James Howard Kunstler on economic meltdown
If the financial system completes its self-destruction -- and that's looking more and more like a real possibility -- there will be several pretty awful consequences. One is that the United States will be forced to declare bankruptcy by repudiating its own debt. All those who took refuge in US Treasury bonds and bills will be like folks who sought shelter from a tornado in their out-house. That would go hand-in-hand with a massive currency inflation that is likely to follow the current phase of compressive liquidating deflation -- in which every possible asset is being sold off for less than its face value. That process is self-limiting due to the finite supply of real salable assets. The trillions of dollars injected into system while this is happening must eventually snap-back as people shed the last fungible article and compete for necessary commodities like food and fuel with dollars that are suddenly plentiful but worthless. At some point, the government may have to summon up a new currency. I don't think it will be anything like the "Amero" which the paranoid fringe incessantly mutters about as part of their fantasy in which the US, Mexico, and Canada all join up to become one country. But any "new dollar" would probably have to be backed by gold.Easthampton Burning?As we discover ourselves to be a much poorer nation, one of my correspondents put it: "the bogus risk-swapping economy must be replaced by a net value-added economy." That means actually making things, growing things, and rebuilding things, and that can only begin to happen if we do not stupidly sucker ourselves into a war with other nations who are liable to be extremely ticked off at us for destroying the global economy, but also competing with us for a dwindling supply of resources that are not equitably distributed around the world.
This means especially oil. I hope you're enjoying the temporarily cheap prices at the gas pumps, because this is purely a function of the compressive deleveraging that is going on right now, as contracts and positions held in energy markets are being dumped by everybody and his uncle to raise cash to meet margin calls. My guess is that oil and its byproducts will become much more difficult to get in the months ahead -- not just more expensive, but literally not available.
Previously on Boing Boing:
• World Made By Hand by James Howard Kunstler
• James Howard Kunstler's "Eyesore of the Month"
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How many false predictions does one man get to make before he loses his credibility? Kunstler's heart is in the right place. He would make a fine and humane novelist, warning us about the things that could threaten us. But I still get nervous when anybody brings up his name without mentioning his horribly, laughably overblown Y2K predictions. He's a decent critic, but he's a lousy prophet.
I think I need a unicorn chaser.
That bit about oil doesn't make a lick of sense. In a severe global depression, there would be much less demand for oil due to decreased manufacturing and decreased transport of manufactured goods. Weakening demand leads to weakening prices, no exceptions.
I've said it before and I'll say it again: Kunstler is fine if you're in a relentlessly apocalyptic frame of mind. But this guy has serious issues and everything he says should be taken with a pound or two of salt. I notice he didn't bounce his latest rubber ducky in this posting: tattoos. Yes, friends, tattoos are a sign of the end-times, according to Mr. Kunstler. Anonymous is correct, Kunstler hasn't been right often. The Sylvia Browne of apocalyptaholics.
I can't help but feel that a fair number of commentators are actually enjoying the bowlfuls of bowel-tightening terror they can now ladle out. I know I find myself avoiding more and more of my regular sources of comment as things get ever more depressing
Meh. Kunstler shouldn't be so smug, as a novelist, he may be one of the first on the bread lines. People on a tight budget go to the library!
Every time I hear about this crazy financial instruments, I think about Economics 2.0 from Stross' Accelerando. It's already coming, just in a different order than Stross anticipated!
No problem with self-reliance, it's an awfully good idea no matter the economic or political conditions. Still, before believing we're in for a worse economy to come, it's worth waiting to see how the markets actually respond to 4 Nov.
I find the juxtaposition of this story with the one following it (you can search flickr by *colors*!) quite humorous.
Doom!
#1: "He would make a fine and humane novelist"
I haven't read it, but Kunstler's "World Made by Hand" got very nice reviews.
While I'm firmly convinced we need to change the way things are done, I don't buy into the apocaphilia that Kunstler is selling.
Utopia-through-dieoff is an old, lazy meme in SF.
Kunstler is pure entertainment, that's all. I don't waste my time reading his stuff any more, it's just nonconstructive ranting.
John Michael Greer's writing is much more interesting and equally long-winded.
