Kunstler: In the Murk.

Kunstler: In the Murk.

Puerto Rico, You lovely island,
Island of tropical breezes….
— West Side Story

Welcome to America’s first experiment in the World Made By Hand lifestyle. Where else is it going? Watch closely.

Ricardo Ramos, the director of the beleaguered, government-owned Puerto Rico Electric Power Authority, told CNN Thursday that the island’s power infrastructure had been basically “destroyed” and will take months to come back

“Basically destroyed.” That’s about as basic as it gets civilization-wise.

Residents, Mr. Ramos said, would need to change the way they cook and cool off. For entertainment, old-school would be the best approach, he said. “It’s a good time for dads to buy a ball and a glove and change the way you entertain your children.”

Meaning, I guess, no more playing Resident Evil 7: Biohazard on-screen because you’ll be living it — though one wonders where will the money come from to buy the ball and glove? Few Puerto Ricans will be going to work with the power off. And the island’s public finances were in disarray sufficient to drive it into federal court last May to set in motion a legal receivership that amounted to bankruptcy in all but name. The commonwealth, a US territory, was in default for $74 billion in bonded debt, plus another $49 billion in unfunded pension obligations.

So, Puerto Rico already faced a crisis pre-Hurricane Maria, with its dodgy electric grid and crumbling infrastructure: roads, bridges, water and sewage systems. Bankruptcy put it in a poor position to issue new bonds for public works which are generally paid for with public borrowing. Who, exactly, would buy the new bonds? I hear readers whispering, “the Federal Reserve.” Which is a pretty good clue to understanding the circle-jerk that American finance has become.

Some sort of bailout is unavoidable, though President Trump tweeted “No Bailout for Puerto Rico” after the May bankruptcy proceeding. Things have changed and the shelf-life of Trumpian tweets is famously brief. But the crisis may actually strain the ability of the federal government to pretend it can cover the cost of every calamity that strikes the nation — at least not without casting doubt on the soundness of the dollar. And not a few bonafide states are also whirling around the bankruptcy drain: Illinois, Connecticut, New Jersey, Kentucky.

Constitutionally states are not permitted to declare bankruptcy, though counties and municipalities can. Congress would have to change the law to allow it. But states can default on their bonds and other obligations. Surely there would be some kind of fiscal and political hell to pay if they go that route. Nobody really knows what might happen in a state as big and complex as Illinois, which has been paying its way for decades by borrowing from the future. Suddenly, the future is here and nobody has a plan for it.

The case for the federal government is not so different. It, too, only manages to pay its bondholders via bookkeeping hocuspocus, and its colossal unfunded obligations for social security and Medicare make Illinois’ predicament look like a skipped car payment.

In the meantime — and it looks like it’s going to be a long meantime — Puerto Rico is back in the 18th Century, minus the practical skills and simpler furnishings for living that way of life, and with a population many times beyond the carrying capacity of the island in that era. For instance, how many houses get their water from cisterns designed to catch rain runoff? How many communities across the island are walkable? (It looks like the gas stations will be down for quite a while.) I’ve been there and much of the island is as suburbanized as New Jersey — thanks to the desire to be up-to-date with the mainland, and the willingness of officials to make it look like that.

We’re only two days past the Hurricane Maria’s direct hit on Puerto Rico and there is no phone communication across the island, so we barely know what has happened. We’re weeks past Hurricanes Irma and Harvey, and news of the consequences from those two events has strangely fallen out of the news media. Where have the people gone who lost everything? The news blackout is as complete and strange as the darkness that has descended on Puerto Rico.

Kunstler: The Technicolor Swan and When the Deal Goes Down.

Kunstler is a registered Democrat but despises the modern party. Perhaps he could register as an independent.

Kunstler: The Technicolor Swan.

I registered as a Democrat in 1972 — largely because good ole Nixon was at the height of his power (just before his fall, of course), and because he was preceded as party leader by Barry Goldwater, who, at the time, was avatar for the John Birch Society and all its poisonous nonsense. The Democratic Party was still deeply imbued with the personality of Franklin Roosevelt, with a frosting of the recent memory of John F. Kennedy and his brother Bobby, tragic, heroic, and glamorous. I was old enough to remember the magic of JFK’s press conferences — a type of performance art that neither Bill Clinton or Barack Obama could match for wit and intelligence — and the charisma of authenticity that Bobby projected in the months before that little creep shot him in the kitchen of the Ambassador Hotel. Even the lugubrious Lyndon Johnson had the heroic quality of a Southerner stepping up to abolish the reign of Jim Crow.

Lately, people refer to this bygone era of the 1960s as “the American High” — and by that they are not talking about smoking dope (though it did go mainstream then), but rather the post World War Two economic high, when American business might truly ruled the planet. Perhaps the seeming strength of American political leaders back then was merely a reflection of the country’s economic power, which since has been squandered and purloined into a matrix of rackets loosely called financialization — a criminal magic act whereby wealth is generated without producing anything of value.

Morehere.





Kunstler: When the Deal Goes Down.

Who needs Russia when the Tweety-Bird-in-Chief is hacking his own presidency into a global joke? Or at least it might be a joke if the USA weren’t such a menace to international order, and to itself, by the way. Interestingly, the 25th amendment allows for the removal of a president from office on account of incompetence or disability, but not for being an embarrassment to the nation.

They may come after him anyway with the 25th, especially as the financial system unravels later this year, because this time, unlike 2008-9, central bank interventions will not avail to rescue the faltering money system from nine years of previous central bank interventions. All it takes is for the “liquidity” flows to seize up and before you know it, there’s no food in the supermarkets because everything in our just-in-time economy is exquisitely calibrated to the sure expectation of getting paid, and when that goes, it all goes.

More here.

Kunstler and Ilind

Kunstler: Forward Guidance Not one of Kunstler's best columns; a standard rant against the Fed, decadent American culture, etc. I think the Kardashians are his stand-in for reality TV in general, particularly the "celebreality" genre.

Ilind.net: Is "Degrowth" the Next Big Thing More interesting this week is Ian Lind's post about "degrowth", discussed thoroughly in OfTwoMinds.