Bill Totten's Weblog

Friday, June 13, 2008

A Harsh Season

Clusterfuck Nation

by Jim Kunstler

Comment on current events by the author of
The Long Emergency (Atlantic Monthly Press, 2005) (June 09 2008)

My new novel of the post-oil future, World Made By Hand, is available at all booksellers.

The banking "industry" slept like a dog through the climax of the political primary season. Meanwhile, the banks sucked in scores of billions in cheap loans from the Federal Reserve, using bundles of devalued-to-worthless "innovative" securities as collateral. This dodge has worked for about three months, allowing them to pay their employees and cover their electric bills, and is now collapsing because American society can't maintain the flow of repayment on current debts and can't take on any additional debt - meaning both the regular "churn" of revenue flowing to the banks is impaired at the same time that fees for originating new loans cannot be generated. Uh Oh.

Out there in the cul de sacs and the strip malls, people are months behind in their mortgage payments, maxed out on their plastic, handing over their car keys to the lien-holders, and feeding their kids Spam fillets. Truckers get paid less for their loads than the cost of transporting the load. The airlines have financial cancer and will be dead in eighteen months. Container ship costs are heading out of sight. Municipalities are going broke. A weekend flood just destroyed part of the Midwest corn crop. And, of course, oil prices took a jagged turn upward last Friday en route to their next stop: $150-a-barrel.

The New York Times reported Monday that rural Americans are being hit hardest by the rise in gasoline prices. Duh. It's worst, naturally, in the big southern states where wages are low and the distances are vast. There's a reason why Nascar is the second-biggest religion down there: the automobile rescued southerners from the tyranny of geography. Cheap gas allowed them to build a "new" economy based mainly on the construction of suburban sprawl. In the process it deified the pickup truck. Guess what? The rural South made a big mistake. The Dukes of Hazard show is now drawing to a close. They are about to take a turn back to being what they were before the Second World War: an agricultural backwater. God knows what will happen to asteroid belts of "production housing" and big box shopping outside the relatively tiny pre-automobile cores of places like Houston and Atlanta.

The New York Times made a particularly inane point in their lead business section story today ("Rural US Takes Worst Hit as Gas Tops $4 Average") saying:

... Sociologists and economists who study rural poverty say the gasoline crisis in the rural South, if it persists, could accelerate population loss and decrease the tax base in some areas as more people move closer to urban manufacturing jobs.

Is it possible, nobody informed the reporters (and editors!) that (A) America has already hemorrhaged manufacturing jobs; and (B) That much of the little manufacturing that remains is not located in any cities per se?

So we now head into the general election. One thing the pundits of the mainstream media seem to miss is how much more room for economic carnage there is in the months remaining. They seem to be laying their current odds on the idea that McCain and Obama are starting on a "level playing field". In fact, McCain is already up to his hips in trouble from his sheer association with the Republican establishment, which will be so badly discredited by the shattered economy that it may actually go the same route as the 19th century whig party and dissolve in a putrid vapor of fecklessness. By November, the Republicans will be viewed as the party that wrecked the nation, and McCain will be in a hole so deep (still on the twenty-yard-line by the way) that nobody will be able to see his lips move.

It was a relief, at long last, to see the odious Hillary step aside on Saturday - though she could not have engineered a more self-glorifying exit. There is talk, all of a sudden, about a President Obama perhaps stashing Hillary in the Supreme Court seat currently occupied by Ruth Badar Ginsburg, whose health is failing. I'd like to see Hillary packed off there. It would get her out of the senate. You can't really grandstand on the Supreme Court. The nation - if it remains a nation - could forget about her.

Well, here we are about twenty minutes from Wall Street's Monday open. I imagine it's going to be quite a day. Over ninety degrees and oil cutting its overnight losses. Praise the lord and pass the Xanax.

Bill Totten


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