Kunstler: Coasting Toward Zero

DISCLAIMER: Toward the end of an otherwise typical column on the decline of the American economy, Kunstler veers into a rant about transgenderism, which he calls "sexual confusion." I don't expect nuance on gender from Kunstler, and one can easily disregard that part of the column (second-to-last paragraph).

Coasting Toward Zero.

I n just about any realm of activity this nation does not know how to act. We don’t know what to do about our mounting crises of economy. We don’t know what to do about our relations with other nations in a strained global economy. We don’t know what to do about our own culture and its traditions, the useful and the outworn. We surely don’t know what to do about relations between men and women. And we’re baffled to the point of paralysis about our relations with the planetary ecosystem.

To allay these vexations, we just coast along on the momentum generated by the engines in place — the turbo-industrial flow of products to customers without the means to buy things; the gigantic infrastructures of transport subject to remorseless decay; the dishonest operations of central banks undermining all the world’s pricing and cost structures; the political ideologies based on fallacies such as growth without limits; the cultural transgressions of thought-policing and institutional ass-covering.

This is a society in deep danger that doesn’t want to know it. The nostrum of an expanding GDP is just statistical legerdemain performed to satisfy stupid news editors, gull loose money into reckless positions, and bamboozle the voters. If we knew how to act we would bend every effort to prepare for the end of mass motoring, but instead we indulge in fairy tales about the “shale oil miracle” because it offers the comforting false promise that we can drive to WalMart forever (in self-driving cars!). Has it occurred to anyone that we no longer have the capital to repair the vast network of roads, streets, highways, and bridges that all these cars are supposed to run on? Or that the capital will not be there for the installment loans Americans are accustomed to buy their cars with?

The global economy is withering quickly because it was just a manifestation of late-stage cheap oil. Now we’re in early-stage of expensive oil and a lot of things that seemed to work wonderfully well before, don’t work so well now. The conveyer belt of cheap manufactured goods from China to the WalMarts and Target stores doesn’t work so well when the American customers lose their incomes, and have to spend their government stipends on gasoline because they were born into a world where driving everywhere for everything is mandatory, and because central bank meddling adds to the horrendous inflation of food prices.

Now there’s great fanfare over a “manufacturing renaissance” in the United States, based on the idea that the work will be done by robots. What kind of foolish Popular Mechanicsporn fantasy is this? If human beings have only a minor administrative role in this set-up, what do two hundred million American adults do for a livelihood? And who exactly are the intended customers of these products? You can be sure that the people of China, Brazil, and Korea will have enough factories of their own, making every product imaginable. Are they going to buy our stuff now? Are they going to completely roboticize their own factories and impoverish millions of their own factory workers?

The lack of thought behind this dynamic is staggering, especially because it doesn’t account for the obvious political consequence — which is to say the potential for uprising, revolution, civic disorder, cruelty, mayhem, and death, along with the kind of experiments in psychopathic governance that the 20th century was a laboratory for. Desperate populations turn to maniacs. You can be sure that scarcity beats a fast path to mass homicide.

What preoccupies the USA now, in June of 2014? According to the current cover story Time Magazine, the triumph of “transgender.” Isn’t it wonderful to celebrate sexual confusion as the latest and greatest achievement of this culture? No wonder the Russians think we’re out of our minds and want to dissociate from the West. I’ve got news for the editors of Time Magazine: the raptures of sexual confusion are not going to carry American civilization forward into the heart of this new century.

In fact, just the opposite. We don’t need confusion of any kind. We need clarity and an appreciation of boundaries in every conceivable sphere of action and thought. We don’t need more crybabies, or excuses, or wishful thinking, or the majestic ass-covering that colors the main stream of our national life.

Schilling Shilling

Kunstler takes on notions of energy independence and the seeming abundance of the shale boom.

Schilling Shilling

Such is the power of wishful thinking that a set of fool-making memes now pulses through the word-clouds of financial chatter in America spreading the false good cheer that our economic troubles are behind us and pimping for perpetual motion in wealth expansion. A poster boy for this bundle of falsehoods is financial analyst A. Gary Schilling. Just last week, he was talking out of his cloacal vent about US “energy independence” and “the manufacturing renaissance” that will allow this country to magically decouple from the compressive contraction driving the rest of the world.

