Monday, December 31, 2007

Hauoli Makahiki Hou!

James Howard "Janus" Kunstler reviews 2007 and forecasts 2008 as only he can:

Dec 31, 2007
Forecast 2008

For the tiny fraction of people who actually pay attention to real events -- those, for instance, who know the difference between Narnia and Kandahar -- the final hours of 2007 leading into the fog-shrouded abyss of 2008 must induce great racking shudders of nausea. Has there ever been a society so exquisitely rigged for implosion? The whole listing, creaking, reeking edifice stands like one of those obsolete Las Vegas pleasure palaces awaiting a mere pulse of electrons to ignite a thousand explosive charges perfectly placed to blow away the structural supports.

...On the ground out in the heartland, in the anxiety-drenched, over-valued beige subdivisions of California and the ennui-saturated pastel McHousing tracts of Florida (not to mention the pathetic vinyl outlands of Cleveland and Detroit) a mighty keening welled forth as mortgage rates adjusted upward, and loans stopped "performing," and "for sale" signs failed to turn up buyers, and sheriff's deputies showed up with the rolls of yellow foreclosure tape, and actual ownership of the re-poed collateral entered a legal twilight zone somewhere north of the Florida State Teacher's Pension Fund and south of the Norwegian Municipal Councils' investment portfolios. What a mighty goddam mess was left out there by the boyz at the Wall Street genius desks, who engineered a magical system for eliminating risk from the capital markets -- only to see it leak back in from a million holes and seams and collapse the greatest bubble ever blown.

In the background, the US dollar sank to record lows against the euro and the pound sterling, the price of oil jumped 56 percent across the year just grazing the $100-a-barrel mark, drought punished the American southeast and Australia's grain belt, floods ravaged Texas and England, the polar ice shrank dramatically, but the US escaped any major hurricane action for a second year in a row. Except for the murder of Mrs. Bhutto just a few days ago, the international scene was supernaturally quiet. Even Iraq fell into a torpor, variously attributed to utter exhaustion among the warring factions or to the US troop "surge" under general Petreus. Iran got a surprise clean bill-of-health on its nuclear bomb-making activity from America's own investigators, to the consternation of Mr. Bush & Co. The non-human denizens of Planet Earth didn't have such a good year. Honeybees, Yangtze river dolphins, and house sparrows took big hits, and Al Gore went up another suit size (as well as winning part of the Nobel Prize for his Powerpoint show). Which brings us finally to the heart of the matter: what's coming down the pike starting tomorrow, January 1, 2008?

Down and Dirty I shudder to imagine how things will play out now as we turn the corner into 2008. Not to put too fine a point on it, but my little walnut brain can't imagine any scenario in which the US economy doesn't end up on a gurney in history's emergency room. It's not necessary to rehash the particulars of the Greenspan bubble-blowing disaster. The outcome is what concerns us. The web cables have been blazing for months with arguments as to what form the workout will take. There's little disagreement about the fundamentals at the housing end of things.

The housing market is in a death spiral. Eventually, the median price of a house will have to fall back to the median income, and it has a very long way to go, perhaps 50 percent. Until that happens, houses will be generally unsellable. At the same time, of course, an anxious finance sector will be offering fewer mortgages and on much more rigorous terms, so there will be far fewer qualified buyers even for distress sales. And the median income itself may soon not be what it has been. The whole equation has changed. As the painful re-pricing process plays out, many owners/sellers will be upside-down and under water in what they owe on the mortgage in relation to the value of the house they occupy. Quite a few may have lost jobs and incomes along the way. Most of these unfortunates would be better off just mailing in the keys and walking away. But in so far as these awful liabilities are peoples' homes, full of all their stuff and their childrens' stuff, not to mention being the repository of all their previously-imagined wealth, as well as their hopes and dreams, walking away is psychologically more easily said than done.

