Twitter: BadCOVID19Takes
This book used to be in my hometown library but it was weeded out some time ago.
Showing posts with label predictions. Show all posts
Showing posts with label predictions. Show all posts
Tuesday, May 12, 2020
COVID-19: Bad Takes
What will be proven right? What will be proven wrong? This Twitter compiles what it thinks are bad takes on the pandemic.
Twitter: BadCOVID19Takes
This book used to be in my hometown library but it was weeded out some time ago.
Twitter: BadCOVID19Takes
This book used to be in my hometown library but it was weeded out some time ago.
Friday, May 01, 2020
Monday, September 03, 2018
Kunstler: The Uncomfortable Hiatus
Kunstler: The Uncomfortable Hiatus.
And so the sun seems to stand still this last day before the resumption of business-as-usual, and whatever remains of labor in this sclerotic republic takes its ease in the ominous late summer heat, and the people across this land marinate in anxious uncertainty. What can be done?
Some kind of epic national restructuring is in the works. It will either happen consciously and deliberately or it will be forced on us by circumstance. One side wants to magically reenact the 1950s; the other wants a Gnostic transhuman utopia. Neither of these is a plausible outcome. Most of the arguments ranging around them are what Jordan Peterson calls “pseudo issues.” Let’s try to take stock of what the real issues might be.
Energy: The shale oil “miracle” was a stunt enabled by supernaturally low interest rates, i.e. Federal Reserve policy. Even The New York Times said so yesterday (The Next Financial Crisis Lurks Underground). For all that, the shale oil producers still couldn’t make money at it. If interest rates go up, the industry will choke on the debt it has already accumulated and lose access to new loans. If the Fed reverses its current course — say, to rescue the stock and bond markets — then the shale oil industry has perhaps three more years before it collapses on a geological basis, maybe less. After that, we’re out of tricks. It will affect everything.
The perceived solution is to run all our stuff on electricity, with the electricity produced by other means than fossil fuels, so-called alt energy. This will only happen on the most limited basis and perhaps not at all. (And it is apart from the question of the decrepit electric grid itself.) What’s required is a political conversation about how we inhabit the landscape, how we do business, and what kind of business we do. The prospect of dismantling suburbia — or at least moving out of it — is evidently unthinkable. But it’s going to happen whether we make plans and policies, or we’re dragged kicking and screaming away from it.
Corporate tyranny: The nation is groaning under despotic corporate rule. The fragility of these operations is moving toward criticality. As with shale oil, they depend largely on dishonest financial legerdemain. They are also threatened by the crack-up of globalism, and its 12,000-mile supply lines, now well underway. Get ready for business at a much smaller scale.
Hard as this sounds, it presents great opportunities for making Americans useful again, that is, giving them something to do, a meaningful place in society, and livelihoods. The implosion of national chain retail is already underway. Amazon is not the answer, because each Amazon sales item requires a separate truck trip to its destination, and that just doesn’t square with our energy predicament. We’ve got to rebuild main street economies and the layers of local and regional distribution that support them. That’s where many jobs and careers are.
Climate change is most immediately affecting farming. 2018 will be a year of bad harvests in many parts of the world. Agri-biz style farming, based on oil-and-gas plus bank loans is a ruinous practice, and will not continue in any case. Can we make choices and policies to promote a return to smaller scale farming with intelligent methods rather than just brute industrial force plus debt? If we don’t, a lot of people will starve to death. By the way, here is the useful work for a large number of citizens currently regarded as unemployable for one reason or another.
Pervasive racketeering rules because we allow it to, especially in education and medicine. Both are self-destructing under the weight of their own money-grubbing schemes. Both are destined to be severely downscaled. A lot of colleges will go out of business [Note: I'll keep track of colleges going defunct.--P.Z.]. Most college loans will never be paid back (and the derivatives based on them will blow up). We need millions of small farmers more than we need millions of communications majors with a public relations minor. It may be too late for a single-payer medical system. A collapsing oil-based industrial economy means a lack of capital, and fiscal hocus-pocus is just another form of racketeering. Medicine will have to get smaller and less complex and that means local clinic-based health care. Lots of careers there, and that is where things are going, so get ready.
Government over-reach: the leviathan state is too large, too reckless, and too corrupt. Insolvency will eventually reduce its scope and scale. Most immediately, the giant matrix of domestic spying agencies has turned on American citizens. It will resist at all costs being dismantled or even reined in. One task at hand is to prosecute the people in the Department of Justice and the FBI who ran illegal political operations in and around the 2016 election. These are agencies which use their considerable power to destroy the lives of individual citizens. Their officers must answer to grand juries.
As with everything else on the table for debate, the reach and scope of US imperial arrangements has to be reduced. It’s happening already, whether we like it or not, as geopolitical relations shift drastically and the other nations on the planet scramble for survival in a post-industrial world that will be a good deal harsher than the robotic paradise of digitally “creative” economies that the credulous expect. This country has enough to do within its own boundaries to prepare for survival without making extra trouble for itself and other people around the world. As a practical matter, this means close as many overseas bases as possible, as soon as possible.
As we get back to business tomorrow, ask yourself where you stand in the blather-storm of false issues and foolish ideas, in contrast to the things that actually matter.
And so the sun seems to stand still this last day before the resumption of business-as-usual, and whatever remains of labor in this sclerotic republic takes its ease in the ominous late summer heat, and the people across this land marinate in anxious uncertainty. What can be done?
Some kind of epic national restructuring is in the works. It will either happen consciously and deliberately or it will be forced on us by circumstance. One side wants to magically reenact the 1950s; the other wants a Gnostic transhuman utopia. Neither of these is a plausible outcome. Most of the arguments ranging around them are what Jordan Peterson calls “pseudo issues.” Let’s try to take stock of what the real issues might be.
Energy: The shale oil “miracle” was a stunt enabled by supernaturally low interest rates, i.e. Federal Reserve policy. Even The New York Times said so yesterday (The Next Financial Crisis Lurks Underground). For all that, the shale oil producers still couldn’t make money at it. If interest rates go up, the industry will choke on the debt it has already accumulated and lose access to new loans. If the Fed reverses its current course — say, to rescue the stock and bond markets — then the shale oil industry has perhaps three more years before it collapses on a geological basis, maybe less. After that, we’re out of tricks. It will affect everything.
The perceived solution is to run all our stuff on electricity, with the electricity produced by other means than fossil fuels, so-called alt energy. This will only happen on the most limited basis and perhaps not at all. (And it is apart from the question of the decrepit electric grid itself.) What’s required is a political conversation about how we inhabit the landscape, how we do business, and what kind of business we do. The prospect of dismantling suburbia — or at least moving out of it — is evidently unthinkable. But it’s going to happen whether we make plans and policies, or we’re dragged kicking and screaming away from it.
Corporate tyranny: The nation is groaning under despotic corporate rule. The fragility of these operations is moving toward criticality. As with shale oil, they depend largely on dishonest financial legerdemain. They are also threatened by the crack-up of globalism, and its 12,000-mile supply lines, now well underway. Get ready for business at a much smaller scale.
Hard as this sounds, it presents great opportunities for making Americans useful again, that is, giving them something to do, a meaningful place in society, and livelihoods. The implosion of national chain retail is already underway. Amazon is not the answer, because each Amazon sales item requires a separate truck trip to its destination, and that just doesn’t square with our energy predicament. We’ve got to rebuild main street economies and the layers of local and regional distribution that support them. That’s where many jobs and careers are.
Climate change is most immediately affecting farming. 2018 will be a year of bad harvests in many parts of the world. Agri-biz style farming, based on oil-and-gas plus bank loans is a ruinous practice, and will not continue in any case. Can we make choices and policies to promote a return to smaller scale farming with intelligent methods rather than just brute industrial force plus debt? If we don’t, a lot of people will starve to death. By the way, here is the useful work for a large number of citizens currently regarded as unemployable for one reason or another.
Pervasive racketeering rules because we allow it to, especially in education and medicine. Both are self-destructing under the weight of their own money-grubbing schemes. Both are destined to be severely downscaled. A lot of colleges will go out of business [Note: I'll keep track of colleges going defunct.--P.Z.]. Most college loans will never be paid back (and the derivatives based on them will blow up). We need millions of small farmers more than we need millions of communications majors with a public relations minor. It may be too late for a single-payer medical system. A collapsing oil-based industrial economy means a lack of capital, and fiscal hocus-pocus is just another form of racketeering. Medicine will have to get smaller and less complex and that means local clinic-based health care. Lots of careers there, and that is where things are going, so get ready.
Government over-reach: the leviathan state is too large, too reckless, and too corrupt. Insolvency will eventually reduce its scope and scale. Most immediately, the giant matrix of domestic spying agencies has turned on American citizens. It will resist at all costs being dismantled or even reined in. One task at hand is to prosecute the people in the Department of Justice and the FBI who ran illegal political operations in and around the 2016 election. These are agencies which use their considerable power to destroy the lives of individual citizens. Their officers must answer to grand juries.
As with everything else on the table for debate, the reach and scope of US imperial arrangements has to be reduced. It’s happening already, whether we like it or not, as geopolitical relations shift drastically and the other nations on the planet scramble for survival in a post-industrial world that will be a good deal harsher than the robotic paradise of digitally “creative” economies that the credulous expect. This country has enough to do within its own boundaries to prepare for survival without making extra trouble for itself and other people around the world. As a practical matter, this means close as many overseas bases as possible, as soon as possible.
As we get back to business tomorrow, ask yourself where you stand in the blather-storm of false issues and foolish ideas, in contrast to the things that actually matter.
Sunday, December 31, 2017
Monday, January 02, 2017
Kunstler: Forecast 2017: The Wheels Finally Come Off.
Kunstler's prediction column for 2017 is so lengthy I'll post only an excerpt or two here. It might take a few days to unpack this column. All emphases mine.
Kunstler: Forecast 2017: The Wheels Finally Come Off.
American Notes
Apart from all the ill-feeling about the election, one constant ‘out there’ since November 8 is the Ayn Randian rapture that infects the money scene. Wall Street and big business believe that the country has passed through a magic portal into a new age of heroic businessmen-warriors (Trump, Rex T, Mnuchin, Wilbur Ross, et. al.) who will go forth creating untold wealth from super-savvy deal-making that un-does all the self-defeating malarkey of the detested Deep State technocratic regulation regime of recent years. The main signs in the sky, they say, are the virile near-penetration of the Dow Jones 20,000-point maidenhead and the rocket ride of Ole King Dollar to supremacy of the global currency-space.
I hate to pound sleet on this manic parade, but, to put it gently, mob psychology is outrunning both experience and reality. Let’s offer a few hypotheses regarding this supposed coming Trumptopian nirvana.
The current narrative weaves an expectation that manufacturing industry will return to the USA complete with all the 1962-vintage societal benefits of great-paying blue collar jobs, plus an orgy of infrastructure-building. I think both ideas are flawed, even allowing for good intentions. For one thing, most of the factories are either standing in ruin or scraped off the landscape. So, it’s not like we’re going to reactivate some mothballed sleeping giant of productive capacity. New state-of-the-art factories would require an Everest of private capital investment that is simply impossible to manifest in a system that is already leveraged up to its eyeballs. Even if we tried to accomplish it via some kind of main force government central planning and financing — going full-Soviet — there is no conceivable way to raise (borrow) the “money” without altogether destroying the value of our money (inflation), and the banking system with it.
If by some magic any new industrial capacity were built, much of the work in it would be performed by robotics, not brawny men in blue shirts, and certainly not at the equivalent of the old United Auto Workers $35-an-hour assembly line wage. We have not faced the fact that the manufacturing fiesta based on fossil fuels was a one-time thing due to special historical circumstances and will not be repeated. The future of manufacturing in America is frighteningly modest. We’ll actually be lucky if we can make a few vital necessities by means of hydro-electric or direct water power, and that will be about the extent of it. Some of you may recognize this as the World Made By Hand scenario. I’ll stick by that.
Similarly for “infrastructure” spending touted by the forces of Trump as the coming panacea for economic malaise. I suspect most people assume this means a trillion-dollar stimulus spend on highways and their accessories. Well, that also assumes that we expect another fifty years of Happy Motoring and suburban living. Fuggeddabowdit. We’re in the twilight of motoring anyway you cut it, despite all the chatter about electric cars and “driverless” cars. We won’t have the electric capacity to switch over the Happy Motoring fleet from gasoline. The oil industry itself is already headed for collapse on its sinking energy-return-on-investment. And our problems with money and debt are so severe that the motoring paradigm is more prone to fail on the basis of car loan scarcity and unworthy borrowers before the fueling issues even kick in. Every year, fewer Americans can afford to buy any kind of car — the way they’re used to buying them, on installment loans. The industry has gone the limit to help them — seven-year loans for used cars! — but they have no more room to maneuver. The car financing system is broken. Bear in mind the original suburbanization of America back in the 20th century — along with its accessory automobiles — must be regarded as the greatest misallocation of resources in the history of the world. So, a rebuild of all this stuff would represent more and possibly even greater malinvestment. We could have applied our post-WW2 treasure to building beautiful walkable towns and cities with some capacity for adaptive re-use, but we blew it in order to enjoy life in a one-time demolition derby. Life is tragic. Societies make poor choices sometimes, and then there are consequences.
We also might have been in better shape now if, beginning twenty years ago, we began a major rebuild of our railway infrastructure. But we blew that off, too, and shortly it will be very difficult to get around this geographically large country by any mechanical means. It may be too late now to do anything about that for the financing reasons already touched on — and which I will elaborate on next. The bottom line is that President Donald Trump will be overwhelmed by a sea of financial troubles from the very get-go, and here’s why.
Designated Bag-Holder
The American people have been punked by their own government and their central bank, the Federal Reserve, for years and the jig is now up. In 2017 both will lose their authority and legitimacy, a very grave matter for the survival of this republic.
Insiders surely have seen this coming for a long time. The people running this so-called Deep State of overblown and overgrown institutions probably acted at first with the good intentions of keeping the national lifestyle afloat. But in the end (now approaching) they stooped to too much duplicity and deceit in the desperate attempt to not just preserve the system, but to protect their own reputations and personal perquisites. And now there ought to be some question with the election of 2016 that they have engineered all of this system fragility to blow up on Mr. Trump’s watch, so they can blame him for it. It was going to blow up anyway. But had Hillary Clinton won the election, at least the right gang would have had to take the blame — the people in charge for the past twenty years. Instead, Donald Trump has been elected Designated Bag-Holder.
...
The Oil Quandary
The reports of Peak Oil’s death are exaggerated, to borrow a gag from Mr. Twain. It’s just been playing out in ways that many of us didn’t quite anticipate and it is still at the heart of our economic predicament — which is that you can’t rationalize an annual debt growth rate of 8 percent if your actual economic growth rate is under 4 percent (paraphrasing Chris Martenson at Peak Prosperity.com).
We haven’t run out of oil, but we have run out of oil that is rationally economical to pull out of the ground. The so-called “shale oil miracle” extended the oil age a few years by debt-financed legerdemain. Yes, we drove US oil production way up, almost back up to the 1970 peak production level around 10 million barrels-a-day (b/d). The trouble was that the companies producing it didn’t make a red cent in the process. They just ran up a huge amount of debt to pursue the shale project. The pursuit was on wholeheartedly beginning around 2006, because 1) the Peak Oil story was scaring folks, including folks in the oil industry, and 2) the market price of crude oil soared after 2004 and shale looked like a possibly winning venture — especially since conventional exploration in recent years was turning up almost nothing of significance.
Kunstler: Forecast 2017: The Wheels Finally Come Off.
American Notes
Apart from all the ill-feeling about the election, one constant ‘out there’ since November 8 is the Ayn Randian rapture that infects the money scene. Wall Street and big business believe that the country has passed through a magic portal into a new age of heroic businessmen-warriors (Trump, Rex T, Mnuchin, Wilbur Ross, et. al.) who will go forth creating untold wealth from super-savvy deal-making that un-does all the self-defeating malarkey of the detested Deep State technocratic regulation regime of recent years. The main signs in the sky, they say, are the virile near-penetration of the Dow Jones 20,000-point maidenhead and the rocket ride of Ole King Dollar to supremacy of the global currency-space.
I hate to pound sleet on this manic parade, but, to put it gently, mob psychology is outrunning both experience and reality. Let’s offer a few hypotheses regarding this supposed coming Trumptopian nirvana.
The current narrative weaves an expectation that manufacturing industry will return to the USA complete with all the 1962-vintage societal benefits of great-paying blue collar jobs, plus an orgy of infrastructure-building. I think both ideas are flawed, even allowing for good intentions. For one thing, most of the factories are either standing in ruin or scraped off the landscape. So, it’s not like we’re going to reactivate some mothballed sleeping giant of productive capacity. New state-of-the-art factories would require an Everest of private capital investment that is simply impossible to manifest in a system that is already leveraged up to its eyeballs. Even if we tried to accomplish it via some kind of main force government central planning and financing — going full-Soviet — there is no conceivable way to raise (borrow) the “money” without altogether destroying the value of our money (inflation), and the banking system with it.
If by some magic any new industrial capacity were built, much of the work in it would be performed by robotics, not brawny men in blue shirts, and certainly not at the equivalent of the old United Auto Workers $35-an-hour assembly line wage. We have not faced the fact that the manufacturing fiesta based on fossil fuels was a one-time thing due to special historical circumstances and will not be repeated. The future of manufacturing in America is frighteningly modest. We’ll actually be lucky if we can make a few vital necessities by means of hydro-electric or direct water power, and that will be about the extent of it. Some of you may recognize this as the World Made By Hand scenario. I’ll stick by that.
Similarly for “infrastructure” spending touted by the forces of Trump as the coming panacea for economic malaise. I suspect most people assume this means a trillion-dollar stimulus spend on highways and their accessories. Well, that also assumes that we expect another fifty years of Happy Motoring and suburban living. Fuggeddabowdit. We’re in the twilight of motoring anyway you cut it, despite all the chatter about electric cars and “driverless” cars. We won’t have the electric capacity to switch over the Happy Motoring fleet from gasoline. The oil industry itself is already headed for collapse on its sinking energy-return-on-investment. And our problems with money and debt are so severe that the motoring paradigm is more prone to fail on the basis of car loan scarcity and unworthy borrowers before the fueling issues even kick in. Every year, fewer Americans can afford to buy any kind of car — the way they’re used to buying them, on installment loans. The industry has gone the limit to help them — seven-year loans for used cars! — but they have no more room to maneuver. The car financing system is broken. Bear in mind the original suburbanization of America back in the 20th century — along with its accessory automobiles — must be regarded as the greatest misallocation of resources in the history of the world. So, a rebuild of all this stuff would represent more and possibly even greater malinvestment. We could have applied our post-WW2 treasure to building beautiful walkable towns and cities with some capacity for adaptive re-use, but we blew it in order to enjoy life in a one-time demolition derby. Life is tragic. Societies make poor choices sometimes, and then there are consequences.
We also might have been in better shape now if, beginning twenty years ago, we began a major rebuild of our railway infrastructure. But we blew that off, too, and shortly it will be very difficult to get around this geographically large country by any mechanical means. It may be too late now to do anything about that for the financing reasons already touched on — and which I will elaborate on next. The bottom line is that President Donald Trump will be overwhelmed by a sea of financial troubles from the very get-go, and here’s why.
