Lahar Rules

June 27, 2005
     The east coast is a steambath, the Dow Jones is tanking, oil has crossed the $60 barrier, and Don Rumsfeld says the Iraq insurgency could run for twelve years.

     Taking these things in reverse order -- why twelve years? Why not forever? Actually, twelve years might as well be forever. What Rummy seems to be saying to the US public is: better be prepared to keep Fort Apache going indefinitely. The part he left out was. . . "if you want to keep making that eighty-mile round trip commute from Cherokee County to Peachtree Street."

     Even that simple equation assumes a lot. For instance, that Mr. Suburban Atlanta Commuter will still have that job in the office tower on Peachtree. Or that he can continue to make a monthly payment of $3200 on a 4000-square-foot house in Hickory Flat. Or that the Fox TV News fans will maintain their enthusiasm for a war of attrition lacking in cineplex quality battles, while their property taxes are being jacked out of sight to cover the rising cost of maintaining senior parking privileges in the centralized school districts.

     The public indeed may be losing its appetite for the Iraq project, but not for Nascar racing, fried chicken buckets, car trips to Six Flags, and round-the-clock air conditioning. What shock of recognition will flash across the TV screens when the connection is finally made that keeping all these things going is why we're in Iraq? War is the answer. Sooner or later even the folks making those jitney trips to East Hampton are going to get it.

     Oil's remorseless up-ratcheting past $60 is as much a symptom of a weak dollar as a strained global energy allocation system, and the dollar is weakening because the way of life it represents is becoming more and more unreal. The harsh truth is that we've reached the limit of our ability to expand our suburban sprawl economy and there is no alternative US economy in the background ready to take its place. The world can't fail to notice this weakness. The inability to generate even fake wealth, in the form of ever more WalMarts, will take its toll on the consensus that the American Dream has enduring value.

      The stock market contraction ought to reflect this reality -- apart from desperate attempts by US government proxies to levitate share prices -- and it is hard to imagine a rally in the face of $60 oil. I'm inclined to predict a gruesome journey down for the Dow Jones into the 4000 range by the end of the year. Until now the dollars created by the Federal Reserve's supernaturally loose credit policy have sought shelter in the "hard assets" of houses? A meltdown of the stock markets will translate into vanishing leverage in all other areas of finance, especially in real estate (as well as a swath of destruction through hedge funds, retirement accounts and, eventually, the entire creaking superstructure of the hallucinated mortgage industry). A few Americans are actually going to get the message that this is not a good time to buy an overpriced raised ranch house. A lot of real estate geniuses are going to witness their own ruin with wonder and nausea.

    The striking aspect in all this is that the US appears to be reaching a breaking point in the absence of any precipitating disaster. Apart from the daily meat-grinder in Iraq, the geo-political scene is temporarily placid. The potential for disaster is huge, of course. Five pounds of Semtex in a crucial spot could crater the global economy. Sooner or later something will blow. But the US slide is commencing without a big shove. Phase change is a curious condition. Things just slip. Lahar rules. 

Comments

[Loveandlight]

Weasledog:

This bubble has been expanding so much for such a long time, not to mention it's the biggest bubble in history, that I tend to think this one will be a big, loud {BLAMMOH!} pop.
----
JHK hits the nail right on the head when he says the economy isn't even producing very much of the illusory wealth it has been producing lo these past few years. At the store where I work, the corporation that bought us out from the independent owner a year and a half ago has been cutting the employees' hours to ribbons and eliminating many of the products we carry on our shelves. This certainly hasn't been good for me, as the city in which I live has a very tight job market right now, and employers around here have shown a distinct predisposition to not hire me even when the economy was good. Oh yeah, and I should also mention that I live in a remote section of a fairly large Midwestern metropolitan area and I don't drive or own a car.

So yeah, from where I'm sitting, it really seems as if the economy is totally cannibalizing itself at this point, and all the "normal" children of society are in deep, absolute, total denial about this painfully obvious fact. It reminds me of the Shel Silverstien poem "The Hungry Mungry", where the subject of the poem, after eating everything in the world, the actual planet, the solar system, and then the entire universe, then proceeds to eat itself, after which there is nothing left of the Hungry Mungry except a snapping set jaws craving more.

