The Storm Perfected

November 27, 2006
       Last week, I had one of those clarifying moments when the enormity of the American fiasco stirred my livers and lights again. I was riding in a car at sundown between St. Cloud and Minneapolis on I-94 through a fifty-mile-plus corridor of bargain shopping infrastructure on each side of the highway. The largest automobile dealerships I have ever seen lay across the edge of the prairie like so many UFO landing strips, with eerie forests of sodium-vapor lamps shining down on the inventory. The brightly colored signs of the national chain fried food parlors vied for supremacy of the horizon with the big box logos. The opposite lane was a blinding river of light as the cars plied north from the Twin Cities to these distant suburbs in the pre-Thanksgiving rush hour.

     All that tragic stuff deployed out on the prairie was but the visible part of the storm now being perfected for us. On the radio, Iraq was coming completely apart and with it the illusion of America being able to control a larger set of global events -- with dire implications for all the glowing plastic crap along the interstates, and the real-live people behind the headlights in those rivers of cars.

     The main fresh impression I had amidst all this is how over it is. The glowing smear of auto-oriented commerce along I-94 (visible from space, no doubt) had the look of being finished twenty minutes ago. Beyond the glowing logos lay the brand new residential subdivisions full of houses that now may never be sold, put up by a home-building industry in such awful trouble that it may soon cease to exist. If suburbia was the Great Work of the American ethos, then our work is done. We perfected it, we completed it, and, like a brand new car five minutes after delivery, it has already lost much of its value.

     The chief failure in American politics lately has been the inability to appreciate the relationship between how we live here and how other people in other lands support us with their resources -- oil from the Middle East, human labor and money saved from the fruits of human labor from the Far East. The oil obviously runs all the cars and the money from China and Japan supports our debt (and incidentally pays for building ever more big box stores and fried food emporia). The Middle East is now so close to exploding that we may not get so much oil from them in the years ahead. China and Japan have stepped back from buying American debt in the form of US Treasury certificates.

      Even if there were no exogenous forces operating, the proverbial Man-From-Mars casual observer would have to conclude that America has built all the shopping venues it will ever need (and far beyond), and certainly more single-family housing subdivisions useful only in a happy motoring meta-system. But the exogenous events are out there and they are going to assert their power to make us uncomfortable and to alienate us from the very stuff that we have poured all of our wealth and spirit into.

     The New York Times headlined yesterday that the US government might try to start negotiations with Iran and Syria over the fate of Iraq -- an idea so preposterous that it might have been a wire-story from The Onion. Iran and Syria have no interest in the matter whatsoever except in the failure of America to control events, and the humiliation entailed by that failure, which is happening on its own. So the story is a clear signal of our desperation that we are even pretending to make overtures.

     For the US military this is a tragedy of classical Greek dimensions, a playing out of implacable forces despite its heroism or even good intentions. But for the American public, back home, enjoying the bright lights of the WalMarts and the steaming heaps of baby back ribs, and the comfort of the ride home with the latte plugged into the cup holder and Jay-Z's inspirational thoughts playing on the car stereo -- it's really the end of the road.

     I've been saying for a long time that as our illusions dropped away, the US economy would fall on its face. I think the process is underway, especially with last week's movement of the dollar against the Euro. All the elements are now set for a full-throttle depression in which currency loses value while credit dries up and incomes are lost. You get a fire-sale of assets that behaves like a deflation while the dollar itself inflates. The Federal reserve can't possibly drop interest rates if foreigners will not buy our bonds.

      Losing your house to the re-po man is a major illusion-breaker. The housing bubble has popped and entered a downward self-reinforcing feedback loop that will be understood as a death-spiral of valuation. Even if nominal house prices stayed close to where they are, dollar inflation would signify a real drop in value. The jobs associated with the bubble -- everything from the legions of house-framers to the realtors to the creative mortgage hawkers to the Crate-and-Barrel furniture elves -- will drop into a black hole. Mortgage obligations will not be met, credit card payments will stop, house refinancings will no longer be possible as equity dissolves, the WalMart associates will get their pink slips, the vacancy signs will go up in the strip malls, and a mighty sob will be heard above the prairie wind.