Designated Bag-Holder
The American people have been punked by their own government and their central bank, the Federal Reserve, for years and the jig is now up. In 2017 both will lose their authority and legitimacy, a very grave matter for the survival of this republic.
Insiders surely have seen this coming for a long time. The people running this so-called Deep State of overblown and overgrown institutions probably acted at first with the good intentions of keeping the national lifestyle afloat. But in the end (now approaching) they stooped to too much duplicity and deceit in the desperate attempt to not just preserve the system, but to protect their own reputations and personal perquisites. And now there ought to be some question with the election of 2016 that they have engineered all of this system fragility to blow up on Mr. Trump’s watch, so they can blame him for it. It was going to blow up anyway. But had Hillary Clinton won the election, at least the right gang would have had to take the blame — the people in charge for the past twenty years. Instead, Donald Trump has been elected Designated Bag-Holder.
...
The Oil Quandary
The reports of Peak Oil’s death are exaggerated, to borrow a gag from Mr. Twain. It’s just been playing out in ways that many of us didn’t quite anticipate and it is still at the heart of our economic predicament — which is that you can’t rationalize an annual debt growth rate of 8 percent if your actual economic growth rate is under 4 percent (paraphrasing Chris Martenson at Peak Prosperity.com).
We haven’t run out of oil, but we have run out of oil that is rationally economical to pull out of the ground. The so-called “shale oil miracle” extended the oil age a few years by debt-financed legerdemain. Yes, we drove US oil production way up, almost back up to the 1970 peak production level around 10 million barrels-a-day (b/d). The trouble was that the companies producing it didn’t make a red cent in the process. They just ran up a huge amount of debt to pursue the shale project. The pursuit was on wholeheartedly beginning around 2006, because 1) the Peak Oil story was scaring folks, including folks in the oil industry, and 2) the market price of crude oil soared after 2004 and shale looked like a possibly winning venture — especially since conventional exploration in recent years was turning up almost nothing of significance.
Monday, January 04, 2016
Kunstler: Pretend to the Bitter End.
A very lengthy and informative forecast by Kunstler. One needn't agree with everything he says (I don't) to recognize there is a lot of value to what he says. In other words, he isn't wrong. My comments are interpolated with brackets.-P.Z.
Kunstler: Pretend to the Bitter End.
Forecast 2016
There’s really one supreme element of this story that you must keep in view at all times: a society (i.e. an economy + a polity = a political economy) based on debt that will never be paid back is certain to crack up. Its institutions will stop functioning. Its business activities will seize up. Its leaders will be demoralized. Its denizens will act up and act out. Its wealth will evaporate.
Given where we are in human history — the moment of techno-industrial over-reach — this crackup will not be easy to recover from; not like, say, the rapid recoveries of Japan and Germany after the brutal fiasco of World War Two. Things have gone too far in too many ways. The coming crackup will re-set the terms of civilized life to levels largely pre-techno-industrial. How far backward remains to be seen.
Those terms might be somewhat negotiable if we could accept the reality of this re-set and prepare for it. But, alas, most of the people capable of thought these days prefer wishful techno-narcissistic woolgathering to a reality-based assessment of where things stand — passively awaiting technological rescue remedies (“they” will “come up with something”) that will enable all the current rackets to continue. Thus, electric cars will allow suburban sprawl to function as the preferred everyday environment; molecular medicine will eliminate the role of death in human affairs; as-yet-undiscovered energy modalities will keep all the familiar comforts and conveniences running; and financial legerdemain will marshal the capital to make it all happen.
Oh, by the way, here’s a second element of the story to stay alert to: that most of the activities on-going in the USA today have taken on the qualities of rackets, that is, dishonest schemes for money-grubbing. This is most vividly and nauseatingly on display lately in the fields of medicine and education — two realms of action that formerly embodied in their basic operating systems the most sacred virtues developed in the fairly short history of civilized human endeavor: duty, diligence, etc.
I’ve offered predictions for many a year that this consortium of rackets would enter failure mode, and so far that has seemed to not have happened, at least not to the catastrophic degree, yet. I’ve also maintained that of all the complex systems we depend on for contemporary life, finance is the most abstracted from reality and therefore the one most likely to show the earliest strains of crackup. The outstanding feature of recent times has been the ability of the banking hierarchies to employ accounting fraud to forestall any reckoning over the majestic sums of unpayable debt. The lesson for those who cheerlead the triumph of fraud is that lying works and that it can continue indefinitely — or at least until they are clear of culpability for it, either retired, dead, or safe beyond the statute of limitations for their particular crime.
Of course it says something about the kind of society we’ve become that such racketeering has become so normative and pervasive, and that evading responsibility for its consequences has been elevated to a sort of enviable skill-set. In fact, the art of evasion has taken the place of what used to be called honor. We live in a low time that honors only low men. Ironically, we affect to admire only “superheroes” because it has become impossible to imagine mere humans showing courage, fortitude, and respect for truth. All conduct is provisional and equivocal. Every law can be parsed to serve what it was created to oppose. Anything goes and nothing matters.
In this year’s go-round, I’ll try to describe what happened so far, where we stand, and where I think things are going. My method is emergent and heuristic. I’m allergic to charts and graphs, which are among the prime tools of the racketeers and the wishful thinking impresarios for bending the truth. Sadly, also, statistical analysis plays into the fantasy that if you can measure enough things you can control them. (And if you mis-measure things on purpose, you can pretend to be in control.) This illusion of control is the weakest ingredient in the financial system. When it does finally reach failure mode, it tends to produce calamity.
I’m more interested in the longer view than the moment-at-hand. The swirl of events generally includes more vectors and factors than any calculus can manage. Outcomes easily slip away from the linear. Ultimately this is a exercise that might be called a history of the future — that is, just a story.
Banking and Markets
The big event of the year past was the Federal Reserve’s Waiting for Godot act concerning the fed funds rate. When Godot finally showed up two weeks before year’s end, it was in the expected-but-pitiful form of a 25-50 basis point hike — which gives the impression of a possible 50 point rise, but with the way more likely probability of actually sticking to the lowest end of the gradient (and actual overnight lending rates were already a few basis points above zero, so the net was really less than 25 basis points.)
The background of this charade was pretty clear to anyone not brain damaged from the rigors of playing Candy Crush on their phone: the Fed was hiking rates into a wobbling global economy; they were forced to act at year’s end or surrender the last shreds of their credibility (i.e. being taken to mean what they say); and they left the door open to retreat in 2016 if necessary. But the damage to the Fed had already been done. They were unmasked as a propaganda machine powerless against the real tides of economy, creating only mischief and misunderstanding, and ultimately undermining all soundness in the relationship between money and real human activity. Anything they do in the election year ahead will be viewed with suspicion, specifically of pimping for Hillary Clinton’s coronation. And her relationship with the biggest banks is well-understood. So they had to make their grand gesture in December.
The stock markets skidded a little below sideways this year (except for the Nasdaq) which glided up more than 5 percent (techno-grandiosity rules!) — with one upchuck at the end of the summer that was remedied by China bailing out its own janky stock markets and playing games with its currency.
Gold and silver continued their four-year swoon thanks to repeated massive wee hour dumps of futures contracts before the traders in New York even got out of bed. The charts conclusively show this shady activity, raising the question: why would any seller want to hugely undercut the price of what he seeks to sell by selling into a market where no buyers are present… or even awake? The answer seems to be: to make the dollar appear more firm than it really is.
The many years of ZIRP (zero interest rate policy), combined with the previous accumulation of debt unlikely to be paid back has made it ever more difficult to issue new debt with any likelihood of being paid back. But ZIRP has also nullified the relationship between interest rates and risk. In a system unencumbered by central bank interventions, interest rates would have to go a whole lot higher on instruments with such poor prospects. Of course, higher interest rates would only make new bonds that much less likely to be serviced by their issuers, especially governments laboring under Himalayan-scale debt loads. The tension in this equation has been provisionally papered over by the use of interest rate swaps, reverse repos, and other abstruse machinations and derivatives aimed at suppressing true price discovery.
The corporate stock buyback fiesta of 2015 was the perfect example of an anything goes and nothing matters ethos. It happened in full view of everyone, and it happened solely to assure corporate executives that they would enjoy their bonuses and fringe benefits and nobody complained about it. Even so, it barely accomplished anything index-wise. The markets went sideways even with all that insider action because the fundamentals suck and the global economy was obviously sinking into a deflationary contraction.
My auditors derive no end of mirth from my attempts to predict the stock markets each year. So, to add to their enjoyment, I’ll be even more precise this time around. I predict that the S & P will top on January 15, 2016, at 2142, and then crumple below 1000 by June. Carnage at the margins of the bond market — high yield paper — will spread to the center and we’ll finally see the re-pricing of risk back in the European sovereign market. French, Spanish, UK, and Italian 10-year paper below 2.0 percent? What a colossal joke that’s been! Fasten your seat belts and check your pension funds.
Oil and Deflation
The oil picture has bamboozled both the broad public and the smaller cohort of supposedly sentient observers. I maintain that the deflationary contraction underway worldwide is largely due to the fact that the world has run out of a particular form of oil: affordable oil. Turns out the peak oil story is still true, just playing out differently than a lot folks predicted. We’re at the mercy of a pretty basic equation: oil over $75-a-barrel destroys industrial economies; oil under $75-a-barrel destroys oil companies. There is no “just right” Goldilocks place on the gradient.
The public got bamboozled by the Ponzi scheme of shale oil. It seemed like a fabulous techno-rescue: the “fracking miracle!” It operated by converting mountains of cheap leveraged capital into a very rapid bump-up in US oil production. It got full traction after a couple of years of $100 oil squashed economic activity — and then squashed demand for oil. Whoops. The problem was that shale oil was very expensive to produce even if reduced demand drove the market price very low. Back at $100-plus a barrel, hardly anyone made any profit on shale. At $40 a barrel shale was a laughable loser. So, in 2015, the shale oil companies laid off thousands of workers, idled the drilling rigs, and kicked back to pray that the price would go back up. Which it didn’t. Incidentally, all kinds of associated ventures went bust with that. The landscape of North Dakota is littered with unfinished garden apartment complexes that may never be completed, and the discharged construction carpenters and roofers drove back to Minnesota ahead of the re-po men coming for their Ford F-110s. Sad, I know….
The rapid ramp-up in shale oil production from 2010 to 2014 was intended as a demonstration project to convince Wall Street to stuff ever more investment capital into oil companies. It was also part of an enormous PR campaign to allow the people running things in business and government to pretend that America’s oil problems were behind us. The “shale miracle” was going to make us “Saudi America,” It was going to boost us into “energy independence.” It played into the Master Wish beneath all the wishful thinking in America: Please, God, let us be able to drive to WalMart forever. It wasn’t so much an evil conspiracy as a feckless collective effort in denial and self-delusion
It happened that a lot of that Wall Street finance came in the form of high-yield (junk) bonds issued by the oil companies — with fat commissions for the big banks to cream off in creating the bonds. So when the price of oil crashed below $50, a lot of oil companies — especially the smaller ones with no cash flow — couldn’t service the interest payments. What lies ahead in 2016 is a debacle of bond defaults and corporate bankruptcies in the US oil patches. What’s more, because of the peculiar geology of shale oil and the rapid depletion of the fracked wells, it is necessary to incessantly drill and frack new wells to keep production even level, let alone rising. That calls for evermore rounds of new financing. But since the current financial obligations can’t be serviced, new financing will not be not forthcoming. And so neither will additional production. All of which means that shale oil production is going to crash in 2016 when the backlog of previously-drilled but untapped wells runs out. I’ll predict that US oil production will go down a million barrels a day before 2017. That includes the roughly 5 percent annual decline of conventional oil.
Some might suppose that such a crash would drive prices back up again as the supply necks down. There are a couple of problems with that supposition. One is that the previous round of $100-plus oil did a lot of permanent damage to the economy, in particular to small businesses and households (i.e. middle-class workers). That damage looks more and more permanent, meaning a smaller aggregate economy and still-shrinking demand base as businesses and citizens go broke and stay broke. If oil prices do return to a level that would justify exploration and production of expensive, hard-to-get oil, (probably north of $110) it will only crash industrial economies again — and there are only so many times this can happen before the system is so damaged recovery is no longer possible. Another problem is that the oil price crash has done significant damage to the oil industry itself, including its credibility as a viable target for investment. Contrary to hopes and expectations, current low oil prices are doing nothing to re-stimulate economic activity. It all has the look of a self-reinforcing feedback loop, a downward spiral in a global complex networked system getting clobbered by the diminishing returns of its principal activities.
Hence I would predict that the price of oil will fall further in 2016, below the $30 mark, and that it will lead to more carnage in the oil industry, in banking and debt defaults, and to new manifestations of geopolitical trouble that could lead to profound oil scarcities and rationing. We can’t seem to face the fact that our techno-industrial paradigm was designed to run on cheap oil, which is just no longer available.
Geopolitics
People are getting very nervous. They can’t help harking back a hundred years to the mysterious lead-up of the First World War, which brought an end to the first iteration of globalism with a bang. The great nations of 1914 just seemed to get haplessly drawn into a debacle that no one had bargained for — the slaughter of the trenches, bankrupted national treasuries, the fall of three dynasties, the rise of the fascists and Bolsheviks… ugh!
Many people with more than half a brain are seeing similar motifs today — a general movement toward major war by way of sheer fecklessness. For instance, the ongoing effort led by the USA to antagonize Russia for no apparent good reason, dragging the dupes of NATO along with it. I won’t rehash our stupid operation to destabilize Ukraine. David Stockman covered that so nicely last week in his blog. Anyway, that Ukraine action was all back in 2013-14. Ukraine is now a failed state. I predict that in 2016 Ukraine will beg Russia to take it back into the Russian sovereign fold, to become once again a province of greater Russia. However, Russia will demur. Russia actually can’t afford such a woebegone, unreliable, and expensive ward. So Ukraine will then go begging back to the US and NATO to dole out financial life-support. By that time, the US and western Europe will be so economically distressed that they will only pretend to bail out Ukraine, just as they pretend to bolster their own economies via smoke-and-mirrors central bank shenanigans. Ukraine will sink into a World Made By Hand level of neo-medievalism, blazing the trail for everybody else in the world. Think: lawlessness, banditry, gangster autarky, neo-serfdom. Sounds harsh, I know, but it is what it is.
In 2015 the action between the US and Russia shifted to Syria. Our monumental blunderings in the Middle East, which included enabling the creation of ISIS, left us bereft of any coherent way to counter the barbarism and animus of radical Islam. So, our “adversary” Mr. Putin stepped in, on the premise that destabilizing what remains of the Syrian government under Mr. Assad was not such a good idea — as he explained very clearly to the UN General Assembly. It remains to be seen whether Russia will be able to pacify Syria, much of which lies in ruins now. But unlike the USA, Russia doesn’t have ambivalent intentions where ISIS is concerned. We’ve pretended that any old freelance gang opposing Assad is our friend. Russia’s aims are pretty straightforward: prop up Assad, rescue whatever governing institutions remain in Syria, and smash ISIS. In exchange they get a warm-water naval base on the Mediterranean. That’s supposed to be an existential threat to the USA.
The basic regional beef there, anyway, is between the Sunni and the Shi’ite, which is to say Arabian-sponsored Islamic maniacs versus Persian-sponsored Islamic maniacs. Unfortunately, that translates into the Saudi Arabia / USA and Iran / Russia contest of wills. Throw in some league wild-card players like Hezbollah and Israel and you have a pretty yeasty mix for rising animosities. Sadly, the US can’t seem to formulate a strategy that doesn’t make things worse for people in the region or for the US homeland (or for our allies in Europe, plagued by refugees they cannot comfortably absorb and the awful threat of terror events).
I expect in 2016 that Obama’s policy will be to just get out of the way of Putin and see what happens. He doesn’t have much left in the kit-bag for now. The worst thing to come out of this for Obama, really, is if Putin can succeed in pacifying Syria, America’s leaders will look bad — incompetent and foolish — which is the actual case, of course. Maybe sometimes you just have suck up your mistakes. Much as Obama dislikes Hillary, I doubt he wants to upend the whole groaning Democratic Party Washington DC patronage pyramid, so he might be careful to not start World War Three during the election year. He can leave that to Hillary, should her coronation actually occur on Jan 20, 2017.
Anything might happen across the Islamic world in 2016. Every Islamic nation is grossly overpopulated, given the poor quality of the terrain. Most of them occupy territory that has been horribly degraded during the population explosion of the past hundred years, and stand to suffer hugely from climate and weather abnormalities ahead. Governments will fall and may not be replaced by anything resembling a coherent polity. Algeria, Libya, Egypt, Iraq (fuggeddabowdit), Pakistan, Malaysia, Indonesia are all only marginally stable for now. Afghanistan is hopeless. We will never control the terrain or the people who live there. But we will continue to maintain a garrison to defend Kabul, pretending that control of the capital city is enough.
And then there is the Big Kahuna: Saudi Arabia, with its dwindling oil income and growing multitude of dependant layabouts. King Salman’s misadventure in Yemen’s civil war has birthed another failed state and dented Saudi Arabia’s resources. If the other clans of Arabia, whoever they turn out to be, overthrow Salman, they will also create an opening for ISIS-flavored non-royals to incite a multi-dimensional civil war. An upheaval in KSA would surely produce profound disorder in the oil markets. The USA would get suckered into this tar-pit wrestling match. The attempt to stabilize our old “ally” with troops on the ground would probably work out about as well as our adventure next door in Iraq did. The further result will be more conflict in this broad swathe of the world over remaining scarce resources, especially water, along with hot war at various scales, and ever more massive movements of populations fleeing the turmoil. If they journey to Europe, they will be turned away. The Camp of the Saints becomes a reality show.
Turkey, with the second-largest military in NATO, could have been a force for stability in the Middle East, but strongman President Recep Tayyip Erdo?an can’t get out of his own way. He can’t decide whether he’s on the side of the Islamists or the West and his attempts to play footsie with both, while piling up private booty, have left him suspect among both camps. Lately he has ventured into such misadventures as shooting down a Russian warplane and receiving stolen goods in the form of ISIS oil shipments from Syrian and Iraqi wells. He was unable to enlist NATO into joining the argument over Turkish airspace and has fatally alienated his western auditors by his actions. He’s lucky that Putin didn’t turn Ankara into an ashtray. The Kurds on Turkey’s southern border threaten to start a civil war by asserting their own nationhood, now just de facto. Meanwhile, the Turkish economy is faltering again, reinforcing its longtime status as “the sick man of Europe.”
Europe’s decades as the West’s delightful tourist theme park are over. The continent is back to being a dangerous free-for-all of nations, tribes, and factions, with the overlay of alien Islamic intruders making things worse. Who knows who or what will blow up next over there. When it becomes obvious in 2016 that the 2015 refugee influx was not a one-off that the Eurozone could comfortably absorb, the individual nations will commence the deportations. Getting to that has been a difficult road, with the headwind of the memory of the Holocaust. But then, unlike the Jews of the 1930s, the Islamists are slaughtering concert-goers, booby-trapping subways, shooting civilians in restaurants, beheading journalists, and explicitly threatening the existence of European society. This business with Islam is different and we are now four generations past Auschwitz. Europeans may just have to get real about defending their respective and collective cultures.