Someone here mentioned *Schadenfreude*. I suppose that's not a very becoming quality, but it's understandable one in light of the fact that this society is run and kept propped up by people who can only be called assholes.

[Loveandlight]

Oh, BTW, I thought this might amuse y'all. I discovered a Jack Chick Tract for Peak Oil, or at it least it could be about Peak Oil with a little tweaking (and Chick does often tweak his little fundie Xtian hate-comics to make them more up-to-date with current events and issues).

http://www.chick.com/reading/tracts/0050/0050_01.asp

BTW, this blog-template sucks for not allowing HTML!

[ross]

Yes, apparently some executive branch officials have been having pow wows with the "insurgents." Most of us assume that the 'ministration, as our fear inducing leader refers to his Presidency, is in the mood for a speedy and face saving withdrawal from ye old quagmire.

And yet, at the same such news is breaking across the wires, ole Rummy opines that we could still be spilling blood ( ours and theirs) in the desert come 2017. My my what a seeming paradox. Could be, except I see no contradiction between Rummy and the news if we are telling Iranian insurgents to back off or else we are going to take the war into Iran. I know, that seems perfectly mad, but then we live in mad times, with mad leaders bahaving quite madly. Tommorow evening's Presidential speech from non other than Ft. Bragg (gee, why Ft. Bragg?) should be illuminating, or so one hopes.

As for Dow 4000 this year, I'd like to go on record as saying that a 60% haircut in less than half a year while possible is very unlikely. I think if the next leg of the secular bear market in stocks, (you know the one that began in 2000, and has been in a countertrend cyclical bull since early'03) has started up again we could see that 60% off sale in the senior averages sometime next year. In any case, don't start loading up on Fidelity sector funds.

[Weaseldog]

We've been cutting deals with both the drug lords and Taliban for a couple of years in Afghanistan. Otherwise that Unocal pipeline wouldn't be getting built.

So I guess if we can negotiate with terrorists in Afghanistan, we can do so in Iraq.

It's weird to see the Bush administration shout that only democrats and cowards use diplomacy, then sit down at the table with terrorists and discuss deals.

And is it any wonder Congress is now freaking out over the possibility that China may soon own that pipeline as a State Asset? If they do buy Unocal, Washington would be hard pressed to tell the Chinese they can't move troops into Afghanistan to protect their assets. After that, what would US troops be there for? To guard the poppy fields and keep the record level heroin shipments moving?

[Jay]

Is Ft Bragg short for braggadocio?

[tee]

"What we need is to go back in time and get the railways rebuilt ..."

I came across an interesting factoid today: In 1915 Iowa had 11,000 miles of railway. Today it's 4,000. At least, most of the right-of-way has been preserved as nature trails. When I was a kid my small town in SE Iowa had three lines--two east-west and a third feeder line to a Mississippi port city. Now there's just one E-W line. I haven't seen a train stop here in years.

I think rebuilding the rails would be a major undertaking and I wonder if we'll have the resources or capital to do it.

[ross]

I've often thought that when the next Depression hits (and I feel sure it won't be like any economic slide this nation has experienced before), that if we are to have a great public works project, it will involve creating a truly dynamic country wide rail system. I just saw where the Japanese have a new 360 kph train, and
in Shanghai they have the Maglev train which can attain speeds in excess of 300 mph. I've been on France's TGV, and that is, well, magnifique. This country should have Maglev up and down both coasts, and one operating out of Chicago. Dream on
little choo choo.

[a-train]

they say that the snake that bites you is rarely the one that you see.

[Trefayne]

Thanks for your comments, KD and Andy R.

I'd just like to clarify something for Andy. Even if we didn't have as many immigrants coming into the U.S. there could still be trouble. I'm concerned that the Former Middle Classes will still look for scapegoats. I don't really think that the Minutemen types will say, "Now that we got rid of the Mexicans, we're doing a-okay." They'll just start blaming someone else for why things haven't gotten back to an oil-soaked "normal".

So how do we head off scapegoating before it consumes the nation? (Not that I'm demanding you answer this, Andy, but I think it's something we all need to think about.)

