Kunstler's Forecast 2017: The Third Excerpt

This is the third and last excerpt of Kunstler's forecast column. It's the second part of "Vagrant Thoughts on Geopolitics" and deals mainly with the Middle East-North Africa region, but Kunstler also discusses Russia and China.

Kunstler's full column.

The reason the Middle East and North Africa are melting down most conspicuously is because they are geographically among the places least well endowed for supporting the swollen populations they acquired over the past two hundred years. Iraq, Syria, the whole Arabian peninsula. Egypt, Libya, et. al. are all deserts artificially supported by the perquisites of Modernity: cheap energy, fertilizers made from that, irrigation, money derived from it, and continuing life-support subsidies from even wealthier modern nations outside the region. In recent years that life-support has flipped into deadly violence imposed from both within and without, as homegrown Sunni ad Shiite vie for supremacy and their puppeteers in the First World rush in with bombers, rockets, and small arms to “help.”

Iraq and Libya were already goners in 2016. They’ll never be politically stable again in the modern sense. Egypt is still headed down the drain despite the grip of General al-Sisi and his army. In all these places the “youth bulge” has no prospects for earning a living or supporting a family. The young men, especially, put their energy into Jihad, revolution, and civil war because there’s nothing else to do. Making war may be thrilling, but it won’t lead to a better future because those benefits of Modernity are running out and there’s nothing to replace them.

Syria is the current goner-du-jour. Whatever it ends up being, either under Assad or someone else, it will not be stable the way it was. The USA ended up arming and funding the Sunni Salafist “bad guys” there because they opposed Shiite Iran and its regional proxy Hezbollah plus Assad. Russia eventually came in on that side on the theory that another failed state is not in the world’s interests. President Obama blinked after he drew his infamous “line in the sand” years ago and now America is too spooked to act directly. In fact, the Russians and Assad have the best chance of restoring a semblance of order, but America’s support for the “moderate” Salafists will necessarily keep undermining that. In the meantime, all this activity has sparked a demographic emergency as refugees flee the country for Europe and elsewhere, creating greater tensions where they land. Trump could stop the flow of US arms to our favored maniacs in Syria. He may see the practical benefit of letting Russia be the policeman on the beat there, and maybe he can sort out the underlying competing interest between the Russian-sponsored gas pipeline proposed to cross Syria and the American-sponsored one — a dynamic underlying all the mayhem there — and make some kind of “deal.” Or maybe he’ll just fuck it up even more.

The situation will grow increasingly acute in Saudi Arabia, where population growth outstrips the ability of oil production to pay for it. Their old “elephant” oil fields are aging out and they know quite well that they cannot depend on oil wealth many decades ahead. The trouble is, they have no realistic replacement for it, despite noises about creating other industries. The truth is, the country was cursed by its oil. It grew its population too much too fast in one of the most inhospitable corners of the globe, and it will take only a modest decline in oil income to destabilize the place altogether. To buffer that, Saudi leaders plan an IPO for shares in Saudi Aramaco — which was originally composed of American and western oil companies nationalized decades ago. That may get them a few hundred billion or so in walking-around money that won’t last very long considering that just about everybody in the nation is on the dole.

The big news in that corner of the world last year was the collapse of Yemen, which occupies a big slab on Saudi Arabia’s southern border. That poor-ass country is the latest Middle East basket-case and Saudi military operations there continue to date, using airplanes and weapons supplied by Uncle Sam — just another case of feeding Jihadist wrath.

Make no mistake — as our Presidents like to say — all these countries are heading back to the Middle Ages economically, maybe even further beyond. Their culture is still basically medieval. The main point is that Modernity inflated them and now Modernity is over and they’re either going to pop or deflate. One wild card for now is what effect climate change may have in ME/NA. If the trend is hotter, than that’s not good news for a region so poorly watered and so hot that air conditioning is mandatory for the pampered urban elites. Last one out, please turn off the lights.