2016 will be the lead-up to the French presidential election of 2017. François Hollande has the whole of the coming year to demonstrate his weakness. But can the French stomach Marine Le Pen’s demi-fascist National Front. The French right wing is not for reduced government, just for pushing people around differently. As 2016 goes on, look for good ole Sarko (Nicolas Sarkozy) to flank them both. Sarko is a bit crooked, but as strong-willed as Le Pen, and not as crazy. French voters will be fed up Hollande-style squishiness, but unready for a female Hitler. Sarko is the Devil they know and they will want him back.
The same election time-line goes for Germany. Voters there will increasingly revolt against what Mutti Merkel represents: how she jammed a million Islamic refugees down Europe’s craw. They’re not shopping for another Hitler, either, but they will be looking for a strong-willed someone to protect the volk against the foreign hordes, of whom they are getting good and goddam sick. There is also the matter of Germany baby-sitting all the bankrupt nations to the south.
As 2016 unfurls, the PIIGS will spin back into financial intensive care. Spain, Italy, Portugal, Greece will eventually have to face the absence of buyers for their bonds and the falsity of their low interest rates. Spain, for one, is not finished with the Catalonian secession problem. Portugal needs to return to the 18th century. The clowns in Brussels have no plan to repair the finances of Euroland beyond massive QE that cannot be endless. Whoever replaces Merkel as chancellor may be the one who senses that Germany ought to lead the way out of the Euro currency fantasy and all the awful liabilities it entails.
Great Britain is a basketcase in search of a basket to land in. It has no economy left besides the swindlers of “the City,” its version of Wall Street, and that janky establishment is losing its grip as a desirable financial capital after years of sharp practice, with much of its action moving to Shanghai. Conservative Prime Minister David Cameron is a catamite for the big banks. The Labour Party leader, Jeremy Corbyn is an old-school romantic unionist Leftie in a nation with little remaining industrial workforce. Unlike France or Germany, Britain’s parliamentary system can route a government on short notice. The debt implosion of 2016 and rescheduled Great Depression 2.0 will thrust UK Independence Party’s Nigel Farage into the spotlight to salvage what remains of Old Blighty.
The big question around Asia is whether China can navigate its way out of the blind alley it’s trapped in: a banking system steeped in crony corruption, bad debt everywhere, and malinvestment like unto nothing the world has ever seen before. The country is choking on excess industrial capacity just as the world enters its epic Peak Everything contraction. Can they keep on pumping out salad shooters and Han Solo dolls to a world drowning in plastic crap and too broke to buy more of it? They still have $3.4 trillion in foreign exchange reserves to theoretically bail themselves out. But that starts affecting the value of their pegged currency, and their main trading partner (us) can play endless currency war games with them to dissuade them from dumping the rest of their accumulated US treasury paper, which, of course, only pisses them off more and makes them look for surreptitious ways to fight back — which is what currency war is all about. Which is also exactly why China (with Russia and others) has started up its own Asian version of the IMF, the BRICs Development Bank, and an alternative to the SWIFT international clearing system.
Chinese economic and financial statistics are even less reliable than the overcooked sludge offered up by the US agencies, but the tanking of commodity prices worldwide tells enough of a story: China is sure not expanding as much as the good old days, if at all. It’s been a great ride, but it was super-quick, and it happened just prior to the world reaching the bona fide limits to growth. China’s contraction may be as quick as its rise, and if that is the case, it will be rough ride into the same vortex of contraction that everybody else is entering.
My one wild-hair prediction about China for 2016: after Kim Jong-Un pulls some bonehead move against his neighbor to the south, China invades North Korea and installs a more rational management regime there. Kim Jong-Un ends up as a lounge singer in Macao. Lucky boy.
Homeland Frolics
Be very afraid. Donald Trump isn’t funny anymore. He’s Hitler without the brains and the charm. [Not quite.--P.Z.] But he’s gotten where he is for a reason. He expresses perfectly the depravity of the culture he springs from: narcissistic, morally rudderless, vulgar, shameless, lost in fantasy, and sadistic. Hillary (last name unnecessary) is not much better, but she’s not nearly as dumb, only more thoroughly corrupt. These are the avatars of our two major political parties. Be very afraid and weep!
The good news is that political parties do occasionally blow up and vanish from the scene, and that would be an interesting possible outcome of the 2016 national elections. Trump could accomplish this much more briskly with the Republicans. He’s made it clear already that he feels zero loyalty to the Red Team, and noises offstage can be heard that the party faithful would find some way to either expel or end-run the Donald Creature. Given our litigious society, one outcome of this would be an election held hostage by the courts. Oy vey is mir. Another possibility is that a message would be transmitted to the Trump Team from some combination of rogue elements in the NSA and the US Military that he’d better drop out or else. It would be done in such a way that Trump would not be able to use it for further narcissistic grandstanding. Were that not to happen, and were Trump somehow able to get elected, I predict there will be a coup d’état against him inside of April 2017. Hello constitutional crisis. Where it might go from there, no one can say.
Of Trump’s opponents for the Republican nomination, the only one I can grudge up any interest for is Rand Paul, who is a truly disruptive figure without being a maniac. In fact, I think he would make a good president, sober, thoughtful, unencumbered by obligation to the forces of racketeering. But he appears to have a near-zero chance of winning the party’s nomination.
Hillary is the opposite of a disrupter; she is the racketeer Godmother. As things proceed, however, she would merely preside over Great Depression 2.0. Unlike FDR in GD 1.0, Hillary would inspire no trust among a fractious population out for revenge against the very enablers of Hillary’s election, namely the Wall Street bankers. The nation would fall into factional fighting and possibly even regional breakup under Miz It’s-My-Turn. But I get ahead of myself…. The question at hand for 2016 is: Can Hillary be stopped. At this point, I don’t see how, given all the weight of the party machinery calibrated in her favor by the equally odious National Party Chairperson, Congressperson Debbie Wasserman Schultz.
Bernie Sanders mounted a noble opposition campaign, and perhaps it is too early to write him off here before the Iowa caucuses and the New Hampshire primary. Perhaps something can happen and he can at least slay the candidacy of Rodan the Flying Reptile – my other nickname for the Hillary Creature. Apart from that is my basic aversion to Bernie’s political philosophy as a self-proclaimed “socialist.” I know it sounds like a glib dismissal of a cartoonish political label, but Bernie’s self-applied label implies ever more intrusion by ever bigger government into the life of this nation. History wants to take us in another direction now, away from so much hyper-centralized control, and we go against the flow at our peril. While I admire Bernie’s presence as a vocal opposition to Hillary, I’m not keen on what he’s actually selling.
I know that Martin O’Malley is still “out there,” but he appears to be a blank cartridge, or a six-pack in search of worldview, and I don’t believe as some observers have averred that this is the fault of the media. In the few Democratic “debates” held last fall he offered next to nothing outside a conventional punch-list of shopworn center-left ideology — that is, no recognition of the extraordinary problems this country faces in the climax of the techno-industrial idyll, and the long emergency that is following it.
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And that’s all you get on the Democratic side for the moment: a powerful sense that the fix is in. Yet there is the very real problem of Hillary’s loathsomeness and how that would go down at the polls. There’s even a pretty good chance that many women would vote against her. So my provisional conclusion / prediction for the November contest is that Hillary runs and loses against some as-yet-unknown un-Trump person. President Cruz? Ach! Rubio? Back in the playpen! Christie? Leave the body, take the canoli…! Jeb? El pendejo supremo! To be continued….
Race Relations and the Cowardice of the Thinking Classes
2015 was sure a bad year for different groups of Americans trying (or not) to get along, especially black people and white people. American society is feeling the full force of the identity ideologies cooked up on the college campuses over the past several decades, now boiling over into an orgy of victim-pleading, identity grandstanding, sexual hysteria, scapegoating, intellectual despotism, juridical blackmail, and (let’s not forget) careerist posturing. The more irrelevant higher education gets, the more strenuously the social justice inquisitors mount their persecutions against those who don’t buy the race-gender-privilege party line. In 2015 it has morphed into a campaign against free speech and free inquiry. The “diversity” deans multiply like fruit flies.
I made the “error” last year of suggesting that black Americans would benefit if the teaching of spoken English were made a high priority of primary and secondary schooling — and I was vilified for saying that. My opponents have not offered any useful counter-ideas beyond name-calling. I suspect that many people of good intentions are running out patience with this racket — and it is a racket for extorting preferential treatment and money from guilt-tripped white people.
In the arena of crime and policing, the situation is especially bad. Black lives matter, but not so much for black people themselves, who are ardently slaughtering each other in places like Baltimore, St. Louis, Detroit, Milwaukee, and “Chi-raq” at a rate proportionately much greater than other ethnic groups in the land. The martyrs of the movement act in ways likely to get them in trouble, for instance the hapless 12-year-old Tamir Rice, shot brandishing a BB gun designed to look exactly like the US Army 1911 issue .45 caliber ACP, Michael Brown thugging out on officer Darren Wilson, Trayvon Martin beating down George Zimmerman. The cops present at several notorious incidents include black officers; a black female sergeant who was supervising the action on the sidewalk in Staten Island when her colleagues choked Eric Garner. (she did nothing to intervene); the several black policemen in Baltimore who took Freddy Gray on his fatal ride in the paddy wagon. It’s a scene fraught with ambiguity, to be generous.
Where are we going with race relations in this country? For now, not in a favorable direction. The trend will be for police to regard certain neighborhoods as “no-go” areas — if only to avoid the gigantic multi-million dollar litigations that grow out of these ambiguous confrontations. Some may view that as a good thing, but it will only play into the decadent ethos that anything goes and nothing matters in this country. The larger question going forward is whether Black America will continue to insist on being an oppositional culture. That is what it has become, though the cowed thinking classes will not acknowledge it. They also will not recognize the need for a common culture in this nation, a set of truly shared values and standards of conduct.
[Kunstler is out of touch with blacks and should read about these issues, and more important, talk with black people.--P.Z.] [Update: I found this video--please excuse all the F words--that makes a good point about Tamir Rice being in an open-carry state:--P.Z.]
Climate Change
This is the underlayment of despair that reflective persons cannot avoid thinking about when all the other petty issues of human relations and the project of civilization are disposed of. Weird weather? Biblical Floods? Melting icecaps? Sea level creep? It was 70 degrees on Christmas Eve here in upstate New York, dandelions blooming in the yard, just a week or so ago. Some people I know can’t stop thinking about climate change. Somehow I manage to put it out of mind and ruminate on other things, or even feel good about something that is happening in the present — a good meal, a gathering of friends, an evening of live music…. but it’s always lurking there in the background like some hooded reaper in a New Yorker cartoon.
Despite the hoopla of the Paris climate change talks, I’m not persuaded that national governments will really do anything, or even that anything they might do would avail to make things better. I’m not even so concerned about whether climate change is man-made or not. I just accept that something is up and that as things change, we will have to adjust. It seems to me that the adjustment will not be easy and five hundred years from now there will be far fewer human beings, if any, around. From the point of view of the planet’s well-being, that is probably a good thing.
In the mean time, let’s do the best we can to carry on and be as kind as possible to one another. Good luck in 2016!
Kunstler: Pretend to the Bitter End.
Forecast 2016
There’s really one supreme element of this story that you must keep in view at all times: a society (i.e. an economy + a polity = a political economy) based on debt that will never be paid back is certain to crack up. Its institutions will stop functioning. Its business activities will seize up. Its leaders will be demoralized. Its denizens will act up and act out. Its wealth will evaporate.
Given where we are in human history — the moment of techno-industrial over-reach — this crackup will not be easy to recover from; not like, say, the rapid recoveries of Japan and Germany after the brutal fiasco of World War Two. Things have gone too far in too many ways. The coming crackup will re-set the terms of civilized life to levels largely pre-techno-industrial. How far backward remains to be seen.
Those terms might be somewhat negotiable if we could accept the reality of this re-set and prepare for it. But, alas, most of the people capable of thought these days prefer wishful techno-narcissistic woolgathering to a reality-based assessment of where things stand — passively awaiting technological rescue remedies (“they” will “come up with something”) that will enable all the current rackets to continue. Thus, electric cars will allow suburban sprawl to function as the preferred everyday environment; molecular medicine will eliminate the role of death in human affairs; as-yet-undiscovered energy modalities will keep all the familiar comforts and conveniences running; and financial legerdemain will marshal the capital to make it all happen.
Oh, by the way, here’s a second element of the story to stay alert to: that most of the activities on-going in the USA today have taken on the qualities of rackets, that is, dishonest schemes for money-grubbing. This is most vividly and nauseatingly on display lately in the fields of medicine and education — two realms of action that formerly embodied in their basic operating systems the most sacred virtues developed in the fairly short history of civilized human endeavor: duty, diligence, etc.
I’ve offered predictions for many a year that this consortium of rackets would enter failure mode, and so far that has seemed to not have happened, at least not to the catastrophic degree, yet. I’ve also maintained that of all the complex systems we depend on for contemporary life, finance is the most abstracted from reality and therefore the one most likely to show the earliest strains of crackup. The outstanding feature of recent times has been the ability of the banking hierarchies to employ accounting fraud to forestall any reckoning over the majestic sums of unpayable debt. The lesson for those who cheerlead the triumph of fraud is that lying works and that it can continue indefinitely — or at least until they are clear of culpability for it, either retired, dead, or safe beyond the statute of limitations for their particular crime.
Of course it says something about the kind of society we’ve become that such racketeering has become so normative and pervasive, and that evading responsibility for its consequences has been elevated to a sort of enviable skill-set. In fact, the art of evasion has taken the place of what used to be called honor. We live in a low time that honors only low men. Ironically, we affect to admire only “superheroes” because it has become impossible to imagine mere humans showing courage, fortitude, and respect for truth. All conduct is provisional and equivocal. Every law can be parsed to serve what it was created to oppose. Anything goes and nothing matters.
In this year’s go-round, I’ll try to describe what happened so far, where we stand, and where I think things are going. My method is emergent and heuristic. I’m allergic to charts and graphs, which are among the prime tools of the racketeers and the wishful thinking impresarios for bending the truth. Sadly, also, statistical analysis plays into the fantasy that if you can measure enough things you can control them. (And if you mis-measure things on purpose, you can pretend to be in control.) This illusion of control is the weakest ingredient in the financial system. When it does finally reach failure mode, it tends to produce calamity.
I’m more interested in the longer view than the moment-at-hand. The swirl of events generally includes more vectors and factors than any calculus can manage. Outcomes easily slip away from the linear. Ultimately this is a exercise that might be called a history of the future — that is, just a story.
Banking and Markets
The big event of the year past was the Federal Reserve’s Waiting for Godot act concerning the fed funds rate. When Godot finally showed up two weeks before year’s end, it was in the expected-but-pitiful form of a 25-50 basis point hike — which gives the impression of a possible 50 point rise, but with the way more likely probability of actually sticking to the lowest end of the gradient (and actual overnight lending rates were already a few basis points above zero, so the net was really less than 25 basis points.)
The background of this charade was pretty clear to anyone not brain damaged from the rigors of playing Candy Crush on their phone: the Fed was hiking rates into a wobbling global economy; they were forced to act at year’s end or surrender the last shreds of their credibility (i.e. being taken to mean what they say); and they left the door open to retreat in 2016 if necessary. But the damage to the Fed had already been done. They were unmasked as a propaganda machine powerless against the real tides of economy, creating only mischief and misunderstanding, and ultimately undermining all soundness in the relationship between money and real human activity. Anything they do in the election year ahead will be viewed with suspicion, specifically of pimping for Hillary Clinton’s coronation. And her relationship with the biggest banks is well-understood. So they had to make their grand gesture in December.
The stock markets skidded a little below sideways this year (except for the Nasdaq) which glided up more than 5 percent (techno-grandiosity rules!) — with one upchuck at the end of the summer that was remedied by China bailing out its own janky stock markets and playing games with its currency.
Gold and silver continued their four-year swoon thanks to repeated massive wee hour dumps of futures contracts before the traders in New York even got out of bed. The charts conclusively show this shady activity, raising the question: why would any seller want to hugely undercut the price of what he seeks to sell by selling into a market where no buyers are present… or even awake? The answer seems to be: to make the dollar appear more firm than it really is.
The many years of ZIRP (zero interest rate policy), combined with the previous accumulation of debt unlikely to be paid back has made it ever more difficult to issue new debt with any likelihood of being paid back. But ZIRP has also nullified the relationship between interest rates and risk. In a system unencumbered by central bank interventions, interest rates would have to go a whole lot higher on instruments with such poor prospects. Of course, higher interest rates would only make new bonds that much less likely to be serviced by their issuers, especially governments laboring under Himalayan-scale debt loads. The tension in this equation has been provisionally papered over by the use of interest rate swaps, reverse repos, and other abstruse machinations and derivatives aimed at suppressing true price discovery.
The corporate stock buyback fiesta of 2015 was the perfect example of an anything goes and nothing matters ethos. It happened in full view of everyone, and it happened solely to assure corporate executives that they would enjoy their bonuses and fringe benefits and nobody complained about it. Even so, it barely accomplished anything index-wise. The markets went sideways even with all that insider action because the fundamentals suck and the global economy was obviously sinking into a deflationary contraction.
My auditors derive no end of mirth from my attempts to predict the stock markets each year. So, to add to their enjoyment, I’ll be even more precise this time around. I predict that the S & P will top on January 15, 2016, at 2142, and then crumple below 1000 by June. Carnage at the margins of the bond market — high yield paper — will spread to the center and we’ll finally see the re-pricing of risk back in the European sovereign market. French, Spanish, UK, and Italian 10-year paper below 2.0 percent? What a colossal joke that’s been! Fasten your seat belts and check your pension funds.
Oil and Deflation
The oil picture has bamboozled both the broad public and the smaller cohort of supposedly sentient observers. I maintain that the deflationary contraction underway worldwide is largely due to the fact that the world has run out of a particular form of oil: affordable oil. Turns out the peak oil story is still true, just playing out differently than a lot folks predicted. We’re at the mercy of a pretty basic equation: oil over $75-a-barrel destroys industrial economies; oil under $75-a-barrel destroys oil companies. There is no “just right” Goldilocks place on the gradient.
The public got bamboozled by the Ponzi scheme of shale oil. It seemed like a fabulous techno-rescue: the “fracking miracle!” It operated by converting mountains of cheap leveraged capital into a very rapid bump-up in US oil production. It got full traction after a couple of years of $100 oil squashed economic activity — and then squashed demand for oil. Whoops. The problem was that shale oil was very expensive to produce even if reduced demand drove the market price very low. Back at $100-plus a barrel, hardly anyone made any profit on shale. At $40 a barrel shale was a laughable loser. So, in 2015, the shale oil companies laid off thousands of workers, idled the drilling rigs, and kicked back to pray that the price would go back up. Which it didn’t. Incidentally, all kinds of associated ventures went bust with that. The landscape of North Dakota is littered with unfinished garden apartment complexes that may never be completed, and the discharged construction carpenters and roofers drove back to Minnesota ahead of the re-po men coming for their Ford F-110s. Sad, I know….