     This is really a tight spot. Wider war in the Middle East is hardly out of the question, with Iran and a broad array of jihadistas emboldened by America's flounderings in Iraq. A year from now, perhaps, or less, we will lose our access to a substantial portion of the imported oil that we run all our stuff on. The sodium vapor lamps will flicker out. The last taco will be served. The US public will have to start paying attention and making other arrangements. I believe what Garrison Keilor says about the people in Minnesota. Scratch below the surface, you'll find a thoughtful, practical mentality. I believe that when they can't do anymore of what they're doing now, they'll turn around and do something else.

Comments

[dangerbird]

You're a regular drama queen Jim. I hope you don't break out into a case of the vapors.

[c roast]

"This is really a tight spot."

Whew...and I thought that you were talking about doomsday or something.

[kuros]

Two things are infinite: the universe and human stupidity; and I'm not sure about the universe.

– Albert Einstein

[ross]

Apropos of JHK's comment of "how over it is."

http://www.atimes.com/atimes/Central_Asia/HK23Ag01.html

[Dave]

I recently flew from Hartford, CT to Greenville, SC. Traveled along the coast for most of the way.

From what I could see from out of the plane's window, the entire coastal plain, from Providence to DC, has been destroyed, literally. Might as well had bombs dropped on it.

Dave

[brian]

Look up the writings of Joseph Stroupe,who has just written a most important book called .."Russian Rubicon"
He writes much about the international oil and natural gas markets.
He says that the Russians..No.I in Natural Gas,and No 2 in oil...are about to challenge the USA and the Dollar,by establishing a Russian oil exchange ,operating in Rubles.
The little Gulf State of Qatar(a major natural gas producer),is about to do the same using Euros.

This will bring great pressure on the US dollar,and Putin believes this will bring the US down by a large way. He thinks the US is much troubled,and now is the time to go in for the economic final punch.
The Europeans who are hooked on Russian fuel will have to follow ,or like Ukraine last winter,they will know what it is to be cold. No allies for old Uncle Sam in Europe...a Europe that needs fuel,of which the US has little'
The opening of the oil exchange is what he calls "the Rubicon" ..a phrase to signify the crossing of a great line..a barrier...which will leave the US floundering.

[asoka]

Well, which is it? Have the jihadists already won and we just haven't realized it yet? Or, will the Wal-Marts and suburbs survive another 150 years? (which is a wink of an eye in geologic time)

Very poetic prose, Jim. I enjoyed it... even if the time frames are still a mystery.

[A Tykhyy]

Dave, please be more explicit. What did you see?

[Patrizia Broghammer]

Europe has not a better future than USA.
Europe doesn't even exist.
It is a mixture of French, Italian, Germans, English...
Everyone with its own language, economy and mentality.
The Euro is strong just because the Dollar is weak.

Since long I have hoped we could reach the bottom.
Reaching the bottom, I thought, would be the way toward a new start.
But id looks like I was wrong.
We have yes, reached the bottom, but we are digging trying to come out on the other side...

Nobody sees, because nobody wants to see.
And the one who says the truth is "Just one more pessimistic Cassandra..."

Patrizia

[kd]

"The chief failure in American politics lately has been the inability to appreciate the relationship between how we live here and how other people in other lands support us with their resources..."

A central point in a strong post, Jim. Thanks.

But for the Dangerbird's of this country, this isn't very important. For them the chief failure in American politics has been the inability to appreciate the terrible threat to us posed by Islamofascists, Democrats, the gay "agenda", the liberal media, & atheism.

[Mike]

Meanwhile, every nation in Latin America continues on a hard-leftward course. The bigger question is why Eastern Europe and Southern Asia aren't following.

Meanwhile, Georgie tours through Europe's "lesser" NATO allies, such as military horses Latvia and Estonia, practically begging them to revamp their military budgets, i.e., buy US defense industry goods. (I have a post up on these twin issues today; click my name to be instantly transported!)

What a farce, and what willful acts of blindness on the Administration's part. For a leadership that claims to be so obsessively concerned with pro-American governments, for reasons both cynical and otherwise, it's hard to understand what the hell they're thinking.

If they're thinking at all.

[Dave]

I saw an essentially paved over, built over, destroyed landscape. One that cannot support life without an umbilical cord to a life support system located somewhere in the mid-west.

This "dead zone" seems to extend about 50 miles inland from maybe Boston to DC.

Dave

[bud4wiser]

Move along, move along folks - nothin' to see here, just some nutty bull frog croakin' out crazy talk.

Last night I dreamed my car broke down and the tow truck driver was GW Bush and when we got to the garage the mechanic was Dick Cheney.