Then there’s Turkey, for decades known as “the sick man of Europe.” Now, of course, it can’t even get into Europe, the EU, that is, and it’s probably too late to sweat that anyway. Back when it was “sick” it was quiet at least. You barely heard a peep from the fucker through the entire cold war and beyond. But now that the countries on its border are breaking down, things have understandably livened up in Turkey. It was, until World War One, the very seat of the Islamic Caliphate, and it controlled much of the territory now occupied by the nations creatively carved out of the Sykes-Picot Agreement. Turkey is still a power in the region, with a lot of well-watered, habitable territory and a GDP half the size of Italy’s, though shrinking. Its current president, Recep Tayyip Erdogan, has shown twinges of megalomania in recent years, no doubt in fear of the radical Islam epidemic so close at hand. Lately, Kurdish extremists have been planting bombs around the country, too. Turkey has a lot to be paranoid about and Erdogan wants to change the constitution so he can act the strongman without a wimpy, pain-in-the-ass parliament weighing him down. He endured a coup last summer and came out of with consolidated power. But he’s capable of making another bonehead move like shooting down a Russian jet (2015). Meanwhile, Turkey’s currency is collapsing. The population is over 80 million. In the event of serious political upheaval, how many of them will try to flee to Europe?

Russia? It’s apparently stable. We hear no end of complaints about “Putin the Thug,” but in this time of altered reality and disinformation fog, it’s honestly impossible to tell what the fuck the score is. Has he bumped off some journalists? So they say. But, not to get to baroque about it, consider the impressive trail of dead bodies said to be left in the wake of Bill and Hillary. That story was so toxic that Google squashed searches for it during the election campaign. Putin seems to me, at worst, a competent and capable Czar, in a country that likes to be ruled by them. That’s their prerogative. He’s hugely popular, anyway, and it’s one of the unsung miracles of recent times that Russia transitioned out of the fiasco of communism into a pretty much normal modern society, with shopping, movies, tourism travel, and everything. The Russian people may look back at these decades as a golden age. They’ve been punished by Western sanctions for a few years now, but it has prompted them to promote their own version of a SWIFT Code for international banking transactions, and their own counterpart to the EU, the Eurasian Customs Union, and to manufacture some products of their own (import replacement).

Personally, I think the meme of “Russian aggression” is not born out by actual recent geopolitical reality. They are castigated constantly for wanting to march back into the Baltic States, Ukraine, and other former Soviet territories. Ukraine was made a basket case with direct American assistance. (Remember Deputy Secretary of State Victoria Nuland: “Fuck the EU!”) Ukraine was rendered an instant failed state. As far as I could tell, the last thing Russia wanted was to take on Ukraine as an economic dependent. Same for the Baltic States. They need to subsidize these places like they need a hole in the head. Russia’s 2015 annexation of the Crimea was a special case, since it had been part of Russia one way or another for most of the past 200 years, except for the period after Khrushchev gifted it to his homeboys in Ukraine around 1957. Anyway, the Crimea was the site of Russia’s only warm-water naval ports. They’d rented it from Ukraine before the US pranged the country. The Crimean inhabitants voted to join Russia (why do we assume that was not sincere?).

Finally, as renowned Russologist Stephen Cohen has said, wouldn’t it make sense for the US and Russia to drop all this antagonism nonsense and make common cause against the real threat of our time: Islamic Jihad? How many Westerners has Russia killed or harmed the past twenty years compared to the forces of Jihad? The tensions in Syria are admittedly complex, but why are we making them worse while Russia attempts to stabilize the joint? Perhaps The Donald can start there….

As I write, Mr. Putin just announced that his country would not take any reciprocal action against American diplomats in retribution for Mr. Obama’s fugue of punishments meted out last week for the still-unproven “Russia Hacks Election” story. Personally, I’m content to wait three weeks and see if relations improve after Mr. Obama departs the Oval Office.

Finally, there’s China. I’m among those who believe China is running the most farkakta banking system on God’s green earth. We should not be surprised if it implodes in 2017, and does so pretty badly, in a way that might shake the foundations of the entire banking system. On that note, I confess that I have run out of forecast mojo for the year, and anyway this bulletin is long enough. If you’ve gotten this far, I commend and admire you hugely for your remarkable patience. Have a happy 2017 everybody, and don’t let our Trumpadelic president get you down.

Kunstler: "Ground Control to Captain Zhou Xiaochuan."

Kunstler: "Ground Control to Captain Zhou Xiaochuan."