The rapid ramp-up in shale oil production from 2010 to 2014 was intended as a demonstration project to convince Wall Street to stuff ever more investment capital into oil companies. It was also part of an enormous PR campaign to allow the people running things in business and government to pretend that America’s oil problems were behind us. The “shale miracle” was going to make us “Saudi America,” It was going to boost us into “energy independence.” It played into the Master Wish beneath all the wishful thinking in America: Please, God, let us be able to drive to WalMart forever. It wasn’t so much an evil conspiracy as a feckless collective effort in denial and self-delusion
It happened that a lot of that Wall Street finance came in the form of high-yield (junk) bonds issued by the oil companies — with fat commissions for the big banks to cream off in creating the bonds. So when the price of oil crashed below $50, a lot of oil companies — especially the smaller ones with no cash flow — couldn’t service the interest payments. What lies ahead in 2016 is a debacle of bond defaults and corporate bankruptcies in the US oil patches. What’s more, because of the peculiar geology of shale oil and the rapid depletion of the fracked wells, it is necessary to incessantly drill and frack new wells to keep production even level, let alone rising. That calls for evermore rounds of new financing. But since the current financial obligations can’t be serviced, new financing will not be not forthcoming. And so neither will additional production. All of which means that shale oil production is going to crash in 2016 when the backlog of previously-drilled but untapped wells runs out. I’ll predict that US oil production will go down a million barrels a day before 2017. That includes the roughly 5 percent annual decline of conventional oil.
Some might suppose that such a crash would drive prices back up again as the supply necks down. There are a couple of problems with that supposition. One is that the previous round of $100-plus oil did a lot of permanent damage to the economy, in particular to small businesses and households (i.e. middle-class workers). That damage looks more and more permanent, meaning a smaller aggregate economy and still-shrinking demand base as businesses and citizens go broke and stay broke. If oil prices do return to a level that would justify exploration and production of expensive, hard-to-get oil, (probably north of $110) it will only crash industrial economies again — and there are only so many times this can happen before the system is so damaged recovery is no longer possible. Another problem is that the oil price crash has done significant damage to the oil industry itself, including its credibility as a viable target for investment. Contrary to hopes and expectations, current low oil prices are doing nothing to re-stimulate economic activity. It all has the look of a self-reinforcing feedback loop, a downward spiral in a global complex networked system getting clobbered by the diminishing returns of its principal activities.
Hence I would predict that the price of oil will fall further in 2016, below the $30 mark, and that it will lead to more carnage in the oil industry, in banking and debt defaults, and to new manifestations of geopolitical trouble that could lead to profound oil scarcities and rationing. We can’t seem to face the fact that our techno-industrial paradigm was designed to run on cheap oil, which is just no longer available.
Geopolitics
People are getting very nervous. They can’t help harking back a hundred years to the mysterious lead-up of the First World War, which brought an end to the first iteration of globalism with a bang. The great nations of 1914 just seemed to get haplessly drawn into a debacle that no one had bargained for — the slaughter of the trenches, bankrupted national treasuries, the fall of three dynasties, the rise of the fascists and Bolsheviks… ugh!
Many people with more than half a brain are seeing similar motifs today — a general movement toward major war by way of sheer fecklessness. For instance, the ongoing effort led by the USA to antagonize Russia for no apparent good reason, dragging the dupes of NATO along with it. I won’t rehash our stupid operation to destabilize Ukraine. David Stockman covered that so nicely last week in his blog. Anyway, that Ukraine action was all back in 2013-14. Ukraine is now a failed state. I predict that in 2016 Ukraine will beg Russia to take it back into the Russian sovereign fold, to become once again a province of greater Russia. However, Russia will demur. Russia actually can’t afford such a woebegone, unreliable, and expensive ward. So Ukraine will then go begging back to the US and NATO to dole out financial life-support. By that time, the US and western Europe will be so economically distressed that they will only pretend to bail out Ukraine, just as they pretend to bolster their own economies via smoke-and-mirrors central bank shenanigans. Ukraine will sink into a World Made By Hand level of neo-medievalism, blazing the trail for everybody else in the world. Think: lawlessness, banditry, gangster autarky, neo-serfdom. Sounds harsh, I know, but it is what it is.
In 2015 the action between the US and Russia shifted to Syria. Our monumental blunderings in the Middle East, which included enabling the creation of ISIS, left us bereft of any coherent way to counter the barbarism and animus of radical Islam. So, our “adversary” Mr. Putin stepped in, on the premise that destabilizing what remains of the Syrian government under Mr. Assad was not such a good idea — as he explained very clearly to the UN General Assembly. It remains to be seen whether Russia will be able to pacify Syria, much of which lies in ruins now. But unlike the USA, Russia doesn’t have ambivalent intentions where ISIS is concerned. We’ve pretended that any old freelance gang opposing Assad is our friend. Russia’s aims are pretty straightforward: prop up Assad, rescue whatever governing institutions remain in Syria, and smash ISIS. In exchange they get a warm-water naval base on the Mediterranean. That’s supposed to be an existential threat to the USA.
The basic regional beef there, anyway, is between the Sunni and the Shi’ite, which is to say Arabian-sponsored Islamic maniacs versus Persian-sponsored Islamic maniacs. Unfortunately, that translates into the Saudi Arabia / USA and Iran / Russia contest of wills. Throw in some league wild-card players like Hezbollah and Israel and you have a pretty yeasty mix for rising animosities. Sadly, the US can’t seem to formulate a strategy that doesn’t make things worse for people in the region or for the US homeland (or for our allies in Europe, plagued by refugees they cannot comfortably absorb and the awful threat of terror events).
I expect in 2016 that Obama’s policy will be to just get out of the way of Putin and see what happens. He doesn’t have much left in the kit-bag for now. The worst thing to come out of this for Obama, really, is if Putin can succeed in pacifying Syria, America’s leaders will look bad — incompetent and foolish — which is the actual case, of course. Maybe sometimes you just have suck up your mistakes. Much as Obama dislikes Hillary, I doubt he wants to upend the whole groaning Democratic Party Washington DC patronage pyramid, so he might be careful to not start World War Three during the election year. He can leave that to Hillary, should her coronation actually occur on Jan 20, 2017.
Anything might happen across the Islamic world in 2016. Every Islamic nation is grossly overpopulated, given the poor quality of the terrain. Most of them occupy territory that has been horribly degraded during the population explosion of the past hundred years, and stand to suffer hugely from climate and weather abnormalities ahead. Governments will fall and may not be replaced by anything resembling a coherent polity. Algeria, Libya, Egypt, Iraq (fuggeddabowdit), Pakistan, Malaysia, Indonesia are all only marginally stable for now. Afghanistan is hopeless. We will never control the terrain or the people who live there. But we will continue to maintain a garrison to defend Kabul, pretending that control of the capital city is enough.
And then there is the Big Kahuna: Saudi Arabia, with its dwindling oil income and growing multitude of dependant layabouts. King Salman’s misadventure in Yemen’s civil war has birthed another failed state and dented Saudi Arabia’s resources. If the other clans of Arabia, whoever they turn out to be, overthrow Salman, they will also create an opening for ISIS-flavored non-royals to incite a multi-dimensional civil war. An upheaval in KSA would surely produce profound disorder in the oil markets. The USA would get suckered into this tar-pit wrestling match. The attempt to stabilize our old “ally” with troops on the ground would probably work out about as well as our adventure next door in Iraq did. The further result will be more conflict in this broad swathe of the world over remaining scarce resources, especially water, along with hot war at various scales, and ever more massive movements of populations fleeing the turmoil. If they journey to Europe, they will be turned away. The Camp of the Saints becomes a reality show.
Turkey, with the second-largest military in NATO, could have been a force for stability in the Middle East, but strongman President Recep Tayyip Erdo?an can’t get out of his own way. He can’t decide whether he’s on the side of the Islamists or the West and his attempts to play footsie with both, while piling up private booty, have left him suspect among both camps. Lately he has ventured into such misadventures as shooting down a Russian warplane and receiving stolen goods in the form of ISIS oil shipments from Syrian and Iraqi wells. He was unable to enlist NATO into joining the argument over Turkish airspace and has fatally alienated his western auditors by his actions. He’s lucky that Putin didn’t turn Ankara into an ashtray. The Kurds on Turkey’s southern border threaten to start a civil war by asserting their own nationhood, now just de facto. Meanwhile, the Turkish economy is faltering again, reinforcing its longtime status as “the sick man of Europe.”
Europe’s decades as the West’s delightful tourist theme park are over. The continent is back to being a dangerous free-for-all of nations, tribes, and factions, with the overlay of alien Islamic intruders making things worse. Who knows who or what will blow up next over there. When it becomes obvious in 2016 that the 2015 refugee influx was not a one-off that the Eurozone could comfortably absorb, the individual nations will commence the deportations. Getting to that has been a difficult road, with the headwind of the memory of the Holocaust. But then, unlike the Jews of the 1930s, the Islamists are slaughtering concert-goers, booby-trapping subways, shooting civilians in restaurants, beheading journalists, and explicitly threatening the existence of European society. This business with Islam is different and we are now four generations past Auschwitz. Europeans may just have to get real about defending their respective and collective cultures.
2016 will be the lead-up to the French presidential election of 2017. François Hollande has the whole of the coming year to demonstrate his weakness. But can the French stomach Marine Le Pen’s demi-fascist National Front. The French right wing is not for reduced government, just for pushing people around differently. As 2016 goes on, look for good ole Sarko (Nicolas Sarkozy) to flank them both. Sarko is a bit crooked, but as strong-willed as Le Pen, and not as crazy. French voters will be fed up Hollande-style squishiness, but unready for a female Hitler. Sarko is the Devil they know and they will want him back.
The same election time-line goes for Germany. Voters there will increasingly revolt against what Mutti Merkel represents: how she jammed a million Islamic refugees down Europe’s craw. They’re not shopping for another Hitler, either, but they will be looking for a strong-willed someone to protect the volk against the foreign hordes, of whom they are getting good and goddam sick. There is also the matter of Germany baby-sitting all the bankrupt nations to the south.
As 2016 unfurls, the PIIGS will spin back into financial intensive care. Spain, Italy, Portugal, Greece will eventually have to face the absence of buyers for their bonds and the falsity of their low interest rates. Spain, for one, is not finished with the Catalonian secession problem. Portugal needs to return to the 18th century. The clowns in Brussels have no plan to repair the finances of Euroland beyond massive QE that cannot be endless. Whoever replaces Merkel as chancellor may be the one who senses that Germany ought to lead the way out of the Euro currency fantasy and all the awful liabilities it entails.
Great Britain is a basketcase in search of a basket to land in. It has no economy left besides the swindlers of “the City,” its version of Wall Street, and that janky establishment is losing its grip as a desirable financial capital after years of sharp practice, with much of its action moving to Shanghai. Conservative Prime Minister David Cameron is a catamite for the big banks. The Labour Party leader, Jeremy Corbyn is an old-school romantic unionist Leftie in a nation with little remaining industrial workforce. Unlike France or Germany, Britain’s parliamentary system can route a government on short notice. The debt implosion of 2016 and rescheduled Great Depression 2.0 will thrust UK Independence Party’s Nigel Farage into the spotlight to salvage what remains of Old Blighty.
The big question around Asia is whether China can navigate its way out of the blind alley it’s trapped in: a banking system steeped in crony corruption, bad debt everywhere, and malinvestment like unto nothing the world has ever seen before. The country is choking on excess industrial capacity just as the world enters its epic Peak Everything contraction. Can they keep on pumping out salad shooters and Han Solo dolls to a world drowning in plastic crap and too broke to buy more of it? They still have $3.4 trillion in foreign exchange reserves to theoretically bail themselves out. But that starts affecting the value of their pegged currency, and their main trading partner (us) can play endless currency war games with them to dissuade them from dumping the rest of their accumulated US treasury paper, which, of course, only pisses them off more and makes them look for surreptitious ways to fight back — which is what currency war is all about. Which is also exactly why China (with Russia and others) has started up its own Asian version of the IMF, the BRICs Development Bank, and an alternative to the SWIFT international clearing system.
Chinese economic and financial statistics are even less reliable than the overcooked sludge offered up by the US agencies, but the tanking of commodity prices worldwide tells enough of a story: China is sure not expanding as much as the good old days, if at all. It’s been a great ride, but it was super-quick, and it happened just prior to the world reaching the bona fide limits to growth. China’s contraction may be as quick as its rise, and if that is the case, it will be rough ride into the same vortex of contraction that everybody else is entering.
My one wild-hair prediction about China for 2016: after Kim Jong-Un pulls some bonehead move against his neighbor to the south, China invades North Korea and installs a more rational management regime there. Kim Jong-Un ends up as a lounge singer in Macao. Lucky boy.
Homeland Frolics
Be very afraid. Donald Trump isn’t funny anymore. He’s Hitler without the brains and the charm. [Not quite.--P.Z.] But he’s gotten where he is for a reason. He expresses perfectly the depravity of the culture he springs from: narcissistic, morally rudderless, vulgar, shameless, lost in fantasy, and sadistic. Hillary (last name unnecessary) is not much better, but she’s not nearly as dumb, only more thoroughly corrupt. These are the avatars of our two major political parties. Be very afraid and weep!
The good news is that political parties do occasionally blow up and vanish from the scene, and that would be an interesting possible outcome of the 2016 national elections. Trump could accomplish this much more briskly with the Republicans. He’s made it clear already that he feels zero loyalty to the Red Team, and noises offstage can be heard that the party faithful would find some way to either expel or end-run the Donald Creature. Given our litigious society, one outcome of this would be an election held hostage by the courts. Oy vey is mir. Another possibility is that a message would be transmitted to the Trump Team from some combination of rogue elements in the NSA and the US Military that he’d better drop out or else. It would be done in such a way that Trump would not be able to use it for further narcissistic grandstanding. Were that not to happen, and were Trump somehow able to get elected, I predict there will be a coup d’état against him inside of April 2017. Hello constitutional crisis. Where it might go from there, no one can say.
Of Trump’s opponents for the Republican nomination, the only one I can grudge up any interest for is Rand Paul, who is a truly disruptive figure without being a maniac. In fact, I think he would make a good president, sober, thoughtful, unencumbered by obligation to the forces of racketeering. But he appears to have a near-zero chance of winning the party’s nomination.
Hillary is the opposite of a disrupter; she is the racketeer Godmother. As things proceed, however, she would merely preside over Great Depression 2.0. Unlike FDR in GD 1.0, Hillary would inspire no trust among a fractious population out for revenge against the very enablers of Hillary’s election, namely the Wall Street bankers. The nation would fall into factional fighting and possibly even regional breakup under Miz It’s-My-Turn. But I get ahead of myself…. The question at hand for 2016 is: Can Hillary be stopped. At this point, I don’t see how, given all the weight of the party machinery calibrated in her favor by the equally odious National Party Chairperson, Congressperson Debbie Wasserman Schultz.
Bernie Sanders mounted a noble opposition campaign, and perhaps it is too early to write him off here before the Iowa caucuses and the New Hampshire primary. Perhaps something can happen and he can at least slay the candidacy of Rodan the Flying Reptile – my other nickname for the Hillary Creature. Apart from that is my basic aversion to Bernie’s political philosophy as a self-proclaimed “socialist.” I know it sounds like a glib dismissal of a cartoonish political label, but Bernie’s self-applied label implies ever more intrusion by ever bigger government into the life of this nation. History wants to take us in another direction now, away from so much hyper-centralized control, and we go against the flow at our peril. While I admire Bernie’s presence as a vocal opposition to Hillary, I’m not keen on what he’s actually selling.
I know that Martin O’Malley is still “out there,” but he appears to be a blank cartridge, or a six-pack in search of worldview, and I don’t believe as some observers have averred that this is the fault of the media. In the few Democratic “debates” held last fall he offered next to nothing outside a conventional punch-list of shopworn center-left ideology — that is, no recognition of the extraordinary problems this country faces in the climax of the techno-industrial idyll, and the long emergency that is following it.
[Cf.
I was surprised at how good @MartinOMalley was tonight! Surprised by his energy and good policy prescriptions. #DemDebate
— Medea Benjamin (@medeabenjamin) December 20, 2015And that’s all you get on the Democratic side for the moment: a powerful sense that the fix is in. Yet there is the very real problem of Hillary’s loathsomeness and how that would go down at the polls. There’s even a pretty good chance that many women would vote against her. So my provisional conclusion / prediction for the November contest is that Hillary runs and loses against some as-yet-unknown un-Trump person. President Cruz? Ach! Rubio? Back in the playpen! Christie? Leave the body, take the canoli…! Jeb? El pendejo supremo! To be continued….
Race Relations and the Cowardice of the Thinking Classes
2015 was sure a bad year for different groups of Americans trying (or not) to get along, especially black people and white people. American society is feeling the full force of the identity ideologies cooked up on the college campuses over the past several decades, now boiling over into an orgy of victim-pleading, identity grandstanding, sexual hysteria, scapegoating, intellectual despotism, juridical blackmail, and (let’s not forget) careerist posturing. The more irrelevant higher education gets, the more strenuously the social justice inquisitors mount their persecutions against those who don’t buy the race-gender-privilege party line. In 2015 it has morphed into a campaign against free speech and free inquiry. The “diversity” deans multiply like fruit flies.
I made the “error” last year of suggesting that black Americans would benefit if the teaching of spoken English were made a high priority of primary and secondary schooling — and I was vilified for saying that. My opponents have not offered any useful counter-ideas beyond name-calling. I suspect that many people of good intentions are running out patience with this racket — and it is a racket for extorting preferential treatment and money from guilt-tripped white people.
In the arena of crime and policing, the situation is especially bad. Black lives matter, but not so much for black people themselves, who are ardently slaughtering each other in places like Baltimore, St. Louis, Detroit, Milwaukee, and “Chi-raq” at a rate proportionately much greater than other ethnic groups in the land. The martyrs of the movement act in ways likely to get them in trouble, for instance the hapless 12-year-old Tamir Rice, shot brandishing a BB gun designed to look exactly like the US Army 1911 issue .45 caliber ACP, Michael Brown thugging out on officer Darren Wilson, Trayvon Martin beating down George Zimmerman. The cops present at several notorious incidents include black officers; a black female sergeant who was supervising the action on the sidewalk in Staten Island when her colleagues choked Eric Garner. (she did nothing to intervene); the several black policemen in Baltimore who took Freddy Gray on his fatal ride in the paddy wagon. It’s a scene fraught with ambiguity, to be generous.
Where are we going with race relations in this country? For now, not in a favorable direction. The trend will be for police to regard certain neighborhoods as “no-go” areas — if only to avoid the gigantic multi-million dollar litigations that grow out of these ambiguous confrontations. Some may view that as a good thing, but it will only play into the decadent ethos that anything goes and nothing matters in this country. The larger question going forward is whether Black America will continue to insist on being an oppositional culture. That is what it has become, though the cowed thinking classes will not acknowledge it. They also will not recognize the need for a common culture in this nation, a set of truly shared values and standards of conduct.
[Kunstler is out of touch with blacks and should read about these issues, and more important, talk with black people.--P.Z.] [Update: I found this video--please excuse all the F words--that makes a good point about Tamir Rice being in an open-carry state:
Redneck goes off over Tamir Rice..White peoples can stop RACIS...Redneck goes off over Tamir Rice.... White peoples can stop RACISM if they start to been honest about it
Posted by Allstarzdjs on Saturday, January 2, 2016
Climate Change
This is the underlayment of despair that reflective persons cannot avoid thinking about when all the other petty issues of human relations and the project of civilization are disposed of. Weird weather? Biblical Floods? Melting icecaps? Sea level creep? It was 70 degrees on Christmas Eve here in upstate New York, dandelions blooming in the yard, just a week or so ago. Some people I know can’t stop thinking about climate change. Somehow I manage to put it out of mind and ruminate on other things, or even feel good about something that is happening in the present — a good meal, a gathering of friends, an evening of live music…. but it’s always lurking there in the background like some hooded reaper in a New Yorker cartoon.