Meanwhile, there's an interesting Tomgram up today. It's about Saudi Arabian oil extraction reaching its limits: http://www.tomdispatch.com/index.mhtml?pid=3832 The featured article is Michael T. Klare's review (?) of Matthew Simmons' new book.

"Listen, kid, we're all in it together."

[BD]

U.S. military dead in Iraq, including suicides: 1,717

U.S. military amputeed, wounded, injured, mentally ill, all now out of Iraq: 41,100

Iraqi civilians dead: 111,700

[Andy R]

Thanks Trefayne,
"So how do we head off scapegoating before it consumes the nation?"

We redirect it to its proper target - those in power. Call me a romantic, but I think the American spirit is underestimated (I hope it is). If it's not, then I blame 70 years of entitlement mentality brought on by the welfare state (you;ve all heard this frm me I know)
Anyway, if we can resdiscover that truly American spirit of self-reliance among communities, (not isolationist survival nuts) then perhaps the energy spent "scapegoating" will be put to good use deconstructing the leviathan state that has consumed so much of the 20th century on America.
It's the only way to regain the flexibility necessary to discover solutions for future societies based on the new energy reality, whatever that might be.

[ross]

I read the article suggested by Trefayne, and was reminded that the moment a consensus
is reached that Peak Oil is occurring within oh, say, a generation, let alone sooner, say in three to five years, Peak Oil will by necessity come much sooner, as nations with the wherewithal to do so begin to hoard supply like there is literally no tomorrow. We are seeing that now as China is feverishly pulling out all the stops to secure access to petroleum, what with their various contract and leasing agreements in Canada and elsewhere. Now they are bidding to buy Unocal, and who knows what else in the not too distant future. As for The U.S., well we have our Army on the ground in the ME. and our Naval armada bobbing about in every major port from the Medditeranean to the Indian Ocean. And of course we are menacing Iran.

The Unocal deal is, in my view, a watershed event. It is a marker of the Chinese government's intent to invest their dollars into other areas than our bloated government debt. Yes, the bid is about oil, but it's really about the Chinese getting something of genuine value. They want equity now. It is a very bold move from them, for all intents and purposed is a hostile takeover if you will, and how the U.S. negotiates this gambit will decide a great deal. There is a lot of room for us to &&$!! up here and really suffer the consequences. International Chess anyone!

[kd]

Personally, I agree with Andy (& I daresay Jim K. would too) that the American spirit--I mean as expressed by Jefferson, Franklin, Emerson, Whitman, Twain, etc--is underestimated. As for its submergence, I too blame decades of entitlement mentality--but perhaps not in the same way as Andy does. I blame the entitlement mentality that has ruled the outlook of what we call the "private sector", or big business, for the past almost 100 years. The leviathan state has, in the final analysis, acted more in the service of business interests than in real human development--roads, public schools, parks, etc notwithstanding.

Perhaps too, in some way, our very "success" has been our undoing.

[Dave]

The addiction model is the most penetrating in understanding our present state. The model also explains how we need deal with the present challenges. The twelve steps writ large can be a model of societal preparation and personality transformation and help us tremendously in preparing ourselves for future.

[john]

Predicting market conditions--a bad thing. The typical doom prognositcations spark and flame, but asking the market to join in the evidence? Uh-uh. Can we please note to check back here about Christmastime--that would be when you're slandering malls, gew-gaws, holiday blockbusters, and heating oil--for that 4000 prediction. and, you know, there is a way to lay cold hard cash moollah regarding these views. May we track an investment of yours? Not to be disagreeable, but tapping on the shoulder of Mr. Market to cooperate with you...wrong move.

[john]

Predicting market conditions--a bad thing. The typical doom prognositcations spark and flame, but asking the market to join in the evidence? Uh-uh. Can we please note to check back here about Christmastime--that would be when you're slandering malls, gew-gaws, holiday blockbusters, and heating oil--for that 4000 prediction. and, you know, there is a way to lay cold hard cash moollah regarding these views. May we track an investment of yours? Not to be disagreeable, but tapping on the shoulder of Mr. Market to cooperate with you...wrong move.

[Phoenician in a time of Romans]

Personally, I agree with Andy (& I daresay Jim K. would too) that the American spirit--I mean as expressed by Jefferson, Franklin, Emerson, Whitman, Twain, etc--is underestimated.