Commodifying risk is a perfectly useful form of economic activity. One well-known form is called "insurance", and there are many others.
While it is true that the paper tail has been wagging the real-economy dog in the past few years, Kunstler's rustic anti-intellectualism completely misses the huge role that moving bits of nominally-valued paper around can play in the business of manufacturing useful things and providing useful services.
There's something about crises that bring out the relentlessly linear thinkers, extrapolating momentary trends past all reasonable bounds. Kunstler would presumably insist that the only cure for oxygen poisoning is a vacuum chamber. Economics, like all the biological sciences, is full of extreme non-linearities, and that makes the future very hard to predict, except to say that linear predictions are almost always wrong.
Deep in his 'Eyesore of the Month' feature, a non-stop curmudgeon harangue, he refers to the Ontario College of Art and Design as 'avante garde faggotry.'
Real pretty. What a douche.
@#5: I'm with you.
I call the phenomenon "apocalypse chic", and it's become insufferably shrill and grating. A bunch of guys getting little rhetorical priapisms predicting gloom and doom at every turn... feh. Between the fearmongering, the sniggering schadenfreude and the smug prognostications, my "annoying bullshit" circuit breaker has started to trip ever more quickly when I hear someone starting up.
My feeling of late: If information or discussion can't help me to make things better for me and my community or is just a tiresome dissection of how awful things are or will be, I file it under "mental masturbation" and move on.
It's a question of style as much as anything else, really.
And that Kunstler... what a fun, fun guy!
The North American Union if done right could be a great thing, protectionism is bad for everybody. I really don't think my professors in business school five years ago were among the paranoid fringe. The EU didn't mean an and to the UK, Germany, or France did it?
One of the most interesting things to emerge from studying economics is that absolutely no one knows how it works.
I was just thinking this morning in the shower about Kunstler. Rather than praise him though, I thought the deflation of the oil bubble was putting him in a bad spot.
First Y2K, now Peak Oil, he's a serial wolf-crier.
He may be a smart guy, and affable enough, but he seems to feel a pull of unnecessary gloom. I don't think we should follow.
http://kunstlercast.com/forum/index.php?topic=237.0
it's funny how much support his anti-tattoo stance gets; I guess it's mostly his groupies there, but no one seems to take a non-judgemental position, or for that matter, very few don't sound like they're 3 steps away from "get those kids offa my lawn!"
Wow, it's almost like people feel that they deserve this sort of scaremongering. It's funny to see all the mention of "the next great depression" by people who don't even know why or how all of this financial turmoil occurred. It's got the tone of mental self-flagellation for past sins.
@18: He is definitely a Cassandra, but if you think the current market price of oil debunks the peak oil idea then you have misunderstood the topic.
@16: I agree about a North American Union, although there are some huge issues. First is that I don't think that the political climate is right for the construction of foundational documents. Not with the terrist fears and all. Anything written now would likely be a civil liberties tragedy.
Also I'm concerned that such a union would be in name only, as the US currently wields such an enormous amount of power relative to the other countries that would be involved that it would be more of an expansion of the US than a banding together of peers.
This is BS. Yeah sure, things will get rough. It is a tedious, cliche, and downright irritating American tradition for apocalyptic loudmouths to draw publicity to themselves with elaborate and sensationalistic predictions during political, economic, or social turbulence. Luckily, it's more the stuff of febrile sci fi than real life.
Enough with this crap. We need to calmly focus on level-headed solutions, not on wacky prophecies that may start fulfilling themselves out of panic and confusion. Don't we have enough with the McCain-Palin psychosis generator? US, Canada, and Mexico merging into one country? Dude, you really have to shove a power drill up your nose for that to make sense!
Oh noes! It's Teh Economapocalypse!!!
"One of the most interesting things to emerge from studying economics is that absolutely no one knows how it works."
That's academic economics. Everyone can understand real-world economics: you work for money and, if something costs more cash than you want to pay for it, you keep walking. But nobody is bamboozled by that, so the illusionists walk in with sophisticated three-card-montes that work until the rubes stop buying in.
Credit swaps were the 3cm this time, and a few people became *extremely* wealthy this year.