Despite the hoopla of the Paris climate change talks, I’m not persuaded that national governments will really do anything, or even that anything they might do would avail to make things better. I’m not even so concerned about whether climate change is man-made or not. I just accept that something is up and that as things change, we will have to adjust. It seems to me that the adjustment will not be easy and five hundred years from now there will be far fewer human beings, if any, around. From the point of view of the planet’s well-being, that is probably a good thing.
In the mean time, let’s do the best we can to carry on and be as kind as possible to one another. Good luck in 2016!
Monday, May 25, 2015
Kunstler: Yesterday's Tomorrowland
Kunstler looks at two movies. Stylistically, they couldn't be more different from each other, but both offer visions of the future that are way off the mark. It should be noted that both movies are likely flops: Mad Max has a $150M budget but earned only $135M worldwide (26 May update: now it's $227.7M). Tomorrowland was made for $190M, but this opening weekend it took in $9.7M $42.7M.
(26 May update): Louis Proyect's great review of Mad Max: Fury Road.
Kunstler: Yesterday's Tomorrowland
Yesterday’s Tomorrowland
America takes pause on a big holiday weekend requiring little in the way of real devotions beyond the barbeque deck with two profoundly stupid movie entertainments that epitomize our estrangement from the troubles of the present day.
First there’s Mad Max: Fury Road, which depicts the collapse of civilization as a monster car rally. They managed to get it exactly wrong. The present is the monster car show. Houston. Los Angeles. New Jersey, Beijing, Mumbai, etc. In the future, there will be no cars, gasoline-powered, electric, driverless, or otherwise. Mad Max: Fury Road is actually a perverse exercise in nostalgia, as if we’re going to miss being a nation of savages in the driver’s seat, acting out an endless and pointless competition for our little place on the highway.
The other holiday blockbuster is Disney’s Tomorrowland, another exercise in nostalgia for the present, where the idealized human life is a matrix of phone apps, robots, and holograms. Of course, anybody who had been to Disneyland back in the day remembers the old Tomorrowland installation, which eventually had to be dismantled because its vision of the future had become such a joke — starting with the idea that the human project’s most pressing task was space travel. Now, at this late date, the monster Disney corporation — a truly evil empire — sees that more money can be winkled out of the sore-beset public by persuading them that techno-utopia is at hand, if only we click our heels hard enough.
Another theme running through both films is the idea that girls can be what boys used to be, that it’s “their turn” to be masters-of-the-universe, that men are past their sell-by date and only exist to defile and humiliate females. That this message is really only a mendacious effort to rake in more money by enlarging the teen “audience share” for the reigning wishful fantasy du jour is surely lost on the culture commentators, who are so busy these days celebrating the triumph and wonder of transgender life.
The reviewers are weighing these two movies on the popular pessimism / optimism scale. These are the only choices for the masses: whether to be a “doomer” or a “wisher.” Both positions are cartoon world-views that don’t provide much guidance for continuing the project of civilization, in case anyone is actually interested in that. It’s either rampaging id or the illusion of supernatural control, take your pick. I find both stances revolting.
Anyway, it’s interesting that the real Fury Road of the rightnow runs from Syria into Iraq starring ISIS. There is a growing sentiment in the news media (including the web, of course) of a sickening déjà vu with these developments. The old familiar talk of air strikes and ground troops infects the wifi transmissions. Maybe we should think about sending Charlize Theron over there with a few vestigial male sidekicks to load her assault rifle. How else to git’er done? Nobody knows.
Memorial Day is a dreary moment to have to face this onrushing calamity of rocket-propelled medievalism rampant — all those poor American soldiers blown up and mangled the past twelve years. It’s also interesting that the news media is totally out-of-touch with the biggest prize on the great gameboard: Saudi Arabia. You think ISIS overrunning Iraq is bad news? Wait until the ordnance starts flying around Riyadh. Notice, too, that there’s no news coming out of Yemen on the base of the Arabian peninsula, a failed state with a population nearly equal to its neighbor. If we have any idea what’s going on there — and surely the Pentagon and NSA do — then it’s not for popular consumption.
This is ironic because if the trouble happens to spread into Saudi Arabia — and I don’t see how it will not — then we’ll find out in a New York minute how America’s future is not about monster trucks, cars, dirt bikes, holograms, phone apps, and all the other ridiculous preoccupations of the moment.
(26 May update): Louis Proyect's great review of Mad Max: Fury Road.
Kunstler: Yesterday's Tomorrowland
Yesterday’s Tomorrowland
America takes pause on a big holiday weekend requiring little in the way of real devotions beyond the barbeque deck with two profoundly stupid movie entertainments that epitomize our estrangement from the troubles of the present day.
First there’s Mad Max: Fury Road, which depicts the collapse of civilization as a monster car rally. They managed to get it exactly wrong. The present is the monster car show. Houston. Los Angeles. New Jersey, Beijing, Mumbai, etc. In the future, there will be no cars, gasoline-powered, electric, driverless, or otherwise. Mad Max: Fury Road is actually a perverse exercise in nostalgia, as if we’re going to miss being a nation of savages in the driver’s seat, acting out an endless and pointless competition for our little place on the highway.
The other holiday blockbuster is Disney’s Tomorrowland, another exercise in nostalgia for the present, where the idealized human life is a matrix of phone apps, robots, and holograms. Of course, anybody who had been to Disneyland back in the day remembers the old Tomorrowland installation, which eventually had to be dismantled because its vision of the future had become such a joke — starting with the idea that the human project’s most pressing task was space travel. Now, at this late date, the monster Disney corporation — a truly evil empire — sees that more money can be winkled out of the sore-beset public by persuading them that techno-utopia is at hand, if only we click our heels hard enough.
Another theme running through both films is the idea that girls can be what boys used to be, that it’s “their turn” to be masters-of-the-universe, that men are past their sell-by date and only exist to defile and humiliate females. That this message is really only a mendacious effort to rake in more money by enlarging the teen “audience share” for the reigning wishful fantasy du jour is surely lost on the culture commentators, who are so busy these days celebrating the triumph and wonder of transgender life.
The reviewers are weighing these two movies on the popular pessimism / optimism scale. These are the only choices for the masses: whether to be a “doomer” or a “wisher.” Both positions are cartoon world-views that don’t provide much guidance for continuing the project of civilization, in case anyone is actually interested in that. It’s either rampaging id or the illusion of supernatural control, take your pick. I find both stances revolting.
Anyway, it’s interesting that the real Fury Road of the rightnow runs from Syria into Iraq starring ISIS. There is a growing sentiment in the news media (including the web, of course) of a sickening déjà vu with these developments. The old familiar talk of air strikes and ground troops infects the wifi transmissions. Maybe we should think about sending Charlize Theron over there with a few vestigial male sidekicks to load her assault rifle. How else to git’er done? Nobody knows.
Memorial Day is a dreary moment to have to face this onrushing calamity of rocket-propelled medievalism rampant — all those poor American soldiers blown up and mangled the past twelve years. It’s also interesting that the news media is totally out-of-touch with the biggest prize on the great gameboard: Saudi Arabia. You think ISIS overrunning Iraq is bad news? Wait until the ordnance starts flying around Riyadh. Notice, too, that there’s no news coming out of Yemen on the base of the Arabian peninsula, a failed state with a population nearly equal to its neighbor. If we have any idea what’s going on there — and surely the Pentagon and NSA do — then it’s not for popular consumption.
This is ironic because if the trouble happens to spread into Saudi Arabia — and I don’t see how it will not — then we’ll find out in a New York minute how America’s future is not about monster trucks, cars, dirt bikes, holograms, phone apps, and all the other ridiculous preoccupations of the moment.
Sunday, August 10, 2014
Monday, January 06, 2014
Kunstler: Forecast 2014: Burning Down the House
Kunstler's latest, which is excerpted below. It was worth the wait and is worth reading in its entirety (see link). Some comments of mine are after the excerpts.
Kunstler: Forecast 2014: Burning Down the House
Many of us in the Long Emergency crowd and like-minded brother-and-sisterhoods remain perplexed by the amazing stasis in our national life, despite the gathering tsunami of forces arrayed to rock our economy, our culture, and our politics. Nothing has yielded to these forces already in motion, so far. Nothing changes, nothing gives, yet. It’s like being buried alive in Jell-O. It’s embarrassing to appear so out-of-tune with the consensus, but we persevere like good soldiers in a just war.
Paper and digital markets levitate, central banks pull out all the stops of their magical reality-tweaking machine to manipulate everything, accounting fraud pervades public and private enterprise, everything is mis-priced, all official statistics are lies of one kind or another, the regulating authorities sit on their hands, lost in raptures of online pornography (or dreams of future employment at Goldman Sachs), the news media sprinkles wishful-thinking propaganda about a mythical “recovery” and the “shale gas miracle” on a credulous public desperate to believe, the routine swindles of medicine get more cruel and blatant each month, a tiny cohort of financial vampire squids suck in all the nominal wealth of society, and everybody else is left whirling down the drain of posterity in a vortex of diminishing returns and scuttled expectations.
Life in the USA is like living in a broken-down, cob-jobbed, vermin-infested house that needs to be gutted, disinfected, and rebuilt — with the hope that it might come out of the restoration process retaining the better qualities of our heritage. Some of us are anxious to get on with the job, to expel all the rats, bats, bedbugs, roaches, and lice, tear out the stinking shag carpet and the moldy sheet-rock, rip off the crappy plastic siding, and start rebuilding along lines that are consistent with the demands of the future — namely, the reality of capital and material resource scarcity. But it has been apparent for a while that the current owners of the house would prefer to let it fall down, or burn down rather than renovate.
Some of us now take that outcome for granted and are left to speculate on how it will play out. These issues were the subjects of my recent non-fiction books, The Long Emergency and Too Much Magic (as well as excellent similar books by Richard Heinberg, John Michael Greer, Dmitry Orlov, and others). They describe the conditions at the end of the cheap energy techno-industrial phase of history and they laid out a conjectural sequence of outcomes that might be stated in shorthand as collapse and re-set. I think the delay in the onset of epochal change can be explained pretty simply. As the peak oil story gained traction around 2005, and was followed (as predicted) by a financial crisis, the established order fought back for its survival, utilizing its remaining dwindling capital and the tremendous inertia of its own gigantic scale, to give the appearance of vitality at all costs.
At the heart of the matter was (and continues to be) the relationship between energy and economic growth. Without increasing supplies of cheap energy, economic growth — as we have known it for a couple of centuries — does not happen anymore. At the center of the economic growth question is credit. Without continued growth, credit can’t be repaid, and new credit cannot be issued honestly — that is, with reasonable assurance of repayment — making it worthless. So, old debt goes bad and the new debt is generated knowing that it is worthless. To complicate matters, the new worthless debt is issued to pay the interest on the old debt, to maintain the pretense that it is not going bad. ...
Miscellany
I get a lot of email on the subject of Bitcoin. Here’s how I feel about it.
It’s an even more abstract form of “money” than fiat currencies or securities based on fiat currencies. Do we need more abstraction in our economic lives? I don’t think so. I believe the trend will be toward what is real. For the moment, Bitcoin seems to be enjoying some success as it beats back successive crashes. I’m not very comfortable with the idea of investing in an algorithm. I don’t see how it is impervious to government hacking. In fact, I’d bet that somewhere in the DOD or the NSA or the CIA right now some nerd is working on that. Bitcoin is provoking imitators, other new computer “currencies.” Why would Bitcoin necessarily enjoy dominance? And how many competing algorithmic currencies can the world stand? Wouldn’t that defeat the whole purpose of an alternative “go to” currency? All I can say is that I’m not buying Bitcoins.
Will ObamaCare crash and burn. It’s not doing very well so far. In fact, it’s a poster-child for Murphy’s Law (Anything that can go wrong, will go wrong). I suppose the primary question is whether they can enroll enough healthy young people to correct the actuarial nightmare that health insurance has become. That’s not looking so good either now. But really, how can anyone trust a law that was written by the insurance companies and the pharmaceutical industry? And how can it be repealed when so many individuals, groups, companies, have already lost their pre-ObamaCare policies? What is there to go back to? Therefore, I’d have to predict turmoil in the health care system for 2014. The failure to resolve the inadequacies of ObamaCare also may be a prime symptom of the increasing impotence of the federal government to accomplish anything. That failure would prompt an even faster downscaling of governance as states, counties, communities, and individuals realize that they are on their own.
Sorry to skip around, but a few stray words about the state of American culture. Outside the capitals of the “one percent” — Manhattan, San Francisco, Boston, Washington, etc. — American material culture is in spectacular disrepair. Car culture and chain store tyranny have destroyed the physical fabric of our communities and wrecked social relations. These days, a successful Main Street is one that has a wig shop and a check-cashing office.^ It is sickening to see what we have become. Our popular entertainments are just what you would design to produce a programmed population of criminals and sex offenders. The spectacle of the way our people look —overfed, tattooed, pierced, clothed in the raiment of clowns — suggests an end-of-empire zeitgeist more disturbing than a Fellini movie. The fact is, it simply mirrors the way we act, our gross, barbaric collective demeanor. A walk down any airport concourse makes the Barnum & Bailey freak shows of yore look quaint. In short, the rot throughout our national life is so conspicuous that a fair assessment would be that we are a wicked people who deserve to be punished.
Elsewhere in the World
Globalism, in the Tom Friedman euphoric sense, is unwinding. Currency wars are wearing down the players, conflicts and tensions are breaking out where before there were only Wal-Mart share price triumphs and Foxconn profits. Both American and European middle-classes are too exhausted financially to continue the consumer orgy of the early millennium. The trade imbalances are horrific. Unpayable debt saturates everything. Sick economies will weigh down commodity prices except for food-related things. The planet Earth has probably reached peak food production, including peak fertilizer. Supplies of grain will be inadequate in 2014 to feed the still-expanding masses of the poor places in the world.
The nervous calm in finance and economies since 2008 has its mirror in the relative calm of the political scene. Uprisings and skirmishes have broken out, but nothing that so far threatens the peace between great powers. There have been the now-historic revolts in Egypt, Libya, Syria, and other Middle East and North African (MENA) states. Iraq is once again disintegrating after a decade of American “nation-building.” Greece is falling apart. Spain and Italy should be falling apart but haven’t yet. France is sinking into bankruptcy. The UK is in on the grift with the USA and insulated from the Euro, but the British Isles are way over-populated with a volatile multi-ethnic mix and not much of an economy outside the financial district of London. There were riots in — of all places — Sweden this year. Turkey entered crisis just a few weeks ago along with Ukraine.
I predict more colorful political strife in Europe this year, boots in the street, barricades, gunfire, and bombs. The populations of these countries will want relief measures from their national governments, but the sad news is that these governments are broke, so austerity seems to be the order of the day no matter what. I think this will prod incipient revolts in a rightward nationalist direction. If it was up to Marine LePen’s rising National Front party, they would solve the employment problem by expelling all the recent immigrants — though the mere attempt would probably provoke widespread race war in France.
The quarrel between China and Japan over the Senkaku Islands is a diversion from the real action in the South China Sea, said to hold large underwater petroleum reserves. China is the world’s second greatest oil importer. Their economy and the credibility of its non-elected government depends on keeping the oil supply up. They are a long way from other places in the world where oil comes from, hence their eagerness to secure and dominate the South China Sea. The idea is that China would make a fuss over the Senkaku group, get Japan and the US to the negotiating table, and cede the dispute over them to Japan in exchange for Japan and the US supporting China’s claims in the South China Sea against the other neighbors there: Vietnam, Indonesia, Malaysia, and the Philippines.
The catch is that Japan may be going politically insane just now between the rigors of (Shinzo) Abenomics and the mystical horrors of Fukushima. Japan’s distress appears to be provoking a new mood of nationalist militarism of a kind not seen there since the 1940s. They’re talking about arming up, rewriting the pacifist articles in their constitution. Scary, if you have a memory of the mid-20th century. China should know something about national psychotic breaks, having not so long ago endured the insanity of Mao Zedong’s Cultural Revolution (1966-71). So they might want to handle Japan with care. On the other hand, China surely nurtures a deep, deadly grudge over the crimes perpetrated by Japan in the Second World War, and now has a disciplined, world-class military, and so maybe they would like to kick Japan’s ass. It’s a hard one to call. I suspect that in 2014, the ball is in Japan’s court. What will they do? If the US doesn’t stay out of the way of that action, then we are insane, too.
That said, I stick by my story from last year’s forecast: Japan’s ultimate destination is to “go medieval.”* They’re never going to recover from Fukushima, their economy is unraveling, they have no fossil fuels of their own and have to import everything, and their balance of payments is completely out of whack. The best course for them will be to just throw in the towel on modernity. Everybody else is headed that way, too, eventually, so Japan might as well get there first and set a good example.
By “go medieval” I mean re-set to a pre-industrial World Made By Hand level of operation. I’m sure that outcome seems laughably implausible to most readers, but I maintain that both the human race and the planet Earth need a “time out” from the ravages of “progress,” and circumstances are going to force the issue anyway, so we might as well kick back and get with the program: go local, downscale, learn useful skills, cultivate our gardens, get to know our neighbors, learn how to play a musical instrument, work, dine, and dance with our friends.
As it happens, the third in the series of my World Made By Hand novels, set in upstate New York in the post-collapse economy, will be published in September by the Atlantic Monthly Press. It’s a ripping yarn. Whether anyone will have enough money to buy a copy, I can’t predict. Happy 2014, Everybody!
===
Eventually, there'll be
^I went to the Kuhio Plaza on Friday, and after our breakfast at IHOP, walked around a bit. Big Island Surf closed, but an HIC opened in the old Waldenbooks space next to Radio Shack. At one end, it's bustling with the new Zippy's and Sports Authority, but throughout the mall are vacant spaces or stores that barely occupy their spaces and sell cheap stuff. Near IHOP, what used to be Suncoast Video was more recently an anime shop (that could have fit in a smaller space; it was cavernous). Now it's closed and serves as an occasional meeting room, which itself was moved from the original Footlocker space to make way for a calendar shop. I'd like your thoughts on the Plaza: what it was like? where it's going? It's been in operation almost thirty years (opening in 1985). The Kaiko`o Mall was around for about that long before it closed. (To malihini and visitors: that giant courthouse in midtown Hilo is on the site of the mall.) Downtown is mixed: pockets of gentrification, longtime businesses, and some downscaling and "frivilousation" (e.g., a good toy shop replaced with a nail salon; the Farmers Exchange, with a bar and a tattoo parlor).
*As I posted recently, our cable system broadcasts a free preview of the Nippon Golden Network around New Year's (this year it ran from 30 December through 3 January). Many of the movies are samurai films from the `50s and `60s. Will Japan go back to the time of the shogunate? Probably not.
