CAPITALISM: U.S. Economy: Six Months To Live?
grok <
[email protected]> Wed, Jan 13, 2010 at 11:15 PM
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This well-known petit-bourgeois commentator doesn't have a socialist
bone in his body, and enjoys the reputation of being somewhat of a
Cassandra, in the "mainstream" -- but the point is: this is mainly
because he calls `em like he sees `em. And he and the bourgeois
experts he analyzes have been seeing this slow-motion Mother Of All
Trainwrecks coming for the longest time... As have any real marxists.
The ability of the bourgeois strategists to continue rolling over
their crisis into 'new debt' is swiftly reaching the point where they
will simply be overwhelmed by their own long-term perfidy against us.
Of course -- we're all along for the ride too.
Enjoy it.
- -- grok.
- ----- Six Months To Live?
Clusterfuck Nation
by James Howard Kunstler
Comment on current events by the author of
The Long Emergency (2005)
www.kunstler.com (January 11 2010)
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 {1}, The Automatic Earth {2}, Chris Martenson {3}, Zero Hedge
{4}, The Baseline Scenario {5} ... 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 {6}, 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 {7}, 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 {8} 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 (that is,
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 - for example
Emergency Food Supply {9}, Food Crisis For Dummies {10}, 2010 Wall
Street Predictions {11}. 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.
Links:
{1} http://globaleconomicanalysis.blogspot.com/
{2} http://theautomaticearth.blogspot.com/
{3} http://www.chrismartenson.com/blog
{4} http://www.zerohedge.com/
{5} http://baselinescenario.com/
{6} http://www.nytimes.com/2010/01/10/opinion/10rich.html?em
{7} http://en.wikipedia.org/wiki/Murphy%27s_law
{8}
http://www.bloomberg.com/apps/news?pid=20601087&sid=awMKjsrS8zYk&pos=3
{9}
http://theemergencyfoodsupply.com/archives/the-coming-world-famine-will-2010-be-the-year-the-world-runs-out-of-food
{10}
http://www.marketskeptics.com/2009/12/2010-food-crisis-for-dummies.html
{11}
http://www.newjerseynewsroom.com/economy/2010-wall-street-predictions-major-food-shortages-oil-to-rise-above-100-a-barrel-among-forecasts
http://kunstler.com/blog/2010/01/six-months-to-live.html
http://www.billtotten.blogspot.com
http://www.ashisuto.co.jp
- ----- End forwarded message -----
- --
The Financiers & Banksters have looted untold trillions of our future earnings.
Their bureaucratic police & military goons are here to make us all pay for it.
Forever.
Well FORGET THAT. Let's get it *ALL* back from them -- and more.
**Socialist revolution NOW!!**
Build the North America-wide General Strike.
TODO el poder a los consejos y las comunas.
TOUT le pouvoir aux conseils et communes.
ALL power to the councils and communes.
And beware the 'bait & switch' fraud: "Social Justice" is NOT *Socialism*...
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