Why would anybody suppose that the Peoples Bank of China might want to tell the truth about anything that was within their power to lie about? Especially the soundness of any loan portfolio vested unto the grasp of its tentacles? Of course, most of what China has done in speeding toward the wall of financial crack-up, it learned from watching US bankers slime their way into Too Big To Fail nirvana — most particularly the array of swindles, dodges, and frauds constructed in the half-light of shadow banking to hedge the sudden, catastrophic appearance of reality-based price discovery.

When so many loans end up networked as collateral in some kind of bet against previous bets against other previous bets, you can be sure that cascading contagion will follow. And so that is exactly what’s happening as China’s rocket ride into Modernity falls back to earth. Like most historical fiascos, it seemed like a good idea at the time: take a nation of about a billion people living in the equivalent of the Twelfth Century, introduce the magic of money printing, spend a gazillion of it on CAT and Kubota earth-moving machines, build the biggest cement industry the world has ever seen, purchase whole factory set-ups, and flood the rest of the world with stuff. Then the trouble starts when you try to defeat the business cycles associated with over-production and saturated markets.

Poor China and poor us. Escape velocity has failed. Which raises the question: escape from what, exactly? Answer: the implacable limits of life on earth. The metaphor for all this, of course, is the old journey-into-space idea, which still persists in the salesmanship of Elon Musk, the ragged remnants of NASA, and even the nightmares of Stephen Hawking. Get off this messed-up home planet and light out of the territories, say Mars. Of course, this is a vain and stupid idea, since we already have a planet engineered to perfection for all the life systems associated with the human project. We just can’t respect its limits.

So now, that dynamic duo, Nature and Reality, the actual owners of the planet, have showed up to read the riot act to the renters throwing a wild party. The fourth and perhaps ultimate financial crisis of the last twenty years begins to express itself in terms that only the raptors and vultures can see from on high. George Soros, Kyle Bass, and the other flocking shadow banking scavengers prepare to short the living shit out of the old Middle Kingdom. The immortal words of G.W. Bush ring in their ears: “This sucker is going down,” and they are sure to win big by betting on the obvious. Trouble is, this sucker could go down so much further than they imagined, that whatever fortunes they gain from its descent will be foiled by the destruction of the very economic system needed for them to enjoy their gains.

For instance, when banking systems go down, governments usually follow, and when governments go down, societies often unravel. It doesn’t take a great effort of imagination to see China’s one party politburo leadership machine lose the respect of its governed masses, and then its control of events, followed by a Great Struggle among the regions and factions to restore some kind of order. And when the smoke clears there will a whole lot of nearly worthless concrete and steel, and a vast loss of notional wealth, and China will be lucky to land back in some approximation of the Twelfth Century.

It must be interesting for China to watch the horrifying disintegration of America’s political party structure currently on view, with the mad bull called Trump rampaging across the land and the designated inevitable Mz It’s-My-Turn hijacking her collective for the greater glory of Goldman Sachs. The last time China got the vapors politically — the so-called Cultural Revolution of the 1960s — the country went batshit crazy. Surely some of the ruling party remembers that with requisite terror.


Or maybe this is China and the USA’s Thelma and Louise moment. Pedal to the metal, they drive into the abyss of history holding hands. Remember, audiences loved that!

BRICS Bank

http://www.globalresearch.ca/%E2%80%8Brussia-ratifies-100bn-brics-new-development-bank/5433304

Kunstler: "Paths of Folly"

Kunstler, "Paths of Folly"

Articles linked therein:

http://www.nytimes.com/2013/06/16/business/economy/even-pessimists-feel-optimistic-over-economy.html?pagewanted=1&_r=1&hp&

http://www.nytimes.com/2013/06/16/world/asia/chinas-great-uprooting-moving-250-million-into-cities.html?pagewanted=all

Kunstler: "Let's All Go Medieval"

Let's All Go Medieval
By James Howard Kunstler
on May 27, 2013 9:34 AM


That voice! All a'quiver with the dread of self-knowledge that it is confabulating a story, much like the "money" that his Open Market Committee spins out of the increasingly carbonized air. His words fill the vacuum of the collectively blank American mind, where hopes and dreams spin like debris in an Oklahoma twister, only to fall incoherently on a landscape of man-made ruins. If Federal Reserve chairman Ben Bernanke were hooked up to a polygraph machine when he made a public statement -- such as last Wednesday's testimony before congress -- I bet the output graph would look something like a seismic record of the 9.0 Fukushima megathrust, all fretful spikes and dips.