Kunstler: Forecast 2014: Burning Down the House
Many of us in the Long Emergency crowd and like-minded brother-and-sisterhoods remain perplexed by the amazing stasis in our national life, despite the gathering tsunami of forces arrayed to rock our economy, our culture, and our politics. Nothing has yielded to these forces already in motion, so far. Nothing changes, nothing gives, yet. It’s like being buried alive in Jell-O. It’s embarrassing to appear so out-of-tune with the consensus, but we persevere like good soldiers in a just war.
Paper and digital markets levitate, central banks pull out all the stops of their magical reality-tweaking machine to manipulate everything, accounting fraud pervades public and private enterprise, everything is mis-priced, all official statistics are lies of one kind or another, the regulating authorities sit on their hands, lost in raptures of online pornography (or dreams of future employment at Goldman Sachs), the news media sprinkles wishful-thinking propaganda about a mythical “recovery” and the “shale gas miracle” on a credulous public desperate to believe, the routine swindles of medicine get more cruel and blatant each month, a tiny cohort of financial vampire squids suck in all the nominal wealth of society, and everybody else is left whirling down the drain of posterity in a vortex of diminishing returns and scuttled expectations.
Life in the USA is like living in a broken-down, cob-jobbed, vermin-infested house that needs to be gutted, disinfected, and rebuilt — with the hope that it might come out of the restoration process retaining the better qualities of our heritage. Some of us are anxious to get on with the job, to expel all the rats, bats, bedbugs, roaches, and lice, tear out the stinking shag carpet and the moldy sheet-rock, rip off the crappy plastic siding, and start rebuilding along lines that are consistent with the demands of the future — namely, the reality of capital and material resource scarcity. But it has been apparent for a while that the current owners of the house would prefer to let it fall down, or burn down rather than renovate.
Some of us now take that outcome for granted and are left to speculate on how it will play out. These issues were the subjects of my recent non-fiction books, The Long Emergency and Too Much Magic (as well as excellent similar books by Richard Heinberg, John Michael Greer, Dmitry Orlov, and others). They describe the conditions at the end of the cheap energy techno-industrial phase of history and they laid out a conjectural sequence of outcomes that might be stated in shorthand as collapse and re-set. I think the delay in the onset of epochal change can be explained pretty simply. As the peak oil story gained traction around 2005, and was followed (as predicted) by a financial crisis, the established order fought back for its survival, utilizing its remaining dwindling capital and the tremendous inertia of its own gigantic scale, to give the appearance of vitality at all costs.
At the heart of the matter was (and continues to be) the relationship between energy and economic growth. Without increasing supplies of cheap energy, economic growth — as we have known it for a couple of centuries — does not happen anymore. At the center of the economic growth question is credit. Without continued growth, credit can’t be repaid, and new credit cannot be issued honestly — that is, with reasonable assurance of repayment — making it worthless. So, old debt goes bad and the new debt is generated knowing that it is worthless. To complicate matters, the new worthless debt is issued to pay the interest on the old debt, to maintain the pretense that it is not going bad. ...
Miscellany
I get a lot of email on the subject of Bitcoin. Here’s how I feel about it.
It’s an even more abstract form of “money” than fiat currencies or securities based on fiat currencies. Do we need more abstraction in our economic lives? I don’t think so. I believe the trend will be toward what is real. For the moment, Bitcoin seems to be enjoying some success as it beats back successive crashes. I’m not very comfortable with the idea of investing in an algorithm. I don’t see how it is impervious to government hacking. In fact, I’d bet that somewhere in the DOD or the NSA or the CIA right now some nerd is working on that. Bitcoin is provoking imitators, other new computer “currencies.” Why would Bitcoin necessarily enjoy dominance? And how many competing algorithmic currencies can the world stand? Wouldn’t that defeat the whole purpose of an alternative “go to” currency? All I can say is that I’m not buying Bitcoins.
Will ObamaCare crash and burn. It’s not doing very well so far. In fact, it’s a poster-child for Murphy’s Law (Anything that can go wrong, will go wrong). I suppose the primary question is whether they can enroll enough healthy young people to correct the actuarial nightmare that health insurance has become. That’s not looking so good either now. But really, how can anyone trust a law that was written by the insurance companies and the pharmaceutical industry? And how can it be repealed when so many individuals, groups, companies, have already lost their pre-ObamaCare policies? What is there to go back to? Therefore, I’d have to predict turmoil in the health care system for 2014. The failure to resolve the inadequacies of ObamaCare also may be a prime symptom of the increasing impotence of the federal government to accomplish anything. That failure would prompt an even faster downscaling of governance as states, counties, communities, and individuals realize that they are on their own.
Sorry to skip around, but a few stray words about the state of American culture. Outside the capitals of the “one percent” — Manhattan, San Francisco, Boston, Washington, etc. — American material culture is in spectacular disrepair. Car culture and chain store tyranny have destroyed the physical fabric of our communities and wrecked social relations. These days, a successful Main Street is one that has a wig shop and a check-cashing office.^ It is sickening to see what we have become. Our popular entertainments are just what you would design to produce a programmed population of criminals and sex offenders. The spectacle of the way our people look —overfed, tattooed, pierced, clothed in the raiment of clowns — suggests an end-of-empire zeitgeist more disturbing than a Fellini movie. The fact is, it simply mirrors the way we act, our gross, barbaric collective demeanor. A walk down any airport concourse makes the Barnum & Bailey freak shows of yore look quaint. In short, the rot throughout our national life is so conspicuous that a fair assessment would be that we are a wicked people who deserve to be punished.
Elsewhere in the World
Globalism, in the Tom Friedman euphoric sense, is unwinding. Currency wars are wearing down the players, conflicts and tensions are breaking out where before there were only Wal-Mart share price triumphs and Foxconn profits. Both American and European middle-classes are too exhausted financially to continue the consumer orgy of the early millennium. The trade imbalances are horrific. Unpayable debt saturates everything. Sick economies will weigh down commodity prices except for food-related things. The planet Earth has probably reached peak food production, including peak fertilizer. Supplies of grain will be inadequate in 2014 to feed the still-expanding masses of the poor places in the world.
The nervous calm in finance and economies since 2008 has its mirror in the relative calm of the political scene. Uprisings and skirmishes have broken out, but nothing that so far threatens the peace between great powers. There have been the now-historic revolts in Egypt, Libya, Syria, and other Middle East and North African (MENA) states. Iraq is once again disintegrating after a decade of American “nation-building.” Greece is falling apart. Spain and Italy should be falling apart but haven’t yet. France is sinking into bankruptcy. The UK is in on the grift with the USA and insulated from the Euro, but the British Isles are way over-populated with a volatile multi-ethnic mix and not much of an economy outside the financial district of London. There were riots in — of all places — Sweden this year. Turkey entered crisis just a few weeks ago along with Ukraine.
I predict more colorful political strife in Europe this year, boots in the street, barricades, gunfire, and bombs. The populations of these countries will want relief measures from their national governments, but the sad news is that these governments are broke, so austerity seems to be the order of the day no matter what. I think this will prod incipient revolts in a rightward nationalist direction. If it was up to Marine LePen’s rising National Front party, they would solve the employment problem by expelling all the recent immigrants — though the mere attempt would probably provoke widespread race war in France.
The quarrel between China and Japan over the Senkaku Islands is a diversion from the real action in the South China Sea, said to hold large underwater petroleum reserves. China is the world’s second greatest oil importer. Their economy and the credibility of its non-elected government depends on keeping the oil supply up. They are a long way from other places in the world where oil comes from, hence their eagerness to secure and dominate the South China Sea. The idea is that China would make a fuss over the Senkaku group, get Japan and the US to the negotiating table, and cede the dispute over them to Japan in exchange for Japan and the US supporting China’s claims in the South China Sea against the other neighbors there: Vietnam, Indonesia, Malaysia, and the Philippines.
The catch is that Japan may be going politically insane just now between the rigors of (Shinzo) Abenomics and the mystical horrors of Fukushima. Japan’s distress appears to be provoking a new mood of nationalist militarism of a kind not seen there since the 1940s. They’re talking about arming up, rewriting the pacifist articles in their constitution. Scary, if you have a memory of the mid-20th century. China should know something about national psychotic breaks, having not so long ago endured the insanity of Mao Zedong’s Cultural Revolution (1966-71). So they might want to handle Japan with care. On the other hand, China surely nurtures a deep, deadly grudge over the crimes perpetrated by Japan in the Second World War, and now has a disciplined, world-class military, and so maybe they would like to kick Japan’s ass. It’s a hard one to call. I suspect that in 2014, the ball is in Japan’s court. What will they do? If the US doesn’t stay out of the way of that action, then we are insane, too.
That said, I stick by my story from last year’s forecast: Japan’s ultimate destination is to “go medieval.”* They’re never going to recover from Fukushima, their economy is unraveling, they have no fossil fuels of their own and have to import everything, and their balance of payments is completely out of whack. The best course for them will be to just throw in the towel on modernity. Everybody else is headed that way, too, eventually, so Japan might as well get there first and set a good example.
By “go medieval” I mean re-set to a pre-industrial World Made By Hand level of operation. I’m sure that outcome seems laughably implausible to most readers, but I maintain that both the human race and the planet Earth need a “time out” from the ravages of “progress,” and circumstances are going to force the issue anyway, so we might as well kick back and get with the program: go local, downscale, learn useful skills, cultivate our gardens, get to know our neighbors, learn how to play a musical instrument, work, dine, and dance with our friends.
As it happens, the third in the series of my World Made By Hand novels, set in upstate New York in the post-collapse economy, will be published in September by the Atlantic Monthly Press. It’s a ripping yarn. Whether anyone will have enough money to buy a copy, I can’t predict. Happy 2014, Everybody!
===
Eventually, there'll be
^I went to the Kuhio Plaza on Friday, and after our breakfast at IHOP, walked around a bit. Big Island Surf closed, but an HIC opened in the old Waldenbooks space next to Radio Shack. At one end, it's bustling with the new Zippy's and Sports Authority, but throughout the mall are vacant spaces or stores that barely occupy their spaces and sell cheap stuff. Near IHOP, what used to be Suncoast Video was more recently an anime shop (that could have fit in a smaller space; it was cavernous). Now it's closed and serves as an occasional meeting room, which itself was moved from the original Footlocker space to make way for a calendar shop. I'd like your thoughts on the Plaza: what it was like? where it's going? It's been in operation almost thirty years (opening in 1985). The Kaiko`o Mall was around for about that long before it closed. (To malihini and visitors: that giant courthouse in midtown Hilo is on the site of the mall.) Downtown is mixed: pockets of gentrification, longtime businesses, and some downscaling and "frivilousation" (e.g., a good toy shop replaced with a nail salon; the Farmers Exchange, with a bar and a tattoo parlor).
*As I posted recently, our cable system broadcasts a free preview of the Nippon Golden Network around New Year's (this year it ran from 30 December through 3 January). Many of the movies are samurai films from the `50s and `60s. Will Japan go back to the time of the shogunate? Probably not.
Sunday, December 29, 2013
How Many of Kunstler's Predictions for 2013 Have Come to Pass?
About this time, Kunstler issues his annual forecast for the year ahead. Here's his look at 2013: Forecast 2013: Contraction, Contagion, and Contradiction
Sunday, November 24, 2013
Century's End
Five writers, including Kunstler, predict the state of things at the end of the century.
Monday, October 22, 2012
Kunstler: Snake Garden
http://kunstler.com/blog/2012/10/snake-garden.html
Snake Garden
By James Howard Kunstler
on October 22, 2012 8:54 AM
There's a good reason why nobody is paying attention to the election this year except the people who, one way or another, get paid to be interested: because for all that's at stake there is no coherent discussion about any of it. By 'at stake' I mean what we are going to do when the major systems we depend on for everyday life begin to wobble and fail.
There is zero cognizance even among the paid kibitzers that we are near that point. Rather, a rapture of techno-narcissism holds in thrall even people who ought to know better, and a chatter-stream of infotainment propaganda spreads an hallucinatory fog of national self-esteem-boosting figments ranging from "energy independence" to "green jobs."
The truth of our situation is an implacable contraction of the turbo-corporate economy due to remorseless looming energy scarcity. That is, strange to relate, not altogether bad news (if we were psychologically disposed to process it, which we are not). It doesn't have to mean that everything in American life goes straight to shit -- though it might. It could well mean that some of the most destructive corporate actors go to shit (quickly and unexpectedly), making room for some really beneficial transformation.
For instance, the tensions of excessive scale and lack of resilience could put WalMart and everything like it out of business. It wouldn't take much to fatally compromise the 12,000-mile supply lines and the 'warehouse-on-wheels' that the behemoth retailers depend on. $6 diesel fuel and a few more currency war provocations against China could put the schnitz on the operating system of national chain retail. It would be the end of the unacknowledged "entitlement" called "bargain shopping," but it would also provide the opportunity to rebuild the very local and regional economies that these predatory outfits put to death thirty years ago - and, more importantly, open up a vast range of careers, positions, and roles for Americans to play in truly running their own commercial economies in their own home-towns, in particular young Americans otherwise demoralized by an economy that has left so many of them stranded.
This is the direction that reality is taking us in, and one wonders why the candidates can't begin to articulate it in these ridiculous show-and-tell spectacles that we misunderstand to be "debates." Obviously it has as much to do with the sheer inertia of the status quo than even with the grotesque distortions of politics inspired by the Citizens United Supreme Court decision that has allowed the complete corporate capture of elections. And even that nation-wrecking calamity is probably out-weighed by the US public's wish to keep all the familiar machinery of daily life going at all costs.
This last part is surely understandable, but it will certainly lead to a tragic outcome: political and social collapse. No one in any realm of US leadership will face the difficulty and uncertainty of finding our way out of this predicament. Both candidates for president are devoted to sustaining the unsustainable and telling fairy tales about running the WalMart economy on "green" pixie dust.
The systems that we depend on for running everyday life can all be clearly described and understood: commerce (WalMart); farming (agri-biz); transportation (happy motoring + airplanes); medicine (sickness hostage racket); education (babysitting), and so on. All of them are near the end of their existence in their current mode of operation. But the system in greatest danger is finance, which is system that is supposed to manage our accumulated wealth and deploy the surplus for purposes that keep civilization going. Finance is the sickest of all these systems now and the one that is most susceptible to collapse.
The basic problem is that finance and its organs of banking now run entirely on accounting fraud, which is to say the misrepresentation of our accumulated wealth and the subsequent misallocation of what's left of it. Pervasive accounting fraud and control fraud (the criminal abuse of trust in money matters) is joined by the systematic corruption of markets. The stock and commodity markets can no longer perform their primary role of "price discovery" due to the criminal manipulation of indexes, and in particular the computer arbitrage racket known as high frequency trading, not to mention the absence of regulation and rule-of-law more generally. And the money markets can no longer perform their primary tasks of truthfully pricing debt in relation to risk - that is, establishing interest rates -- due to the desperate interventions of central banks.
The result is a money management system that could collapse at any moment into a vacuum of unreality, and the chaos that would ensue is capable of wrecking the current incarnation of advanced industrial civilization. Mitt Romney represents all the forces that seek to pervert truth in banking, markets, trading, and commercial business. He made his fortune in a business of lethal arbitrage, hunting through the underbrush of American business like a poisonous snake, striking his victims in stealth and then consuming them. Barack Obama, lawyer and president, forgot that one of his duties is hunting snakes, and has allowed the garden of America to become overrun with snakes. There is even the pretty good chance that, if he loses this election, Mr. Obama will become one of those snakes himself.
Personally, I have no faith in either of them, and watching them pretend to battle in the trumped-up arena of "debate" makes me sick.
Snake Garden
By James Howard Kunstler
on October 22, 2012 8:54 AM
There's a good reason why nobody is paying attention to the election this year except the people who, one way or another, get paid to be interested: because for all that's at stake there is no coherent discussion about any of it. By 'at stake' I mean what we are going to do when the major systems we depend on for everyday life begin to wobble and fail.
There is zero cognizance even among the paid kibitzers that we are near that point. Rather, a rapture of techno-narcissism holds in thrall even people who ought to know better, and a chatter-stream of infotainment propaganda spreads an hallucinatory fog of national self-esteem-boosting figments ranging from "energy independence" to "green jobs."
The truth of our situation is an implacable contraction of the turbo-corporate economy due to remorseless looming energy scarcity. That is, strange to relate, not altogether bad news (if we were psychologically disposed to process it, which we are not). It doesn't have to mean that everything in American life goes straight to shit -- though it might. It could well mean that some of the most destructive corporate actors go to shit (quickly and unexpectedly), making room for some really beneficial transformation.
For instance, the tensions of excessive scale and lack of resilience could put WalMart and everything like it out of business. It wouldn't take much to fatally compromise the 12,000-mile supply lines and the 'warehouse-on-wheels' that the behemoth retailers depend on. $6 diesel fuel and a few more currency war provocations against China could put the schnitz on the operating system of national chain retail. It would be the end of the unacknowledged "entitlement" called "bargain shopping," but it would also provide the opportunity to rebuild the very local and regional economies that these predatory outfits put to death thirty years ago - and, more importantly, open up a vast range of careers, positions, and roles for Americans to play in truly running their own commercial economies in their own home-towns, in particular young Americans otherwise demoralized by an economy that has left so many of them stranded.
This is the direction that reality is taking us in, and one wonders why the candidates can't begin to articulate it in these ridiculous show-and-tell spectacles that we misunderstand to be "debates." Obviously it has as much to do with the sheer inertia of the status quo than even with the grotesque distortions of politics inspired by the Citizens United Supreme Court decision that has allowed the complete corporate capture of elections. And even that nation-wrecking calamity is probably out-weighed by the US public's wish to keep all the familiar machinery of daily life going at all costs.
This last part is surely understandable, but it will certainly lead to a tragic outcome: political and social collapse. No one in any realm of US leadership will face the difficulty and uncertainty of finding our way out of this predicament. Both candidates for president are devoted to sustaining the unsustainable and telling fairy tales about running the WalMart economy on "green" pixie dust.
The systems that we depend on for running everyday life can all be clearly described and understood: commerce (WalMart); farming (agri-biz); transportation (happy motoring + airplanes); medicine (sickness hostage racket); education (babysitting), and so on. All of them are near the end of their existence in their current mode of operation. But the system in greatest danger is finance, which is system that is supposed to manage our accumulated wealth and deploy the surplus for purposes that keep civilization going. Finance is the sickest of all these systems now and the one that is most susceptible to collapse.
The basic problem is that finance and its organs of banking now run entirely on accounting fraud, which is to say the misrepresentation of our accumulated wealth and the subsequent misallocation of what's left of it. Pervasive accounting fraud and control fraud (the criminal abuse of trust in money matters) is joined by the systematic corruption of markets. The stock and commodity markets can no longer perform their primary role of "price discovery" due to the criminal manipulation of indexes, and in particular the computer arbitrage racket known as high frequency trading, not to mention the absence of regulation and rule-of-law more generally. And the money markets can no longer perform their primary tasks of truthfully pricing debt in relation to risk - that is, establishing interest rates -- due to the desperate interventions of central banks.