This is total crap, not the least because it completely ignores that while "Americans are growing and rebuilding things" the rest of the world would also be crashing and burning in this scenario.
Wishing for a cleansing apocalypse is extremely distasteful and willfully ignores human suffering.
Anonymous "But I still get nervous when anybody brings up his name without mentioning his horribly, laughably overblown Y2K predictions."
Hey, it could still happen. It's just been delayed. There's an apocalypse patch coming out soon.
raisedbywolves "Wishing for a cleansing apocalypse is extremely distasteful and willfully ignores human suffering."
Oddly, eschatologists of all stripes get offended when you tell them that, as though your not wanting the world to end is a bad thing. I can't imagine going through life hoping for it to end. That's just sad.
Strange, I seem to remember he was convinced anyone who thought the price of oil was going up due to "contracts and positions held in energy markets" was a fool or a knave. Now it's going down, suddenly it was a bubble all along.
Further, he has been promising oil being "literally not available" real soon now for as long as I've been aware of him. What is the mechanism of action meant to be here? The price fell because busted futures speculators had to sell, but then it will become LITERALLY IMPOSSIBLE to buy oil because the speculators have been cleaned out? What the fuck kind of sense is this meant to make?
Sure, it looks like Kunstler; but how could we tell if it was generated by a Kunstler-themed Markov chain?
Also, how the hell do you "inject trillions of dollars" into something through deflation? That's like injecting air into the carpet with a vacuum cleaner.
There is a principle called Ockham's razor which is attributed to the 14th-century English logician and Franciscan friar, William of Ockham. It basically states that – "All other things being equal, the simplest solution is the best."
The following are two simple ideas that effectively create the ideal social construct.
Simple Idea #1
1. Socialize ALL Land
2. Charge leases on ALL Land based on demand.
3. Return 100% of the resulting revenue to every man, woman and child in the form of a yearly dividend check.
4. Make the Universal Birthright of Land an Everlasting Standard in the education of every Child.
This effectively makes the average piece of Land Free for every Living Soul and restores our Natural Birthright as well as coupling our social construct to the Principles of Life.
Simple Idea #2
1. Remove ALL FORMS of taxation
2. Implement a Tax on ALL new goods based on the resources they contain and the resources they use in production and delivery (this can easily be implemented with the current barcode system used at the checkout)
3. Use this system to encourage/discourage various resource usages (High tax on non-renewable/ecosystem damaging products and low/no tax on renewable/ecosystem enhancing products) and to encourage purchasing of local products.
4. Use the resulting revenue to fund infrastructure expenses and the restoration of ecosystems..
This effectively encourages the creation/use of longer lasting, high quality products as well as encouraging recycling and reuse of existing products.
Idea #2 effectively constrains the ravaging appetite of the capitalistic consumer society within the Boundaries of Sustainability while Idea #1 effectively encloses both Sustainability and capitalism within the Principles of Life.
That's it!!! The path to True Democracy – True Equality – True Unity. Simple and Effective
It is all over b/c the rich and pretenmtious refuse to change their greedy ways. The stupid beer guzzling bush lovers don't have 10 brain cells among them. Even the "Liberal" enlightned granola crunchers that have moved to Vermont fighting wind towers cause it "might ruin their property values" don't get it! Americans are walking around in denial that suburbia will sustain itself. Even the new president (I wrote in Ron Paul) is focusing on "roads and bridges projects" WTF? He should be jumping on re-tooling all auto mfgrs, oil companies and filling stations to run our vehicles on clean burning AMERICAN produced natural gas. That would jump start the economy better than hiring flaggers on the highway! Talk politics and all everyone cares about is the Superbowl. Wake up you F*#@ing A@#&%les! You are ruining everything. Go back to basics, buy local and live simply, but comfortably. Stop spraying pesticides, buying your vinyl lawn furniture from China, killing every animal on the planet so you can live your lavish lifestyle! The best thing that could happen is everyone with a Lincoln Navagator, Hummer, Escalade all drive off a cliff like lemmings together. You DUMB S@&%s! You just don't get it do you! The party is OVER!
The preceding comment was typed on recycled tofu.