Surely in this election year, schemes will be advanced to bail out these poor suckers. But the beneficiaries of such a putative bail out would be far outnumbered by the home-owners still making mortgage payments, plus property taxes jacked up during the recent orgy by greedy public officials, and I don't think this majority would stand for the unfairness of seeing their neighbors simply let off the hook on their obligations. Perhaps the one thing that congress could do is change the insane law that treats foreclosures like some kind of bizzaro capital gain and piles additional huge tax demands on people who can no longer afford to buy their kids a frozen burrito. The issue of what to do about the dispossessed will be so politically red-hot that it could upset the election process --but I get a bit ahead of myself.

One thing the public doesn't get about the housing debacle is that it is not just the low point in a regular cycle -- it is the end of the suburban phase of US history. We won't be building anymore of it, and those employed in its development will have to find something else to do. Now, unfortunately the whole point of the housing bubble was not really to put X-million people in so many vinyl and chipboard boxes, but rather to ramp up a suburban sprawl-building industry as a replacement for America's dwindling manufacturing economy. This stratagem ran into the implacable force of Peak Oil, which not only puts the schnitz on America's whole Happy Motoring / suburban nexus, but implies a pervasive trend for contraction in everything from the daily distances we can travel to the the very core idea of regular economic growth per se -- at least in the way we have understood it through the age of industrial capital.

But to return to my point, something like 40 percent of all new jobs after the year 2000 were created in the final burst of suburban expansion -- everything from the excavators to the framers to the sheet-rockers, and then the providers of granite countertops, the sellers of appliances and furnishings, and cars to service the far-out new subdivisions, and so on. This is the end, therefore, not only of the production "home-builders," but perhaps everything from Crate and Barrel to WalMart, too, eventually. By the way, the housing collapse was only one phase of a more generalized real estate debacle, because the commercial side of the business has also begun a nauseating slide into non-performance and equity destruction. In other words, we built way too many strip malls, power centers, and office parks. God knows what will happen to the owners of these white elephants, or the mortgage and lien holders of these things -- but as one wag remarked to me some years ago as we both gazed upon a forlorn abandoned strip mall outside of Tulsa, "...we don't need that many evangelical roller rinks...."

What happens out there on the housing market scene will certainly redound in banking and finance and whatever still constitutes the US economy generally. The fears and uncertainties surrounding all credit-backed tradable securities derive first from the millions of troubled home mortgages dangling slowly in the wind. These fears and uncertainties will multiply as defaults commence in commercial real estate, and desperate individuals next enter a wave of credit card default, all of it, too, securitized and sprinkled all over the world. None of this stuff has yet been priced into the public disclosures of the many troubled banks and bank-like companies holding it. Nor does anyone really know how this is affecting the hedge funds, and their staggering leveraged positions in things that are looking more and more like quicksand. I can't imagine that quite a few major banks will not collapse in the first half of 2008. It is hard to escape the conclusion that many hedge funds will also blow up, given the unsoundness of their counter-parties' positions, not to mention the frailty of the bond reinsurers. But the death of more than a few hedge funds could easily unwind the entire global finance system -- meaning a period of destructive chaos followed by a set of severely different institutional arrangements, with untold loss of imagined capital wealth along the way and big changes in everyday life. The world has never really been in a situation like this before and it is impossible to say what it might lead to. But there is no doubt that the American public has enjoyed an artificially high standard of living in relation to the value of what we actually produce -- fried chicken, hair extensions, and the Flaver Flav Show [Flavor of Love, actually--P.Z.] -- so the conclusion is pretty self-evident.

Others have said (and I concur) that 2008 will be the year that the issue of Peak Oil not only takes stage in the forefront of American politics, but pushes global warming aside as the most immediate threat to the "modern" way-of-life. There is every reason to believe that the world has arrived at its all-time oil production peak -- and some statisticians would even pin-point the exact moment as July 2006. Since then a few new and crucial story-lines have emerged to allow us to understand what is happening out there on the world oil scene.