When historians of the future ponder our fate around their campfires, they will marvel that this society invited such a temporizing little nerd to act as its Oracle-in-Chief... that he made periodic visits to sit before the poobahs of the land, and issued prophesies that nobody could really understand -- and that the fate of the people in this land hung on his muttered ambiguities. Let's face it: people need oracles when they don't know what the fuck is going on.

What's going on is as follows: America's central bank is trying to compensate for a floundering economy that will never return to its prior state. The economy is floundering because its scale and mode of operation are no longer consistent with what reality offers in the way of available resources at the right price, especially oil. So, rather than change the scale and mode of operations in this economy -- that is, do things differently -- we try to keep doing things the same by flushing more "money" into the system, as though it were a captive beast receiving nutriment.
One problem with that is that the "money" is no longer money. That is, it's not really an effective store of value, or pricing reference. It remains for the moment a medium of exchange, but the persons exchanging it grow suspicious of what this "money" purports to represent. Does it stand for promises of future repayment? Hmmmm. Those promises are looking sketchy lately, especially since this is an economy that does not generate enough new real wealth to make the interest payments, let alone manage to pay back the principal. Is it a claim on future work? Some are afraid that the future work deliverable will be less than they expect. Whatever else it is, does it find respect in other societies where different money is used?

These questions are making a lot of people nervous these days. Of course, a time will come when all matters concerning this particular incarnation of money will be seen as strictly ceremonial. Ben Bernanke, we will understand, was not stating facts before congress but rather singing a song, or rather chanting in a low, repetitive, tedious way in the primal manner of a frightened person trying to comfort himself with reassuring sound -- that is, prayer. You'd be surprised how well that goes over in a place like congress, which is stuffed with prayerful characters, people who exist in a religious delirium. These are not the people who are nervous, by the way. The nervous tend to be more secular, and inhabit the margins of life where unconventional thinking thrives weedlike at a remove from all the mental toxicity at the center.

These nervous ones are looking ever more closely these days at the distant nation of Japan, where an interesting scenario is playing out: the last days of a giant industrial-technocratic economy. The story there is actually pretty simple if you peel away the quasi-metaphysical bullshit it comes wrapped in these days from astrologasters like John Mauldin and Paul Krugman, viz. Japan has no fossil fuel resources. Zip. You can't run their kind of economy without the stuff. And they can't. Japan is crapping out, as they say in Las Vegas. Tilt! Game over. As this happens, Japan issues a lot of distracting financial noise that involves evermore "creation" of their own "money," and the knock-on effects of that, but it's all just noise. Japan's only good choice is to go medieval, that is, to give up on the rather hopeless 150-year-long project of being an industrial-technocratic modern super-state, and go back to being an island of a beautiful artistic hand-made culture. I call that "going medieval," though you could quibble as to whether that's the best word for it, since I'm not talking about cathedrals or crusades.
One of Japan's other choices is to "go mad-dog," something they actually tried back in the mid-20th century. It didn't work out too well then. The Japanese leadership is making noises about "re-arming," and a nice state of conflict is already simmering between them and their age old rivals-victims next door in China, a country that has lately enjoyed the upper hand in the industrial-techno racket (though it will be faced with the same choices as Japan not too many years hence). Do the Japanese start another world war on their side of the planet? Let's hope not. Let's hope they lay down their robotics and their nuclear reactors gently and go back to making netsuke. Just give it up and do things differently -- after all, that's what all the human beings on the planet have to do now.

For what it's worth, Japan's stock market has tanked a hearty 14 percent in the past five days, if that means anything, and I'm not sure it does considering the aforesaid "noise," but there you have it. Our own stock markets are mercifully closed this holiday, having given American worriers an extra day of anxious reflection on the state of things out there. My own opinion is that we're all going medieval sooner rather than later and the big remaining question is how much of a mess we'll make on the journey to it.

Also, personally, I don't like these manufactured holidays when the landscape is cluttered with morons enjoying motorsports. I'll be working today, and grateful when it blows over.