The result is a money management system that could collapse at any moment into a vacuum of unreality, and the chaos that would ensue is capable of wrecking the current incarnation of advanced industrial civilization. Mitt Romney represents all the forces that seek to pervert truth in banking, markets, trading, and commercial business. He made his fortune in a business of lethal arbitrage, hunting through the underbrush of American business like a poisonous snake, striking his victims in stealth and then consuming them. Barack Obama, lawyer and president, forgot that one of his duties is hunting snakes, and has allowed the garden of America to become overrun with snakes. There is even the pretty good chance that, if he loses this election, Mr. Obama will become one of those snakes himself.
Personally, I have no faith in either of them, and watching them pretend to battle in the trumped-up arena of "debate" makes me sick.
Monday, January 02, 2012
Janus Part Two: Kunstler's Forecast for 2012
2012 Forecast: Bang and Whimper
By James Howard Kunstler
on January 2, 2012 7:28 AM
There's a lot to be nervous about, even if you don't subscribe to the undercooked Mayan apocalypse lore moving through the gut of the Internet like a Staphylococcus-infected tamale. The casual observer might say that nothing seemed to give on the world scene in 2011 despite the Fukushima meltdown, the Arab Spring uproars, the train wreck of European finance, the disappearing act at MF Global, and the assorted injuries done to the Kardashian brand by the giant walking dildo Kris Humphries.
I demur. On close examination, the industrial world underwent complete zombification in 2011. Its member states and their institutions are now lurching across the stage of history like so many walking dead. Whole European nations are dead, their citizens squirming around the ruined bones of failed speculative condo projects, housing estates, and luxury hotels like botfly larvae. The USA lies in complete moral ruin despite the exertions of ten thousand evangelical preachers in dusty back-road tilt-up chapels from Texas to Carolina, several new museums of Creation Science, and the shining example of former Senator Rick Santorum. Just look at how we behave, from the cloakrooms of Congress to the piercing parlors of West Hollywood to the 7-Elevens of suburban Maryland: a nation of thieves, racketeers, reality TV sluts, wannabe road warriors, light-fingered gangsta-boyz, and crybabies living in an anomie-drenched decrepitating demolition derby landscape of failure. When everybody is a zombie, whose brains are left to eat? Echo answers.... On to the predictions for 2012 then.
The biggest political shock awaiting us is the massive disruption of the major party nominating conventions next summer, when thousands of angry citizens descend on Tampa and Charlotte demanding a reality test. The parties will attempt to go about their ritual business, ignoring the mischief outside the convention centers, and both parties will make the mistake of siccing the cops on the protestors. The result will be a much bigger mess than the one I personally witnessed on the streets of Chicago, 1968, when the party hacks anointed the grinning sell-out Hubert Humphrey to run against Ole Debbil Nixie. Just before getting tear-gassed on Michigan Avenue that night, I saw some kid hoisting a sign that depicted the nominee with a Hitler mustache over the epithet: Mein Humph! It made my night, despite the subsequent retching in the gutter.
The two major parties are completely bankrupt zombie organizations and this election may be their last stand - if they even survive the conventions. Neither of them can come to grips with the reality-based issues of the day: epochal financial and economic contraction, peak energy (and many other resources), climate change, the absence of the rule of law in banking, and generational grievance - or, perhaps more to the point, the manifestations of these giant trends as presented in unemployment, debt slavery, foreclosure, bankruptcy, homelessness, hunger, and X-million family tragedies. Both parties can only promise the return to a bygone status quo that is largely mythical.
President Obama, the putative "progressive" - spokesman of the Ivy League, Silicon Valley, Lower Manhattan, and all the other precincts where "folks" imagine themselves to be advanced thinkers - can't even wrap his mind around the simple fact that we will never be "energy independent" if we think that means running 260 million cars and trucks, no matter how many algae farms we pretend to invest in. Here is man who ought to know better and either doesn't, or is lying about it. He has other failures to answer for, too. Why, following the Citizens United decision in the Supreme Court, did Mr. Obama not prompt his party to sponsor federal legislation (or a constitutional amendment) that would redefine a corporation as not identical in "personhood" to a human being? Why does he still employ an Attorney General who has not started one prosecution for financial misconduct amid a panorama of arrant swindling and fraud? (Ditto: heads of the SEC, CFTC, etc.) And why did he not object loudly to the provision in the latest defense appropriations bill that allows for the capricious arrests and indefinite detention of anyone in the USA on suspicion of "terrorism?" Does this graduate of Harvard Law remember what habeas corpus means?
A lot of voters projected on Mr. Obama some notion of supernatural brilliance - our Hollywood fantasies are rife with wishes to be saved, and therefore redeemed, by our former victims - but he turned out to have a pedestrian mind. Could he possibly believe we have "a hundred years of natural gas" in the ground? Or that we're in a position to ramp up another cycle of industrial economic "growth?" Or that we can continue the web of cruel rackets that passes for medical care in this country? When the Democratic Party re-nominates Obama, it will be sealing its death warrant, and it will be on its way to the same cosmic vacuum where the memory of the Whigs lingers on.
Meanwhile, the Republicans labor to convert themselves into the party of corn-pone Nazism with all their unconcealed lust to push everybody around under the plastic eagle rubrics of "Freedom" and "Liberty." Look at the dismal lineup of morons, hypocrites, and religious fanatics arrayed for the Iowa caucus: a doctor who is also a creationist!? A leveraged buyout artist! A grifter fresh from K Street! A lady Christian theocrat wholly owned by the "dominionist" New Apostolic Reformation cult! A George W. Bush imitator showing symptoms of early onset senility! The whole posse is preoccupied with things supernatural. And being so dedicated to things unreal, they're the prime representatives of the suburban clusterfuck, who will do anything to keep that obsolete machine running, even if it means national suicide, because they lack the brains to understand where history is taking us and what the mandates of reality are shouting at us about the urgent need to reorganize American life. They are also the vassals of corporate despotism - where the Democrats are mere footservants. They masquerade as "job creators," but they promote the off-shoring of every activity that corporate America can shed in its quest for ever-greater executive compensation. The lip-service they pay to "freedom" is belied by their intent to control everybody's personal life, commoditize the public interest, and sell out their grandchildren's future for a few extra rounds of golf.
I think this gang, too, will be sent packing by the mobs of 2012. I have a nagging intimation that some third party candidate will emerge. The two personalities I keep seeing in that role are Howard Dean and Michael Bloomberg. Both of them are imperfect, but both of them are clear-headed and action-oriented, and I have a feeling that both of them are stewing in the background over the spectacle of idiocy, inertia, and dithering they see at every political compass point. Maybe somebody else will crawl out of the woodwork. I've said before in the weekly blog that conditions could deteriorate so badly that a Pentagon general might have to step into national leadership just to keep the grocery stores supplied with basic rations - but that is an outcome in my personal asteroid belt of probabilities.
Whatever party ends up running things, and whomever fronts it, is going to be in for a helluva wild ride. The USA is diving into an economic depression that will make the 1930s look like a Busby Berkeley production number. Compressive contraction will have its way with us, whatever Ben Bernanke thinks. There will simply be less activity of the kinds we're used to - Big Box shopping sprees, hamburger sales, theme park visits, house closings, you name it - than our hypertrophic system requires to keep its own destructive momentum going. Instead, the whole thing will just topple over, inert, like a 99-cent gyroscope giving into the forces of entropy. There will be a lot of bewildered, angry, dispossessed people from sea to shining sea. Not a few of them will "act out," that is, start breaking things, stealing things, targeting easy prey, hurting bystanders, and even tangling with police. Personally, I don't believe in the internment camp meme so popular among the doomer paranoiacs, but surely a lot of people will be cooling their heels in some slammer - while many other miscreants will just get away with crimes against persons and property.
The global banking system was on death-watch all through 2011. Somehow the various doctors in the central banks and finance ministries were able to muster enough accounting legerdemain to give the appearance of a system still showing a pulse. But in a compressive debt deflation, there are only so many accounting tricks you can pull off as money (and wealth) literally disappears down a cosmic worm-hole. In Europe, the process has moved from the margins toward the center. The people of Greece, Portugal, Ireland, Spain, Italy, Belgium will have less income, fewer government services, lost wages and pensions, less comfort than they have had for a couple of generations. Meanwhile, France is drowning in bad paper and the German banks are choking on it. There is really only one plausible outcome and that is default. The reckoning of the bondholders is at hand. Everybody will get poorer simultaneously - and if not, there will be not just regime change but civil war and revolution. The fantasy of a fiscal union in Europe is impossible because it means two things: that Germany will have to issue orders to everybody else; and that Germany would have to pick up the tab for everybody else while telling them what to do. Both are intolerable and implausible. Let's just think of the Euro experiment as an interesting side effect of the peak energy era... now drawing to a close.
These professional economists with their jabber about QEs and "financial repression" and bond-term "twists" and debt-to-GDP ratios are missing the point. The advanced industrial nations will not be re-jiggered onto any "growth" runway. Rather, we're entering the rutted wagon-road of de-industrializing and un-advancing. What awaits us in a "time-out" from hyperbolic technological progress. Forget about Ray Kurzweil's nanobot nirvana. That is not in the cards. Instead, wrap your mind around life in an economy organized around farming, with a much sparser distribution of big urban centers, and far fewer people overall. Don't imagine for a moment that your grandchildren will be zinging across the landscape in electric cars sampling one theme park after another while "networking" with "friends" on cyborg social networks implanted in their brain jellies. Think of them grooming their mules in the summer twilight. Anyway, you get the picture: everything that the finance ministries and treasuries and central banks are affecting to do is mere shadow theater performed in support of wishful thinking.
The question, then, is what kind of hardship and disorder will attend our journey out of the industrial era into post-technological age we are entering. Will we just turn the world into a Michael Bay movie and blow everything up? Or will we make some graceful descent and retain what is really best about the human spirit?
2012 will be the year of internal strife in these "advanced" nations, of people fighting over the table scraps of modernity among their own, in their own backyards, a desperate sorting out of the remnants. I don't think we'll see fighting between the European nations until the internal conflicts are resolved and that will take a few years.
The hot-spots for 2012 are very likely to be in the Middle East. You already know that. What could be more obvious than the tinderbox character of that region? Islamic extremism is poised to take over governments (and armies) in Egypt, Syria, Libya, possibly Algeria, and probably Pakistan. Iran lost its mind decades ago and seems determined to dominate the region by means of a strategy that can only get it into trouble (and perhaps the whole world if it goes really badly). Saber-rattling is one thing; making an actual move something else. Block the Straits of Hormuz? Not if you don't want Teheran to turn into an ashtray. That may happen anyway if Iran rattles a nuclear saber. Germany, France, Britain, and Italy, all struggling with terrible problems at home, would breathe a sigh of relief if the mullahs were chastened. The chatter around the Web about an Israeli preemptive attack never ceases. But it is a possibility.
Oh, and don't forget Turkey. Formerly the "sick man" of Europe, Turkey has become strangely resurgent, prompting some recollections that the Ottoman Empire actually administered over much of the Middle East until 1914, and not with complete incompetence, either. They just sort of imploded from empire fatigue, which is not the worst way to go down, if history is taking you there anyway. But empires come back, too, and what passes for Turkey today is a polity that in one incarnation or another has been around since the ancient Greek days, and was, for quite a long while, Rome Release 2.0.
Don't be surprised if some hostilities break out between Turkey and Iran, since a battleground named Iraq lies between them. Iraq is a basket-case despite an immense reserve of oil under its sands, and having had the US military babysit it for eight years. The last American combat units left Iraq this fall, but there are still plenty of US soldiers there, maintaining our garrisons and keeping an eye on things. The question is: can they control what the Kurds do in the north, and whatever meddling Iran engages in around the Basra oil region in the South? These American support troops remaining in Iraq could find themselves looking like a ham-and-cheese sandwich between a lot of crusty mischief north-and-south. The Turks have already had a dustup or two with Syria lately - Syria occupies a big wedge between Turkey, Iraq and the Mediterranean Sea - and Turkey will take a dim view of that nation falling into the hands of Islamic extremists if Assad gets booted.
All bets are off in Egypt. Anything can happen there.
The dangerous position of Israel vis-Ã -vis all these quarreling players is probably as bad as it has been in two generations. An attack by a neighbor or getting caught in a crossfire between neighbors would stimulate a lusty response, and perhaps World War Three. As if the world needed this added aggravation. It makes my kishkas ache just to think about it. Sometimes I wonder why the whole Israeli nation doesn't just pack up and move to Nebraska.
2012 is the year that China proves to be a mortal nation and rolls over with a very bad case of the vapors. Their banking system is a sham. Their property bubble is a fiasco. Their government has no formal legitimacy and will install a new leadership group this year, while exports crash and mass factory layoffs happen. There will be a lot of pissed off people in China, and they may express themselves politically in ways that have seemed unthinkable for decades. The aura of social control looms large in China, but an aura is a light garment not recommended for stormy political weather. 2012 could be the year that China begins its journey into a "Balkanized" collection of smaller autonomous parts, which is the big fat trendline for all the nations of the world, including the USA.
It is hard to think about the bizarre case of India, a nation with one foot in the modern age and the other in a colorful hallucinatory dreamtime. Their climate-change related problems are doing heavy damage to the food supply. Their groundwater is almost gone. The troubles of the wobbling global economy will take a lot pep out of their burgeoning tech and manufacturing sectors. It wouldn't be surprising if these travails prompted distracting hostilities with its failed-state neighbor, Pakistan. Pakistan, with its inexhaustible supply of Islamic maniacs could easily start a rumble with some crazy caper like the Mumbai hotel assault of two years ago, but this time India would answer with a heavy cudgel, perhaps even a nuclear sortie designed to neutralize Pakistan's dangerous toys at a stroke. And that would be that. Like cleaning out an annoying neighborhood crack house. It's not a very appetizing scenario, but what else can you do about failed states with nuclear bombs?
Turning to Japan....That sore beset kingdom is suffering all the blowback of modern times at once: the Godzilla syndrome up in Fukushima; a demographic collapse; an imminent bond crisis; the collapse of export market partners; and a long, agonizing death spiral of its banks. I stick by a prediction I tendered back in March, after the deadly tsunami: Japan will decisively opt for a return to pre-industrial civilization. Why not? The rest of the world will be dragged kicking and screaming to the same place. Let Japan get there first and enjoy the advantage of the early adapter - back to an economy of local, hand-made stuff, rigid social hierarchy, folkloric hijinks in whispering bamboo groves, silk robes, and frequent time outs for the tea ceremony.
Russia? The big bear might have just sat out another decade and enjoyed its remaining fossil fuel supply, but the temptation to project power is a demanding habit, so they make all sorts of noises about watching Iran's back - though mutual hatred abounds - and generally rushing into the power vacuum occupied by a US with dwindling mojo. There were stirrings of political discontent just few weeks ago, after the rigged early rounds of national elections, and who knows where that will lead. Vlad Putin has held things together there impressively after the meltdown of the 1990s, but apparently the tranquil veneer is thin. Except for two big cities, the sprawling nation is broke and decrepitating, with little to offer the world but oil and gas - not an inconsiderable offering, but one with certain limits especially as they drain their oil fields for export cash. The rule of law is also pretty sketchy there. The government, as ever, is a kind of gangster affair, only this time one that allows some people to get really rich, not just connected. Their 70-year experiment with Marxian dogma has probably put them off ideology for a few centuries to come, which means less money spent on prisons for people with independent thoughts and more for call girls and home furnishings. I imagine that Putin will maintain his grip through the year. The Russians will appreciate relative order more when they see a few other countries devolve into internal conflict.
I don't see much action around South America this year. Some Americans are already fleeing to Argentina. Perhaps they'll enjoy it, but there is always the menace of property confiscation, and worse. Brazil will continue to appear vibrant while it grows more population, shoving it toward eventual ruin. They will see setbacks in the development of their deep-sea oil due to an international shortage of investment capital.
Mexico's fortunes depend on its oil industry, Pemex, which faces remorseless depletion. Revenue from oil production and (dwindling) exports can't hope to keep up with continuing population growth (and ever more poverty). These trends suggest a continued loss of control for the central government and more territorial fighting among the drug gangs and other criminal mafias. As long as all those loose heads roll on the south side of the Rio Grande the US will just tut-tut off to the side. But if the gangs get bold and start venturing cross border to make mischief we will make like Woodrow Wilson did and send the regular army down to spank them. It would be a satisfying diversion for that portion of the US demographic that enjoys Ultimate Fighting on TV, though it won't get them their job back at the Pontiac plant.
The global oil picture is not so reassuring. The fragility of our supply is simply unnoticed by commuters enjoying Lady Gaga on their iPods. Meanwhile, our politicians retail fantasies of endless domestic reserves, which is total horse shit. Global exports are in remorseless decline, apart from geopolitical fissures and strains that could just paralyze allocation cold. If a hot war breaks out in the Middle East, you'll see the American supermarket shelves empty in three days. Won't that be fun. Note, too: the manias over shale oil and shale gas will reveal themselves as just more bubbles in a long cavalcade of bubbles, and both will begin to founder on a shortage of investment capital. The shale plays will prove to have been a national self-esteem-building program, not any part of an energy policy.
The abiding question as we turn the corner into the New Year is: how come Jon Corzine is still at large? (Not to mention Angelo Mozilo, plus the entire executive floor of Goldman Sachs, and about 5000 other assorted Wall Street grifters still on the loose.) There is plenty of dire talk that the collapse of MF Global, and the shenanigans around its demise involving the evaporation of segregated accounts, has gravely and permanently damaged the entire investment industry, but especially the commodities funds, who can no longer depend on the Chicago Mercantile Exchange to honestly clear trades and regulate behavior. The whole affair, and the thundering silence from the oval office, makes Barack Obama seem not just inept but somehow complicit in the looting of America. As if he needs another mark of discredit in his record of consistent fumbling. There are signs that a lot of people who still have something resembling money invested in various funds will go to cash in the weeks ahead, including under-the-mattress style. The distrust and paranoia is palpable now, with the frenzies of Yuletide bygone for another year. After all, why trust banks, especially the TBTF monsters. Such a mass move could take the starch even out of highly manipulated equity markets.
Nemesis may have her day, though. Jamie Dimon might have just gone a swindle too far for the fates to ignore him another year. JP Morgan looks to be in a peck of trouble for its role in the confiscation of MF Global accounts, not to mention its hijinks in the precious metals markets. The impudence of these rascals! In a nation when all sorts of people are murdered every day for little more reason than being in the wrong place at the wrong time, is it not a wonder that some poor swindled Grampa with nothing left to live for has not tossed a Molotov cocktail through the window of a Wall Street watering hole known to be frequented by banking poobahs? Perhaps this sort of action awaits us in 2012.
Longtime readers of this blog know how much I love predicting the Dow Jones Industrial Average to crash down to 4000 every year. I never disappoint - though I am often disappointed. In 2011, the SP index managed the delightful trick of finishing a fraction below its previous January kickoff. The stock markets have churned in range-bound purgatory for a decade while the price of a jar of pickles has multiplied four-fold. Applying the calculus, and given the pickle-DOW differential, I'd say my call was actually pretty good. In any case, this year I change the tune slightly: I predict the DJIA will go to 4000, with the catch that the number is only a way-station to 1000, which it will hit in 2014. We may be short of snow here in the Northeastern US - thanks to La Nina - yet not short of confidence that the mills of the Gods grind slowly, but grind exceedingly fine.
Finally, look for the publication of my next book round July 2012, a non-fiction work titled Too Much Magic: Wishful Thinking, Technology and the Fate of the Nation... from The Atlantic Monthly Press. In a week, I begin work on World Made By Hand 3.