One story-line is that only "demand destruction" among the world's poorest nations has kept the oil markets functioning "normally" among the OECD nations and the rising Asian players. Even so, oil priced in US dollars more than doubled in 2007. It remains to be seen whether demand destruction in a wobbling US economy -- with the suburban builders crippled -- will keep oil prices from jumping into the uncharted territory beyond $100-a-barrel. But two other forces are in operation now. One is the growing oil export problem, soon to be a crisis. It now appears that exports, in nations with surplus oil to sell, are going down at an even steeper rate than production declines. Why? They are using more of their own oil. The population is growing robustly. The Saudi Arabians are building the world’s largest aluminum smelter and many chemical factories. This takes a lot of oil. Russia, another big exporter, saw its car sales jump by 50 percent in 2007. Mexico is depleting so rapidly, and using so much more of its own oil, that it might be out of the export game altogether in three years. That will be bad news for the US, since Mexico is tied with Saudi Arabia as America's number two leading source of oil imports. Remember, the US now imports close to three-quarters of all the oil we use.

The second new factor on the Peak oil scene is "oil nationalism." It is prompting countries like Norway and Russia to husband more of their own resources as the awareness hits that they are past peak and might want to keep their own motors humming further into the future. Oil surplus nations are also trending more toward selling their oil on the basis of long-term contracts with favored customers rather than just auctioning the stuff off on the futures market. This makes oil a much more important element in geopolitical power politics. Note that the US may not enjoy "favored customer" standing among many of these nations.

Matt Simmons, the leading investment banker to the oil industry, predicted at a major conference in October that the US is much closer to encountering a problem with chronic spot shortages of oil (and gasoline, of course) than the public realizes, and Simmons says that this supply problem will be extremely disruptive in every imaginable way -- economically, politically, and socially. Most of the commentators I take seriously see the price of oil oscillating in 2008 between $80 and $160-a-barrel. Simmons says Americans will keep sucking up the price increases, but they will probably freak out over spot shortages. I have no idea how presidential election politics will play out in 2008. It must be obvious that so many nasty pitfalls lie out there in the months ahead that something's got to shake up the current scripted mummery among the contenders. The current batch of candidates will soon find their story-lines and pre-cooked messages out-of-date as the nation faces crises in finance and energy (at least). Given the uneventful geopolitical scene of the past 18 months (since the Hezbollah-Israel War and up to the murder of Mrs. Bhutto in Pakistan), odds are that the US will have more rather than less trouble from the rest of the world in 2008-- especially if our own financial recklessness trips up the global economy. Back in the early days of George W. Bush, even before 9/11, I used to joke with my friends that Bill Clinton would return as the Emperor Bill the First. [Hattie might not like the following.--P.Z.] The joke doesn't seem so funny anymore with Hillary off and running. I never liked the way she muscled her way into a US senate seat -- sending the message, in essence, that there was not one genuine New York resident qualified for the job. But there is so much more about her I dislike now, starting with her presumption of dynastic entitlement to the annoyingly phony way she nods her head (like one of those old "drinky-bird" toys) to put across the idea that she is a fabulous "listener." I write this a few days before the Iowa caucuses and then the New Hampshire primary. New York's Mayor Bloomberg is suddenly making noises again about entering the race as an independent. That might lead to a situation as fractured as the one in 1860 that saw a multi-party scuffle send Lincoln into office (or the election of 1912 when Teddy Roosevelt made a credible run on the independent Bull Moose line). At the moment, I'd like to see both John Edwards and Barack Obama roll on. The mere thought of a president Huckabee gives me the chilblains, and the rest of the Republican pack I would not want to have as my county supervisor. [Too bad he doesn't make an exception for Ron Paul, whose advocacy of withdrwal of American forces worldwide must seem to him prudent.--P.Z.] In any case, whoever ends up in the oval office will preside over one king-hell of a clusterfuck. In the immortal words of TV's erstwhile "Mr. T," I pity da fool who gets elected into this mess. There will be a whole continent full of bankrupt, re-poed, and idle former WalMart shoppers, many of them with half of their skin tattooed and many of that bunch all revved up to "roll heavy and gun up" against the folks who screwed them.