Jefferson is dead.
Franklin is dead.
Emerson is dead.
Whitman is dead.
Twain is dead.

And the average American these days doesn't read more than one novel a year for pleasure and gets in the car to go 50 feet.

[Zaine Ridling]

Bush Co. set the Americans up and the whole country is about to go down hard. At least for the rest of my miserable life I'll be able to rub it in my brother's face that the SOB voted republican and consequently destroyed 230 years of hard work. All for Halliburton.

[dangerbird]

It's all about you Zaine.

[Harry Cheddar]

Change is undoubtedly coming. It usually does. But I think the complete social meltdown fantasies inform us more about the people writing here than they do the future. Don't be disappointed if you're not baking Soylent Green cookies next christmas.

[One Eye Open]

kd,

You state:
" The leviathan state has, in the final analysis, acted more in the service of business interests than in real human development--roads, public schools, parks, etc notwithstanding."

Unless you expect eveyone to be employed by the government then the government has to work with "business interests" so business can thrive and employ people.

I love it how people refer to business as if it is this mechanized entity. Businesses are nothing more than organized collections of people working towards common goals.

Now if the goal is to grow and distribute heroin that particular business is bad and should be put out of "business" but government working with "business interests" per se is not automatically a bad or undesirable thing.

[Weaseldog]

Critic of Energy Agency Estimates

http://www.energybulletin.net/2544.html

[a_retrogrouch]

The American Spirit, whatever that is, and like its rhetorical siblings "American Freedom" and "American Dream," has been transmogrified into a glorification of fossil-fueled toys and consumption, particularly involving food, alcohol, and, well, anything cheap, flashy, and ubiquituous. Anyone with even a slight sense of restraint and frugality knows this, and many of us are even pained by it. I'm not particularly religious, but it's clearly wrong, and there's an increasing sense among many of us that somewhere, somehow, we're going to pay for it sooner or later. American exceptionalism is not a law of nature, but a overwrought sense of entitlement practiced most keenly by those who accept their entitlements willingly while criticizing others who take theirs, usually to avoid starving to death or living in their cars out in the woods.

What do heroin or worse, crack addicts do when the price goes up? They steal more...

[Weaseldog]

Harry and others, you folks make assumptions that say a lot about you.

When you assume that all of us are happy that we've learned some unpleasant things, it clear tells me that you get a thrill when you do so, so you assume we do to. For what other reason would you keep saying such things?

For instance if you step in dog doodoo, I can tell from your statement that you get gleeful. When your toilet overflows and you tell others in household about it, it's because you're glad it overflowed.

For myself, I think it sucks the way things are going. Please don't assume everyone is cheered by bad news the way you are. you might get a kick out of bad news Harry, but I don't.

And yes, I understand that the market is a Almighty God to some people. When they die, they expect to go accounting heaven and work on spreadsheets 24 hours a day. But I see it as only loosely related to reality. The market is lousy at dealing with shortages. unexpected events, and is horrible at predicting events. It seems like a god should be able to do better.

As for me, I could care less what the invented CPI and inflation numbers are. They don't involve things I deal with on a daily basis, like food, shelter and clothing.

[kd]

One Eye,

Your knee-jerk response about "government" vs "business" shows a continued surface reading of these posts.

There has been an ongoing merger of corporate & state interests over the past years. This is undeniable. The recent court decision concerning individual home owners & "developers" is indicative.

Even the oft-quoted Calvin Coolidge also said that accumulation of wealth cannot be justified as the chief end of existence.
"The chief ideal of the American people is idealism."

*

Phoenician,

I work in a bookstore & can say from experience the Americans are voracious readers. The quality of what we read may not always be sterling, but we turn to books for solace, advice, instruction, diversion, inspiration, confirmation & information.
We do the same with the web.

The folks I listed as being representative of the American spirit may be dead, but Wendell Berry, Robert Coles, Rebecca Solnit & Bill Moyers are alive. Just to name a few.

Why so cynical? Many of the folks who post here (including Jim) may be pessimistic (in the vein of, let's say, Ambrose Bierce), but they are not "snarky" or finally cynical.

Read JK's Clusterfuck Manifesto, read his books. As sharp as it is, his is not the voice of a cynic.