Monday two of E's employees each asked for private meetings with the boss. Because of the storm, they said, the payroll company had failed to make electronic salary deposits in their checking accounts. They were concerned because they were late on their mortgage payments and without the past week's electronic paycheck, they couldn't pay their mortgages.

E told me that these were "high-level employees" with substantial salaries who were both living in "very high-end homes", which around here would mean around a half-million dollars (and I know that in some parts of the US, like Washington, DC, or San Francisco, a half-million barely gets you a "pre-owned" raised ranch). He said he was shocked to discover that his executives were living from paycheck to paycheck, in houses that by normal criteria (this is, pre-bubble standards) they probably couldn't afford.

"What if something happened to me?" E said. "What if I was hit by a bus? That would be it for the company. That would be the end of their paychecks, and what if they didn't find another job almost immediately? I don't want to interfere in their personal affairs, but I can't help feeling that I really need to talk to them about this."

Meanwhile, our cretinous, pandering local newspaper, the Saratogian, published a special real estate section on Sunday under the banner "Progress 2006". The headline under the banner said, "If You Build It They Will Come", and the accompanying photo showed a rank of beige McHouses in a new subdivision. The sub-head said "Growth is the name of the game across the county".

Spring here in the North Country brings with it a ripe expectation that the winter real estate doldrums will soon yield to raptures of zippy sales. Of course this is based on the assumption that the year ahead will be like the recent years just past, only better! The sense of momentum in the real estate markets is reinforced by the fact that so much stuff has worked through the arduous permitting process and is just now coming up for sale, with even more stuff behind it moving through the cloacal pipeline, so to speak - so therefore the buyers will automatically appear drooling into their checkbooks.

I don't think so. I think that what we are getting here is stupendously delusional behavior. The ebullience in the newspaper only tells me how much unexpressed subconscious terror lurks just below the surface of wished-for "normality". For one thing, anybody who walks around this town can hardly fail to notice how the realtor's signs are accumulating in the front yards. Nothing's moving. Outside of town, in the suburban asteroid belts that only ten years ago were cornfields and cow pastures, there's a much more lavish supply of new houses. I detect an odor of bloodshed.

This has been a hot market for a while, because Saratoga is an historic "main street" town in pretty good condition with a high level of cultural amenity, close to the gigantic Adirondack Park. The three old cities nearby which comprise the employment centers of the Capital District - Albany, Schenectady, and Troy - are in such a state of squalid decrepitude that practically anyone gainfully employed has fled shrieking lately, and Saratoga has attracted many willing to tolerate a thirty-plus mile commute.

For years following the two oil crises of the 1970s, the real estate market in Saratoga fell stone dead because the fear of rising gasoline prices and long lines at the filling stations remained so vivid. We're headed back to scary gasoline prices again, only this time it will not be a temporary crisis. And this time, there will be a huge surplus of unsold houses. There will also be a substantial number of house owners getting in trouble with their mortgage payments, and one way or another their houses may end up adding to the supply of available houses. There is also very likely to be trouble in the financial markets, with dark implications for the value of the US dollar, for the movement of interest rates, and for the availability of further credit.

It makes my head hurt to imagine the coming carnage on the real estate scene here. Nation-wide, the latest figures are not reassuring. Even hot markets cool off when evil economic winds blow. According to the California Association of Realtors, sales of existing, single-family detached homes were down 24.1 percent, the highest year-on-year decline since December 1990 when sales dropped 25.2 percent. The National Association of Realtors reports Massachusetts home sales are down 21 percent and listings up 41 percent. In Florida existing home sales are down nineteen percent. In Alabama existing home sales down 21 percent and listings up seventeen percent. Pennsylvania sales down seventeen percent. Minnesota sales down seven percent and inventory up 35 percent.

Meanwhile housing "starts" (under construction) jumped 14.5 percent in January of 2006. Permit approvals were up 6.8 percent. That old dawg, momentum.

House "affordability" reached a fourteen-year low according the US Department of Commerce. Foreclosures were up 27 percent so far in 2006.

You wonder, finally, how many current homeowners will lose their houses? How many developers will lose the shirts off their backs? How many banks will get stuck with foreclosed property? And how will the United States economy function without a phony-balony real estate bubble market driving it?