Shilling is among the growing chorus of cheerleaders who believe that the shale oil and gas boom will make it possible for so-called “consumers” (what we foolishly call ourselves) to keep driving to Wal-Mart forever — which is the master wish behind all the current fantasies of endless expansion. That idea is going to leave a lot of people disappointed and put the nation further behind in the necessary reorganization of all the key systems that support everyday civilized life, namely: food production, commerce, transport, and the management of capital.

Here’s what’s actually going to happen with shale oil and gas. Best case scenario: shale oil production rises for three more years to about 2.3 million barrels a day and then crashes so quickly that in 10 years the shale oil industry ceases to exist. A less rosy forecast would admit that the exorbitant costs of drilling-and-fracking will not find the necessary capital to even take the industry that far. Rather, dwindling capital will see the shocking decline rates of shale wells (commonly 50 percent the first year and double digits the following) and will run shrieking for other places to hide.

Contrary to Gary Schilling’s blather, America is not practicing “energy conservation.” Rather, an economy engineered strictly to run on cheap oil has gotten crushed by oil that is not cheap. Does Schilling believe, for example, that American suburbia works just as well on $90-a-barrel oil as it did on $11-a-barrel oil, or that it has a future as the basic armature of daily life, or that we are doing anything meaningful to alter the burdens of living this way? My guess is that he has never thought about it.

Likewise, as the American economy got crushed by no-longer-cheap oil, all the working classes in this country below the one-percenters got crushed, hammered, and trashed. Among other things they can no longer afford is gasoline. Total vehicle miles driven has gone down by almost 3 percent since 2007. It will keep going down, and the Happy Motoring matrix will collapse for another reason: capital scarcity will translate into fewer available car loans for Americans, and fewer qualified borrowers, and Americans are used to buying their cars on installment loans.

The shale gas situation is also not the “energy savior” it’s cracked up to be. Because it costs so much to export the stuff, and we don’t have the export infrastructure in place — ocean terminals, fleets of special (expensive!) tanker ships — shale gas is hostage to the US domestic market. The initial boom was so extravagant that it produced a gas glut, which drove the price way below the level that makes it economically rational to drill for the stuff. Now, a lot of those drilling rigs are migrating to North Dakota, where the Bakken shale oil fields require perpetual increases in rig-counts to offset the rapid decline of existing wells.

The shale gas regions of Barnett (Fort Worth), Haynesville (Louisiana), and Fayetteville, Arkansas, are already dwindling. The “sweet spots” turned out to be smaller than the hype suggested. The Marcellus (Pennsylvania and New York) is next. Several of the other hyped shale gas “plays” — the Antrim and the Utica — proved too unpromising to even bother with and never made it out of the wish bag.

The problems with fracking and groundwater pollution are secondary to the economic quandaries as far as the fate of the industry is concerned. At under $8 a unit (1000 cubic feet), shale gas is not worth drilling-and-fracking for. It’s currently around $4. Above $8, Americans are going to have a hard time paying for it. So, enjoy the temporary glut and now stand back and watch the industry begin to dry up and blow away.

As for the “industrial renaissance,” clowns like Gary Shilling can’t put together the obvious trends. The talked-about new factories will be operated by robots, so there would be no employment renaissance to go along with them. Then there is the question of who might the products be sold to? To Americans who have no jobs and no money? To Europeans who are also going broke and also have the ability to roboticize industrial production and impoverish their own working people? To Asia, which is already at industrial over-capacity — and which will only grow worse as Americans and Europeans buy less stuff? I guess that leaves South America and Africa. Well, good luck with that.

Schilling is really only shilling for delusional stock market psychology, which tends to be a self-reinforcing racket until it reaches a threshold of credulity criticality and then implodes from a sudden loss of faith, ruining even a great many one percenters. Money may indeed keep pouring into the US stock markets, especially from other countries, where the money is frightened. I’ll tell you what it ought to be really frightened about: that it doesn’t represent genuine capital, i.e. has no real value. One day not distant, all the nations will discover that their money is only notional and that notions have a way of going up in a vapor. Foolish ideas, though, appear more durable and plentiful. They just keep coming, no matter what’s going on in reality.

My basic wish is that we would quit all our wishing in America and get on with the job of transforming our economic arrangements to a scale and mode that are consistent with the resource and capital realities of these times — before they whap us upside the head and put and end to the project of remaining civilized.