The last thing I remember I was running away on a dark road with people in robes chasing me.

I've got to quit reading Clusterfuck Nation before bedtime....

[kd]

http://www.truthout.org/docs_2006/112306G.shtml

http://www.dissidentvoice.org/Nov06/Petras24.htm

[what a riot]

and here I was, hoping we could go another week without Mike spamming us about his painfully boring and vapid blog. I guess that is an honor we only get during the week of 9/11. Mike, since you're clearly far too dense to pick up on this, I'll spell it out for you: if anyone here gave two shits about your blog or your worthless opinions, we would have become regular readers of it after one of the literally dozens of times you spammed us about it before.

[Mike]

I'm glad to give you something to rant about, Stephen.

Have a nice day.

[David Mathews]

I agree with James Howard Kuntsler: We are very close to the end. The American Way of Life is dying, thank God!

Technological civilization is nearing its end, but there's plenty of time left for humans to complete destroying the Earth for fun & profit.

Humankind's extinction event is approaching quickly, too, but that will only occur after humans have finished this work of trashing the only living planet in the Universe.

The future is bleak for America, technology and Homo sapiens. But the sun will keep on shining, the Earth will keep on spinning, and the Universe will keep on expanding -- with or without us.

[Weaseldog]

From your DissidentVoice link KD.

"Citicorp, the largest banking enterprise in the world announced a massive overseas expansion program to increase profits by 75%."

The world has seen a slowing of energy growth since the 1990s and a likely a standstill since 2005.

The energy dip in the period of 2002-2003, made the growth since, look anemic, especially if you use current growth to backfill losses. From that perspective we've seen no meaningful energy growth since 2000.

Energy powers two aspects of our industrial society. It powers production and it powers consumption.

Production and consumption are in an uneasy balance maintained by a network propagated and fabricated, upon the notion of just in time inventories.

So our production is at the ceiling allowed by energy production. If energy production has been flat, then there's been no growth in goods and services since 2000.

So how does CitiCorp intend to see a 75% growth in profits in a zero sum economy?

How foes anyone expect to see growth?

As I see it, only two things can allow growth when the physical economy is stagnant.

1. The money supply can grow. So profits are inflationary. This works great for financial institutions that trade debts. They are only secondarily related to the physical economy, so that physical prodution cost increases are only a few percentage points on their bottom line. CitiCorp could grow to control assets worth millions of planet Earths and continue to see profits, because they trade in promises to pay. Both Clinton and Bush have worked to expand the money supply so that there are enough dollars to buy the planet Earth more than eight times over. That means that the entire planet would have to be sold more than eight times to recover what is owed. This probably amounts to decades of debt for industry to pay off. Everyday, time is tacked on. We borrow faster than we earn. We can never catch up. The gap will widen until something breaks. Right now, each American owes enough debt created by Congress, to buy almost four modest homes in an average market. In a couple of years, it'll probably be up to five or six.

2. Predation. Corporations must destroy or swallow competitors. This leads to only one outcome when chased to its conclusion. That's one single corporation that owns the planet and creates its own currency. A corporation that essentially is a world government. A giant ameoba.

Of course in a world of declining energy, the complexity of such a gigantic corporation is simply impossible to maintain. The competitive nature of our markets will insure that the downward struggle is violent and destructive.

When CitiCorp makes announcements that real growth is impossible and that they've decided to work instead to make the downturn a better event, I'll believe that the people of the world will work together to make the decline as painfree as possible.

Those that want to see energy consumption scaled down are at odds with CitiCorp and all the other corporate giants that must grow or die. A rational downturn will mean their death. They will dissolve and breakup into smaller entities, due to market forces driven by energy availabilty, but not without leaving a path of destruction in their wake.

[Weaseldog]

I like Mike's Blog. I visit it often.

[montysano]

"If suburbia was the Great Work of the American ethos, then our work is done. We perfected it, we completed it, and, like a brand new car five minutes after delivery, it has already lost much of its value."

JHK doing what he does best. I also liked his closing comment. We may indeed have the time, and even the will, to turn this thing around. The real question is: will we still have the financial wherewithal to pull it off?

Re his comment about negotiations with Iran. I wrote a letter to the editor of our local paper about six months ago, in which I speculated that we would indeed have to sit down with Iran, in a position of weakness, and that we would indeed "give". This resulted in an eruption of rage from rightwing letter-writers, to whom I was just a dirty hippie surrender monkey. But it is this inability to deal in Realpolitik that will be our undoing in the Middle East.