March 13 2006

Not included here. See

March 06 2006

You've heard of "Pimp My Ride". Well, the New York Times is running a new joint called "Pimp My Read". This week's Sunday Time Magazine devoted itself to the idea that housing bubble is (in Martha Stewart's words) a good thing. In fact, Martha herself is getting into the racket, lending her name to a 650-unit (they're just units) suburban subdivision outside of Raleigh, North Carolina. If she was shrewd about the deal (could it be otherwise?) then Martha will get paid whether the project tanks or not.

Really, the whole issue of the Mag was just an opportunity for the financially-strapped Times to sell a shitload of advertising to the real estate investment trusts, the luxury condo hucksters, and the home furnishing industry. It will probably go down in history, along with Yale economist Irving Fisher's 1929 proclamation that the US had achieved "permanent prosperity", as one of the seminal documents of societal cluelessness in the face of obvious calamity.

My favorite story in the joint was "Home Economics" about Harvard whiz Edward L. Glaeser, 38, "a genius" urban theorist, who sports bespoke English suits (with watch-fobs!) and who has managed to construct a comprehensive view of how we live in America without factoring in the global energy predicament. Apparently Glaeser's major contribution to the field is the arresting idea that whatever has been happening out there in America will certainly continue to happen - exactly in the Irving Fisher tradition. For instance, people have been moving to the Sunbelt for sixty years because there's no winter there to hassle with, so that trend will continue. Also, suburban sprawl is just fine, no problem, let's get more of it up-and-running. (Glaeser's theory is related to Times columnist David Brooks's incisive formulation that suburbia must be okay because the public seems to like it.)

What these pimps and geniuses don't get is that America's future is all about discontinuity. Virtually everything you see out there will not keep going. We will discontinue granting interest only, adjustable rate mortgage loans for half-million-dollar McHouses to schlemiels one paycheck away from bankruptcy - because the practice will prove to be reckless and ruinous not only for the schlemiels, but for the financial system as a whole. Americans will stop moving to the Sunbelt when they discover what life is really like in Phoenix and Houston without cheap air conditioning. After the suburbs implode financially from a pandemic of defaulted mortgages, we will see how well they operate on $5-a-gallon gasoline (or higher), and how carefree it is to heat a 4000-square-foot McHouse in a permanent natural gas crisis. We'll also discover that telecommuting over the Internet is not so "cool" in brownout nation.

Obviously these clowns are whistling past the graveyard as the air audibly hisses out of the housing bubble, and the very appearance of these fatuous reassurances in America's chief enabling organ of popular delusion ought to be a signal to the still-alert out there to run shrieking for safety. It's interesting to note, by the way, that the New York Times ran an editorial last week titled "The End of Oil", by Robert B Semple, stating starkly that the global oil production peak was for real. The catch was that the chickenshit Times editors only ran the piece on their Web edition, not in the printed newspaper. The next day, in the print edition, they ran a big display ad from Exxon-Mobil saying that peak oil was just a shuck-and-jive by a claque of alarmists. Of course, one of the wonderful things about democracy is that people are free to believe whatever they like.

February 27 2006

Not included here. See

February 20, 2006

Not included here. See

February 13 2006

The failure to lead in this country now includes all the major fields of enterprise and resolves into a general and total failure of authority that threatens to drag us into darkness. Leaders in politics, business, the news media, science, medicine, education, and the organized religions have all failed to prepare the public for the hardships that will attend a global energy crisis supercharged by climate change, disorder in the financial markets, and almost certainly more war.

President Bush's failure to lead was obvious in his state of the union speech, and in actions that followed - such as signing on with the continued starvation of Amtrak last week. If Mr Bush doesn't like that crypto-private company, he could start an initiative of his own to reform and reorganize the railroad system we desperately need. So too, by the way, could Hillary Clinton or John Kerry, or any other putative Democratic leader. But they're too busy grubbing around the contribution circuits to fatten their campaign war chests.

The major news media's failure is near total, especially at the highest level of the New York Times, which gives more ink to narcissistic blather about gender identity than to the issue of how industrial civilization is going to carry on without its primary resources. The cable news networks have sunk into such mires of craven whorishness that they don't even pretend to broadcast news between eight o'clock and midnight anymore, just tabloid crime spectacles and celebutante melodramas. The Wall Street Journal has resigned from reality in order to DJ the financial sector's dangerous game of musical chairs.

I haven't heard one college president address the question of how we are going to reform education when it ceases to be a mass consumer activity and the giant campuses of the land-grant diploma mills enter their own waiting crisis of scale.