Which leads me to my penultimate observation of the moment: 2008 will be the year that celebrity wealth goes into hiding. [Cf. Paul Fussell's observation that "Showing off used to be the main satisfaction of being very rich in America. Now the rich must skulk and hide. It's a pity."--P.Z.] A land full of people crying into their foreclosure notices will take a dim view of the Donald Trumps and P. Diddys luxuriating out there and may come looking for scalps -- though in the case of Mr. Trump they'll be sorry they woke up the wolverine that lives on his head. Basically, though, I'm not kidding. Conspicuous displays of wealth will be so "out" that Mr. Diddy might take to club-hopping in a 1999 Mazda. Lindsay Lohan and Paris Hilton may have to double-up living in a minuteman missile silo to keep the angry mobs of fans-turned-vengeful-berserkers away.

Okay, my final comment. After being chastised endlessly about mis-calling the DOW in 2006 (I said 4000), I have learned my lesson about making numerical predictions for the stock markets. So let's just say there is no fucking way that the DOW, the NASDAQ, and the S & P will not end the year 2008 absolutely on their asses. The charade of permanent prosperity based on getting something for nothing is over. That sound you hear out there is reality knocking on the door. It has been standing out in the cold for a long time and it is not happy with us.

Saturday, December 29, 2007

Harper's: How Relevant is It?

Many comments appended to the above post ponder the relevancy of Harper's. I've subscribed to Harper's on and off through the years. The Readings section is always excellent as are some of the essays and Lapham's columns. It's way overpriced at $6.95 per copy, so one is better off subscribing. All can agree most people have never heard of, let alone read, Harper's. This entry on Harper's from Namebase, though somewhat out-of-date, is still acute:

Harper's was founded in 1850, and in the late 1980s had a circulation of 182,000. It is designed for political liberals who claim some cultural assets, whose inherited wealth can afford the occasional indignation over corruption in high places. Editor Lewis H. Lapham seems to lack focus; he knows America is going to hell, but literate hand-wringing is preferred over investigative reporting. Publisher and president John R. MacArthur actually has some journalism experience... One might take MacArthur at his word but for the fact that unlikely magazines such as Vanity Fair and New Yorker are beginning to publish important investigative pieces, while Harper's just wimps along. ...

on 29 Dec 2007 at 7:57 am1Lou Minatti
I appreciate your hard work and research on this, Bob. But who the hell reads Harper’s?

on 29 Dec 2007 at 8:15 am2XReader
But who the hell reads Harper’s? I read Harper’s for years. When the Harper’s Foundation ended up as the mainstay for the magazine, the articles went towards the left, and my reading of Harper’s diminished.
on 29 Dec 2007 at 8:45 am6WAL
“I appreciate your hard work and research on this, Bob. But who the hell reads Harper’s?”
Second that,
I appreciate it also, but nobody’s read Harper’s since 1900. I genuinely wasn’t sure until pretty recently if the magazine even still existed or not.
on 29 Dec 2007 at 1:31 pm11Trevor
Harper’s is the premier socio-political journal in the country and it outsells “The Weekly Standard” and “National Review” combined 10-1. Unlike the fat boys with asthma talking tough neocons- it presents a virile unabridged mirror on the real events as they occur. It’s a magazine favored by Don DeLillo, Thomas Pynchon, John Updike, Cormac McCarthy, Harold Pinter, Stephen Hawking, Philip Roth, Admiral William Fallon head of Centcom and innumerable other international movers and shakers. Of course, Hugh Hewitt reads “The Weekly Standard” and John Podhoretz “The National Review” so I guess it’s even.

on 29 Dec 2007 at 1:46 pm12Mike
Trevor is correct, as are the other posters. Harper’s took a dive to the Left and never looked back. As a magazine that looks to promote it’s “narrative”, more ethical lapses were bound to emerge. Nevertheless, it is still well-read by the intellectual Left. But it is seen as more credible still than Mothoer [sic] Jones or American Prospect.