In Glenn Greenwald's excellent post on Sunday, he quotes from a column by Michael Rubin, one among a small group of neoconservatives who are making a Custer-like last stand in defense of their ideas. Rubin is miffed that neocons have not been asked to contribute to the Iraq Study Group, which begs the reply: "duh!" When one has made an incredible mess of things, one is often not asked to help clean it up.

The neocons had an idea that was full of "if only", simply requiring "the will" to succeed. The alternative, that the USA no longer possessed the clout to pacify the Middle East, was, in Dubya's words, "unacceptable thinking", which flies in the face of the fact that, in matters of great importance, there is no such thing as unacceptable thinking. This state of denial, this vain search for a pony where a pony will never be found, is truly one of the tragic themes of our time, whether you're talking about our energy situation, our finances, or our foreign policy.

I've often said that, in 2003, Bush had said: "We have to have oil. It's so important that an unsettled Middle East is not acceptable, so we're going in", I could have respected that. I might disagree, but I could respect the truth of it.

Sadly, we struggle forward on all fronts, deep in denial and blinded by illusion, clapping frantically to keep Tinkerbell alive.

[Mike]

Thanks, Weas.

By the way, you see that a bunch of major league financial players like Goldman, Citicorp, etc. are gonna float $18 *Billion* to Ford? Strange thing, it's a "senior secured" line of credit, meaning they'll be at the front of the line if Ford goes belly up.

Looks like Hyenas smelling the carrion, to me. The last huge float to Ford was unsecured, as you'd expect in the quid pro quo world of big biz. But this one? Hmmmm.

Weas, Jerry, Ross, Dumas, anyone else? Your thoughts?

[Weaseldog]

Yeah Mike, that's a good example of predation in the market place.

The executives will get golden parachutes to by a string of French Chalets with and the workers will get screwed. Pensions will be wiped out. Retirement funds dissolved. Stock values trashed.

How many people have Ford stock in the their Mutual Funds, IRAs or 401ks?

[just a thought]

I hope Jim is right that the Minnesotans (and the rest of us?) will be able to handle what's on the other side.

I am reading "Little House in the Big Woods" with my daughter. It is very strange to read this children's book -- fiction but based on the author's life -- with a peak oil perspective. In the first chapter, which starts in 1870s Wisconsin, are dozens of examples of the self-sufficiency of Laura and her family ... Less than 150 years later, it's unlikely that one percent of the U.S. population could garden, hunt and do all the other things they did as routine ... It's amazing how fast such knowledge gets lost. Also, it was sobering to see that Laura and her family had abundant resources around them: thick forests, lakes so abundant with fish that Pa was able to catch a wagonload of fish with a net...
We are in for a rude awakening on the other side of the energy curve... as we face acres of strip malls that will need reclaiming and oceans that will be fished out by 2050.

I also recently watched the documentary "Paper Clips," about a middle school in rural Tennessee and the monument they built to the Holocaust. I recommend that Jim see this. It might temper his anti-Southern bias. But it, too, was weird to watch from a peakist perspective.... From the middle school principal saying their area was "poor" (followed by a shot of a gleaming school bus pulling up to pick up a well-fed and well-clothed student) to the energy expended to assemble the Holocaust memorial (it's unlikely people will have such time and resources on hand to do what those folks did a few years from now)... Cheap energy has made so much possible, yet most have little understanding of its value.

[Peter]

NBC decides to call the violence in Iraq a “civil war”

Doh!

http://www.crooksandliars.com/2006/11/27/nbc-decides-to-call-the-violence-in-iraq-a-civil-war/

[What a Riot]

Mike: Since you seem to reply to comments here, why don't you answer a few questions for me? I'm probably not the only person who wants these questions answered.

1) Why do you delete comments from your blog when you don't like them or disagree with them?

2) Do you think your pursuit of censorship is one of the reasons your blog has done so poorly in terms of gaining/retaining regular readers and commentators?

3) I am by no means the first or last person to be irritated by your constant spamming/advertising/self-promotion on this blog. Why do you keep doing it? Has anyone ever profusely thanked you for spamming this forum? Do you feel you're somehow justified in spite of the overwhelming public opinion to the contrary, making you the George W. Bush of the rarely-read-blog world?