Good luck to you in 2012, and report any suspicious characters adorned with ear-plugs, quetzel feathers, and carrying obsidian knives to your nearest office of Homeland Security.
==
3 January update: Swans looks to the new year also.
By James Howard Kunstler
on January 2, 2012 7:28 AM
There's a lot to be nervous about, even if you don't subscribe to the undercooked Mayan apocalypse lore moving through the gut of the Internet like a Staphylococcus-infected tamale. The casual observer might say that nothing seemed to give on the world scene in 2011 despite the Fukushima meltdown, the Arab Spring uproars, the train wreck of European finance, the disappearing act at MF Global, and the assorted injuries done to the Kardashian brand by the giant walking dildo Kris Humphries.
I demur. On close examination, the industrial world underwent complete zombification in 2011. Its member states and their institutions are now lurching across the stage of history like so many walking dead. Whole European nations are dead, their citizens squirming around the ruined bones of failed speculative condo projects, housing estates, and luxury hotels like botfly larvae. The USA lies in complete moral ruin despite the exertions of ten thousand evangelical preachers in dusty back-road tilt-up chapels from Texas to Carolina, several new museums of Creation Science, and the shining example of former Senator Rick Santorum. Just look at how we behave, from the cloakrooms of Congress to the piercing parlors of West Hollywood to the 7-Elevens of suburban Maryland: a nation of thieves, racketeers, reality TV sluts, wannabe road warriors, light-fingered gangsta-boyz, and crybabies living in an anomie-drenched decrepitating demolition derby landscape of failure. When everybody is a zombie, whose brains are left to eat? Echo answers.... On to the predictions for 2012 then.
The biggest political shock awaiting us is the massive disruption of the major party nominating conventions next summer, when thousands of angry citizens descend on Tampa and Charlotte demanding a reality test. The parties will attempt to go about their ritual business, ignoring the mischief outside the convention centers, and both parties will make the mistake of siccing the cops on the protestors. The result will be a much bigger mess than the one I personally witnessed on the streets of Chicago, 1968, when the party hacks anointed the grinning sell-out Hubert Humphrey to run against Ole Debbil Nixie. Just before getting tear-gassed on Michigan Avenue that night, I saw some kid hoisting a sign that depicted the nominee with a Hitler mustache over the epithet: Mein Humph! It made my night, despite the subsequent retching in the gutter.
The two major parties are completely bankrupt zombie organizations and this election may be their last stand - if they even survive the conventions. Neither of them can come to grips with the reality-based issues of the day: epochal financial and economic contraction, peak energy (and many other resources), climate change, the absence of the rule of law in banking, and generational grievance - or, perhaps more to the point, the manifestations of these giant trends as presented in unemployment, debt slavery, foreclosure, bankruptcy, homelessness, hunger, and X-million family tragedies. Both parties can only promise the return to a bygone status quo that is largely mythical.
President Obama, the putative "progressive" - spokesman of the Ivy League, Silicon Valley, Lower Manhattan, and all the other precincts where "folks" imagine themselves to be advanced thinkers - can't even wrap his mind around the simple fact that we will never be "energy independent" if we think that means running 260 million cars and trucks, no matter how many algae farms we pretend to invest in. Here is man who ought to know better and either doesn't, or is lying about it. He has other failures to answer for, too. Why, following the Citizens United decision in the Supreme Court, did Mr. Obama not prompt his party to sponsor federal legislation (or a constitutional amendment) that would redefine a corporation as not identical in "personhood" to a human being? Why does he still employ an Attorney General who has not started one prosecution for financial misconduct amid a panorama of arrant swindling and fraud? (Ditto: heads of the SEC, CFTC, etc.) And why did he not object loudly to the provision in the latest defense appropriations bill that allows for the capricious arrests and indefinite detention of anyone in the USA on suspicion of "terrorism?" Does this graduate of Harvard Law remember what habeas corpus means?
A lot of voters projected on Mr. Obama some notion of supernatural brilliance - our Hollywood fantasies are rife with wishes to be saved, and therefore redeemed, by our former victims - but he turned out to have a pedestrian mind. Could he possibly believe we have "a hundred years of natural gas" in the ground? Or that we're in a position to ramp up another cycle of industrial economic "growth?" Or that we can continue the web of cruel rackets that passes for medical care in this country? When the Democratic Party re-nominates Obama, it will be sealing its death warrant, and it will be on its way to the same cosmic vacuum where the memory of the Whigs lingers on.
Meanwhile, the Republicans labor to convert themselves into the party of corn-pone Nazism with all their unconcealed lust to push everybody around under the plastic eagle rubrics of "Freedom" and "Liberty." Look at the dismal lineup of morons, hypocrites, and religious fanatics arrayed for the Iowa caucus: a doctor who is also a creationist!? A leveraged buyout artist! A grifter fresh from K Street! A lady Christian theocrat wholly owned by the "dominionist" New Apostolic Reformation cult! A George W. Bush imitator showing symptoms of early onset senility! The whole posse is preoccupied with things supernatural. And being so dedicated to things unreal, they're the prime representatives of the suburban clusterfuck, who will do anything to keep that obsolete machine running, even if it means national suicide, because they lack the brains to understand where history is taking us and what the mandates of reality are shouting at us about the urgent need to reorganize American life. They are also the vassals of corporate despotism - where the Democrats are mere footservants. They masquerade as "job creators," but they promote the off-shoring of every activity that corporate America can shed in its quest for ever-greater executive compensation. The lip-service they pay to "freedom" is belied by their intent to control everybody's personal life, commoditize the public interest, and sell out their grandchildren's future for a few extra rounds of golf.
I think this gang, too, will be sent packing by the mobs of 2012. I have a nagging intimation that some third party candidate will emerge. The two personalities I keep seeing in that role are Howard Dean and Michael Bloomberg. Both of them are imperfect, but both of them are clear-headed and action-oriented, and I have a feeling that both of them are stewing in the background over the spectacle of idiocy, inertia, and dithering they see at every political compass point. Maybe somebody else will crawl out of the woodwork. I've said before in the weekly blog that conditions could deteriorate so badly that a Pentagon general might have to step into national leadership just to keep the grocery stores supplied with basic rations - but that is an outcome in my personal asteroid belt of probabilities.
Whatever party ends up running things, and whomever fronts it, is going to be in for a helluva wild ride. The USA is diving into an economic depression that will make the 1930s look like a Busby Berkeley production number. Compressive contraction will have its way with us, whatever Ben Bernanke thinks. There will simply be less activity of the kinds we're used to - Big Box shopping sprees, hamburger sales, theme park visits, house closings, you name it - than our hypertrophic system requires to keep its own destructive momentum going. Instead, the whole thing will just topple over, inert, like a 99-cent gyroscope giving into the forces of entropy. There will be a lot of bewildered, angry, dispossessed people from sea to shining sea. Not a few of them will "act out," that is, start breaking things, stealing things, targeting easy prey, hurting bystanders, and even tangling with police. Personally, I don't believe in the internment camp meme so popular among the doomer paranoiacs, but surely a lot of people will be cooling their heels in some slammer - while many other miscreants will just get away with crimes against persons and property.
The global banking system was on death-watch all through 2011. Somehow the various doctors in the central banks and finance ministries were able to muster enough accounting legerdemain to give the appearance of a system still showing a pulse. But in a compressive debt deflation, there are only so many accounting tricks you can pull off as money (and wealth) literally disappears down a cosmic worm-hole. In Europe, the process has moved from the margins toward the center. The people of Greece, Portugal, Ireland, Spain, Italy, Belgium will have less income, fewer government services, lost wages and pensions, less comfort than they have had for a couple of generations. Meanwhile, France is drowning in bad paper and the German banks are choking on it. There is really only one plausible outcome and that is default. The reckoning of the bondholders is at hand. Everybody will get poorer simultaneously - and if not, there will be not just regime change but civil war and revolution. The fantasy of a fiscal union in Europe is impossible because it means two things: that Germany will have to issue orders to everybody else; and that Germany would have to pick up the tab for everybody else while telling them what to do. Both are intolerable and implausible. Let's just think of the Euro experiment as an interesting side effect of the peak energy era... now drawing to a close.
These professional economists with their jabber about QEs and "financial repression" and bond-term "twists" and debt-to-GDP ratios are missing the point. The advanced industrial nations will not be re-jiggered onto any "growth" runway. Rather, we're entering the rutted wagon-road of de-industrializing and un-advancing. What awaits us in a "time-out" from hyperbolic technological progress. Forget about Ray Kurzweil's nanobot nirvana. That is not in the cards. Instead, wrap your mind around life in an economy organized around farming, with a much sparser distribution of big urban centers, and far fewer people overall. Don't imagine for a moment that your grandchildren will be zinging across the landscape in electric cars sampling one theme park after another while "networking" with "friends" on cyborg social networks implanted in their brain jellies. Think of them grooming their mules in the summer twilight. Anyway, you get the picture: everything that the finance ministries and treasuries and central banks are affecting to do is mere shadow theater performed in support of wishful thinking.
The question, then, is what kind of hardship and disorder will attend our journey out of the industrial era into post-technological age we are entering. Will we just turn the world into a Michael Bay movie and blow everything up? Or will we make some graceful descent and retain what is really best about the human spirit?
2012 will be the year of internal strife in these "advanced" nations, of people fighting over the table scraps of modernity among their own, in their own backyards, a desperate sorting out of the remnants. I don't think we'll see fighting between the European nations until the internal conflicts are resolved and that will take a few years.
The hot-spots for 2012 are very likely to be in the Middle East. You already know that. What could be more obvious than the tinderbox character of that region? Islamic extremism is poised to take over governments (and armies) in Egypt, Syria, Libya, possibly Algeria, and probably Pakistan. Iran lost its mind decades ago and seems determined to dominate the region by means of a strategy that can only get it into trouble (and perhaps the whole world if it goes really badly). Saber-rattling is one thing; making an actual move something else. Block the Straits of Hormuz? Not if you don't want Teheran to turn into an ashtray. That may happen anyway if Iran rattles a nuclear saber. Germany, France, Britain, and Italy, all struggling with terrible problems at home, would breathe a sigh of relief if the mullahs were chastened. The chatter around the Web about an Israeli preemptive attack never ceases. But it is a possibility.
Oh, and don't forget Turkey. Formerly the "sick man" of Europe, Turkey has become strangely resurgent, prompting some recollections that the Ottoman Empire actually administered over much of the Middle East until 1914, and not with complete incompetence, either. They just sort of imploded from empire fatigue, which is not the worst way to go down, if history is taking you there anyway. But empires come back, too, and what passes for Turkey today is a polity that in one incarnation or another has been around since the ancient Greek days, and was, for quite a long while, Rome Release 2.0.
Don't be surprised if some hostilities break out between Turkey and Iran, since a battleground named Iraq lies between them. Iraq is a basket-case despite an immense reserve of oil under its sands, and having had the US military babysit it for eight years. The last American combat units left Iraq this fall, but there are still plenty of US soldiers there, maintaining our garrisons and keeping an eye on things. The question is: can they control what the Kurds do in the north, and whatever meddling Iran engages in around the Basra oil region in the South? These American support troops remaining in Iraq could find themselves looking like a ham-and-cheese sandwich between a lot of crusty mischief north-and-south. The Turks have already had a dustup or two with Syria lately - Syria occupies a big wedge between Turkey, Iraq and the Mediterranean Sea - and Turkey will take a dim view of that nation falling into the hands of Islamic extremists if Assad gets booted.
All bets are off in Egypt. Anything can happen there.
The dangerous position of Israel vis-Ã -vis all these quarreling players is probably as bad as it has been in two generations. An attack by a neighbor or getting caught in a crossfire between neighbors would stimulate a lusty response, and perhaps World War Three. As if the world needed this added aggravation. It makes my kishkas ache just to think about it. Sometimes I wonder why the whole Israeli nation doesn't just pack up and move to Nebraska.
2012 is the year that China proves to be a mortal nation and rolls over with a very bad case of the vapors. Their banking system is a sham. Their property bubble is a fiasco. Their government has no formal legitimacy and will install a new leadership group this year, while exports crash and mass factory layoffs happen. There will be a lot of pissed off people in China, and they may express themselves politically in ways that have seemed unthinkable for decades. The aura of social control looms large in China, but an aura is a light garment not recommended for stormy political weather. 2012 could be the year that China begins its journey into a "Balkanized" collection of smaller autonomous parts, which is the big fat trendline for all the nations of the world, including the USA.
It is hard to think about the bizarre case of India, a nation with one foot in the modern age and the other in a colorful hallucinatory dreamtime. Their climate-change related problems are doing heavy damage to the food supply. Their groundwater is almost gone. The troubles of the wobbling global economy will take a lot pep out of their burgeoning tech and manufacturing sectors. It wouldn't be surprising if these travails prompted distracting hostilities with its failed-state neighbor, Pakistan. Pakistan, with its inexhaustible supply of Islamic maniacs could easily start a rumble with some crazy caper like the Mumbai hotel assault of two years ago, but this time India would answer with a heavy cudgel, perhaps even a nuclear sortie designed to neutralize Pakistan's dangerous toys at a stroke. And that would be that. Like cleaning out an annoying neighborhood crack house. It's not a very appetizing scenario, but what else can you do about failed states with nuclear bombs?
Turning to Japan....That sore beset kingdom is suffering all the blowback of modern times at once: the Godzilla syndrome up in Fukushima; a demographic collapse; an imminent bond crisis; the collapse of export market partners; and a long, agonizing death spiral of its banks. I stick by a prediction I tendered back in March, after the deadly tsunami: Japan will decisively opt for a return to pre-industrial civilization. Why not? The rest of the world will be dragged kicking and screaming to the same place. Let Japan get there first and enjoy the advantage of the early adapter - back to an economy of local, hand-made stuff, rigid social hierarchy, folkloric hijinks in whispering bamboo groves, silk robes, and frequent time outs for the tea ceremony.
Russia? The big bear might have just sat out another decade and enjoyed its remaining fossil fuel supply, but the temptation to project power is a demanding habit, so they make all sorts of noises about watching Iran's back - though mutual hatred abounds - and generally rushing into the power vacuum occupied by a US with dwindling mojo. There were stirrings of political discontent just few weeks ago, after the rigged early rounds of national elections, and who knows where that will lead. Vlad Putin has held things together there impressively after the meltdown of the 1990s, but apparently the tranquil veneer is thin. Except for two big cities, the sprawling nation is broke and decrepitating, with little to offer the world but oil and gas - not an inconsiderable offering, but one with certain limits especially as they drain their oil fields for export cash. The rule of law is also pretty sketchy there. The government, as ever, is a kind of gangster affair, only this time one that allows some people to get really rich, not just connected. Their 70-year experiment with Marxian dogma has probably put them off ideology for a few centuries to come, which means less money spent on prisons for people with independent thoughts and more for call girls and home furnishings. I imagine that Putin will maintain his grip through the year. The Russians will appreciate relative order more when they see a few other countries devolve into internal conflict.
I don't see much action around South America this year. Some Americans are already fleeing to Argentina. Perhaps they'll enjoy it, but there is always the menace of property confiscation, and worse. Brazil will continue to appear vibrant while it grows more population, shoving it toward eventual ruin. They will see setbacks in the development of their deep-sea oil due to an international shortage of investment capital.
Mexico's fortunes depend on its oil industry, Pemex, which faces remorseless depletion. Revenue from oil production and (dwindling) exports can't hope to keep up with continuing population growth (and ever more poverty). These trends suggest a continued loss of control for the central government and more territorial fighting among the drug gangs and other criminal mafias. As long as all those loose heads roll on the south side of the Rio Grande the US will just tut-tut off to the side. But if the gangs get bold and start venturing cross border to make mischief we will make like Woodrow Wilson did and send the regular army down to spank them. It would be a satisfying diversion for that portion of the US demographic that enjoys Ultimate Fighting on TV, though it won't get them their job back at the Pontiac plant.
The global oil picture is not so reassuring. The fragility of our supply is simply unnoticed by commuters enjoying Lady Gaga on their iPods. Meanwhile, our politicians retail fantasies of endless domestic reserves, which is total horse shit. Global exports are in remorseless decline, apart from geopolitical fissures and strains that could just paralyze allocation cold. If a hot war breaks out in the Middle East, you'll see the American supermarket shelves empty in three days. Won't that be fun. Note, too: the manias over shale oil and shale gas will reveal themselves as just more bubbles in a long cavalcade of bubbles, and both will begin to founder on a shortage of investment capital. The shale plays will prove to have been a national self-esteem-building program, not any part of an energy policy.
The abiding question as we turn the corner into the New Year is: how come Jon Corzine is still at large? (Not to mention Angelo Mozilo, plus the entire executive floor of Goldman Sachs, and about 5000 other assorted Wall Street grifters still on the loose.) There is plenty of dire talk that the collapse of MF Global, and the shenanigans around its demise involving the evaporation of segregated accounts, has gravely and permanently damaged the entire investment industry, but especially the commodities funds, who can no longer depend on the Chicago Mercantile Exchange to honestly clear trades and regulate behavior. The whole affair, and the thundering silence from the oval office, makes Barack Obama seem not just inept but somehow complicit in the looting of America. As if he needs another mark of discredit in his record of consistent fumbling. There are signs that a lot of people who still have something resembling money invested in various funds will go to cash in the weeks ahead, including under-the-mattress style. The distrust and paranoia is palpable now, with the frenzies of Yuletide bygone for another year. After all, why trust banks, especially the TBTF monsters. Such a mass move could take the starch even out of highly manipulated equity markets.
Nemesis may have her day, though. Jamie Dimon might have just gone a swindle too far for the fates to ignore him another year. JP Morgan looks to be in a peck of trouble for its role in the confiscation of MF Global accounts, not to mention its hijinks in the precious metals markets. The impudence of these rascals! In a nation when all sorts of people are murdered every day for little more reason than being in the wrong place at the wrong time, is it not a wonder that some poor swindled Grampa with nothing left to live for has not tossed a Molotov cocktail through the window of a Wall Street watering hole known to be frequented by banking poobahs? Perhaps this sort of action awaits us in 2012.
Longtime readers of this blog know how much I love predicting the Dow Jones Industrial Average to crash down to 4000 every year. I never disappoint - though I am often disappointed. In 2011, the SP index managed the delightful trick of finishing a fraction below its previous January kickoff. The stock markets have churned in range-bound purgatory for a decade while the price of a jar of pickles has multiplied four-fold. Applying the calculus, and given the pickle-DOW differential, I'd say my call was actually pretty good. In any case, this year I change the tune slightly: I predict the DJIA will go to 4000, with the catch that the number is only a way-station to 1000, which it will hit in 2014. We may be short of snow here in the Northeastern US - thanks to La Nina - yet not short of confidence that the mills of the Gods grind slowly, but grind exceedingly fine.
Finally, look for the publication of my next book round July 2012, a non-fiction work titled Too Much Magic: Wishful Thinking, Technology and the Fate of the Nation... from The Atlantic Monthly Press. In a week, I begin work on World Made By Hand 3.
Good luck to you in 2012, and report any suspicious characters adorned with ear-plugs, quetzel feathers, and carrying obsidian knives to your nearest office of Homeland Security.
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3 January update: Swans looks to the new year also.
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