on 29 Dec 2007 at 2:06 pm13WAL
Harper’s is the premier socio-political journal in the country and it outsells “The Weekly Standard” and “National Review” combined 10-1.
It has a current circulation of 210,000. National Review’s circulation is about 160,000 and has varied between 140 and 200,000 in the past few years. The weekly Standard has a circulation of about 80,000 - so that’s pretty much a statistic you just made up.
More importantly, whatever its circulation is - when’s the last time anybody, on the right or left, ever uttered the sentence “did you see the article in Harper’s?”
I’ll answer that - 1900.
It’s cool to be able to cite a big name, but the author’s you’re listing are well past their prime (Thomas Pynch is what? 70?) and the other two, while being great men, were never known for their engaging writing ability. These men may have been heroes to you at some point, but there came a time when guys who were popular in the ’60s kept doing the same damn thing over and over again and became boring as hell. (I like Tom Wolfe, but even I’ll admit he’s lagged in recent years - you expect me to get excited about John Updike?). For some reason Harper’s insists on publishing those people. Too bad.
Because of its age and it’s former prominence, I’m sure it can still get libraries and other institutions to subscribe to it and inflate those numbers, but - this isn’t even a leftwing vs. conservative thing - I can’t think of anybody on the left or the right who’s ever given a damn within the past couple decades what they publish, because they don’t read it.

on 29 Dec 2007 at 2:08 pm14Thomass
I guess the corollary to who reads Harpers is why don’t people read Harpers. It’s because it is a leftwing partisan rag. A step up over The Nation which is a step up over Mother Jones…. Ergo, I doubt they’ll move on this. Their credibility was never a issue (to them or their readers). Only people who agree with them (regardless) buy their mag anyway… they don’t really care if its made up.
I’d add, the New Republic is better than any of them… and you saw how long it took to get them to move on a retraction… I’m betting Harpers will totally ignore you.

Of course, I'll probably update this post soon.

26 March 2008 update: I just found this column by Canadian journalist Heather Mallick, who takes the magazine and its editor to task for a lack of women writers and for a general lack of humour. This is Gawker's reply.

Friday, December 21, 2007

From Kalapana to Kansas: Aloha, Grant Jones

Grant Jones, a.k.a. the Kalapana Pundit, announces he and his wife will move to Kansas in early January. I wish them well. Upon their move to the mainland, I'll move the Dougout from the Hawaii politics section to the general politics section in the list of links.
In one of his recent posts, Grant mentions a new Hawaii political site, boldly titled Zero Shibai.

Thursday, December 20, 2007

Tancredo the Frado Out! Cynthia McKinney In! says Good riddance to Tancredo, who had the nerve to badmouth Ron Paul. More on Tancredo's resignation at, which also notes Cynthia McKinney's announced candidacy as a Green. Her candidacy was a much-discussed possibility for months and now that it's official, voters have an alternative to Clinton and Obama.

Frado explained.

Friday, December 14, 2007

Post #200: Madonna to be Inducted

into the Rock n'Roll Hall of Fame.

Local Playwright Lisa Matsumoto

[Links provided by me.--P.Z.]

Updated at 3:47 p.m., Friday, December 14, 2007
Hawaii playwright seriously injured in H-1 crash
Advertiser Staff

Lisa Matsumoto was involved in a head-on crash on the H-1 today. Officials said the vehicle may have been driving in the wrong direction. [Courtesy photo]

Noted local playwright Lisa Matsumoto, 43, is in critical condition following a head-on crash in the west-bound lanes of the H-1 Freeway early today, authorities confirmed.
Matsumoto was driving a green Toyota Camry in the wrong direction and collided with a black Toyota Corolla being driven by a 35-year-old woman, who was also injured in the 3:32 a.m. crash.

The younger woman, who swerved to the right to avoid Matsumoto's vehicle, was taken to The Queen's Medical Center in serious condition with head and leg injuries.

It took more than an hour for Honolulu firefighters to free the woman from the wreckage.
A 21-year-old man whose car crashed while trying to avoid the collision was treated at the scene and did not have to be taken to the hospital, said Bryan Cheplic, spokesman for the city Emergency Services Department.

Police blocked off all lanes of H-1 west at the Houghtailing off-ramp while police traffic investigators examined the crash scene.
When Lisa's play Once Upon One Time debuted on the Big Island.