Where are the doctors speaking out about the nightmarish swindle that corporate medicine has become? The most conspicuous public doctor, Senate majority leader Bill Frist of Tennessee, is under investigation precisely for working one angle of that swindle - insider trading of medical services stock. Isn't it bad enough that hardworking people have to face cancer and mutilating injuries from auto accidents without also shoving them into personal bankruptcy?

Business leadership in America has become nothing less than a transparent wholesale shift of wealth by irresponsible boards of directors from the pension funds of longtime employees to the pockets of grifting CEOs - or the outright looting of supersized enterprises such as Enron. Here's an interesting question-of-the-day for those of you who ponder over business matters: how does a person really improve his standard of living after the first $10 million? Give that some thought, because a few years hence a furious public is going to be asking that very question of fattened corporate executives as they prepare to roast them on spits over the flames of discarded automobile tires.

Where are the clergymen in America who are willing to tell their congregations that casino gambling is a moral fiasco and that the worship of unearned riches is an offense in the sight of God?

Where are the scientists who will inform the public and its political leaders that we really are in trouble with oil and natural gas, that markets do not magically deliver rescue remedies on demand, that technology and energy are not interchangeable and mutually substitutable, and that our nation is about five years from falling into a condition of energy starvation that will bring down all our complex systems of daily life?

When the public finally discovers how they have been let down or played by these leaders, there will be a convulsion more severe than the one that tore this country apart in 1861.

February 06 2006

By now, President Bush's wildly irresponsible remarks on energy in his state of the union speech may have already vanished down the memory hole, but the damage will linger on. "America is addicted to oil", Mr Bush began, failing to mention that underlying this addiction was a living arrangement that required people to drive their cars incessantly. A clueless public will continue to believe that "the best way to break this addiction is through technology ..." and that "we must also change how we power our automobiles".

Mr Bush recommended ethanol. As one wag put it after the speech: "America's heroin is oil, and ethanol will be our methadone". The expectation will still be that everybody must drive incessantly.

It is hard to believe that Mr Bush does not know the truth of the situation, or that some of the clever people around him who run his brain do not know it, namely that ethanol and all other bio-fuels are net energy losers, that they require more energy to grow and process them than they produce in the end, and that the energy "inputs" required to do this are none other than oil and natural gas, the same fuels we already run engines on.

The president also said that "breakthroughs on this and other new technologies will help us reach another great goal, to replace more than 75 percent of our oil imports from the Middle East by 2025".

In point of fact, our oil imports from anywhere on the planet will be reduced by more than 75 percent because by that time worldwide oil depletion will be advanced to its terminal stage, and nobody will have any oil left to export - assuming that the industrial nations have not ravaged each other by then in a war to control the diminishing supply of oil.

The key to the stupidity evinced by Mr Bush's speech is the assumption that we ought to keep living the way we do in America, that we can keep running the interstate highway system, WalMart, and Walt Disney World on some other basis besides fossil fuels. The public probably wishes that this were so, but it isn't a service to pander to their wishes instead of addressing the mandates of reality. And reality is telling us something very different. Reality is saying that the life of incessant motoring is a suicidal fiasco, and if we don't learn to inhabit the terrain of North America differently, a lot of us are going die, either in war, or by starvation when oil-and-gas-based farming craps out, or in civil violence proceeding from failed economic expectations.

I hate to keep harping on this, but Mr Bush could have announced a major effort to restore the American railroad system. It would have been a major political coup. It would have a huge impact on our oil use. The public would benefit from it tremendously. And it would have put thousands of people to work on something really meaningful. Unlike trips to Mars and experiments in cold fusion, railroads are something we already know how to do, and the tracks are lying out there waiting to be fixed. But the reigning delusions of Hollywood and Las Vegas prevent us from thinking realistically about these things. We're only into wishing for grand slam home runs and five-hundred-million-dollar lottery jackpots. Anything less than that makes us feel like losers.

Meanwhile, the official Democratic Party response to Mr Bush's fucking nonsense was the stupendous fatuousness of newly-elected Virginia Governor Tim Kaine's rebuttal, a saccharine gruel of platitudes and panderings that made me want to shoot members of my own party on sight.

History will look back in wonder and nausea at the twitterings of these idiots as the world they pretended to run lurched into darkness.

Bill Totten


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