Not So Wonderful

December 18, 2006
      It's a Wonderful Life, Frank Capra's 1946 Christmas card to America, is full of strange and bitter lessons about who we were and who we have become. It also illustrates the perversity of history -- the fact that things sometimes end up the opposite of the way we expect.

     The movie concerns the life and career of one George Bailey (Jimmy Stewart) and his neighbors in the prototypical main street town of Bedford Falls. The story's arc runs roughly from about 1910 to the 1946 "present." By the 1920s, young George yearns to break free of the "crummy little town" (as he calls it), but circumstances keep him bound to it through the years, and to the family business, a little local "building and loan" bank of the kind that also used to be called "thrifts" and later "savings and loans," now extinct institutions.

      Bailey Building and Loan gets whipsawed by the boom of the 1920s and then the Great Depression. World War Two comes and goes. Over the decades, George is bedeviled by the town villain, scheming rival banker Mr. (no first name) Potter (Lionel Barrymore), who is always trying to shut down or take over Bailey Building and Loan.

     Eventually, Mr. Potter gets the better of George, who attempts suicide, but is saved by an avuncular guardian angel named Clarence, who shows George how much worse off his town (and, by extension, the world) would be if George had never been born. The rest is George coming to his senses on Christmas Eve, amid caroling and bell ringing, realizing how wonderful all the vicissitudes of small town life, and family, and banking really have been.

     It's a splendid, heartwarming movie in many ways (and I am not being facetious). It was released a year after the awful ordeal of World War Two ended -- which itself had followed the decade-long tribulation of the Great Depression. America was weary but victorious. Democracy and decency had triumphed over manifest evil -- but the memory of all that hardship lingered on. In 1946, we were a chastened, earnest, prudent, generous, and quietly confident nation of heroes who had managed to lick hard times and Hitler.The Jimmy Stewart portrayal of George Bailey was supposed to embody all the home front virtues in our national character that made victory possible.

     Here's the weird part though. The main business of Bailey Building and Loan was financing the first new suburban subdivisions of the automobile age. In one of the movie's major set pieces, George Bailey opens Bailey Park, a tract of car-dependent cookie-cutter bungalows, and turns over the keys to the first house to the Italian immigrant Martini family. Had the story continued beyond 1946 into, say, the 1980s, (with George Bailey now a doddering Florida golfer), we would have seen the American landscape ravaged by suburban development, and the main street towns like Bedford Falls gutted and left for dead. That was the perverse outcome of George Bailey's good intentions. We also would have witnessed the Savings and Loan Crisis of the late 1980s, when changes in federal regulation opened the door to an orgy of looting and grift (acted out largely in suburban development scams) so extravagant that a quarter-trillion dollar federal bail-out was eventually required to cauterize the economic infection.

     At a crucial point in the story, Clarence the guardian angel takes George Bailey on a tour of Bedford Falls as-if-George-had-never-been-born. Only the town is named Pottersville now. Main Street is lined with gin mills, strip clubs, and dance halls instead of wholesome banks, groceries, and pharmacies. (Oddly, casinos are absent, because in 1946 we lacked the vision to see how truly demoralized our nation could get.) Prostitutes ply the busy sidewalks. Now the weirdest thing is that Pottersville is depicted as a busy, bustling, lively place -- the exact opposite of what main streets all over America really became, thanks to George Bailey's efforts -- a wilderness of surface parking, from sea to shining sea, with WalMart waiting on the edge of every town like Moloch poised to inhale the last remaining vapors of America's morale. Frank Capra could imagine vibrant small towns turning their vibrancy in the direction of vice -- but he couldn't imagine them forsaken and abandoned, with the shop fronts boarded up and the sidewalks empty, which was the true tragic destiny of all the Bedford Falls in our nation.

     Most ironically, today America's favorite main street town, Las Vegas, is Pottersville writ large, and most Americans see absolutely nothing wrong with it. How wonderful is that?

Comments

[Patrizia Broghammer]

"we were a chastened, earnest, prudent, generous, and quietly confident nation of heroes who had managed to lick hard times and Hitler.The Jimmy Stewart portrayal of George Bailey was supposed to embody all the home front virtues in our national character that made victory possible."

I think that the misunderstanding is in that "we were..."
Mr. JK. you were not, you just looked like, and behaved liked and wore the mask of...

In reality man was, is and will be always the same.
What changes is the mask he wears and the one he shows.
And how good he is in making the others believe he is the way he is not.

[Laura Louzader]

Jim, it's really not as bad out here as you think. Honestly, most of the common folk out here don't think of Las Vegas as being any kind of model for their towns and cities, and they have only grudgingly accepted the local casinos in their own burgs because their deluded, desperate leaders have convinced them that these floating garbage dumps are their burgs' only hope of economic salvation.

Well, the casinos have by and large not brought the promised revitalization to these towns and cities, and at last even the municipal leaders are noticing that the money never leaves the boat. It was expected that the casino traffic would spill over into the surrounding area and settle on local businesses, resulting in revitalized downtowns and the growth of new, local businesses, but what happens is that people get on the boat and spend all their money there, and never leave because there is a buffet to eat off of.

People also are beginning to see that the tax money does not benefit the surrounding area, but mostly goes to the state.

And the funniest thing of all is that the more money pours into state coffers from casino gambling and lotteries, the more fiscal problems the states seem to have. How come?

The citizens of many communities are now beginning to resist the blandishments of the 'gaming' industry and are rallying to oppose casinos in thier own towns. Chicago is a case in point. Mayor Daley has been campaigning to get a riverboat casino on the Chicago River for over ten years, but the more he talks up this proposal, the more opposition he finds arrayed against him. Among his opponants are the downtown business district and corporations headquartered there, the financial community (Chicago's main industry), the Friends of the Chicago River, the alderman and clergy representing black and hispanic wards who fear for their constituents should they have easy access to gambling parlors, and, increasingly, the entire voting population of Chicago. Something like 80% of the general population opposes gaming in the city, and if it were put to a popular vote today, it would lose by a very wide margin.

People all over the country are waking up to the fact that the casinos, as well as Kar Kulture, are very destructive to their communities and are not an adequate substitue for a real community or a real economy. However, most citizens cannot articulate their dismay and their creeping realization that the things that are currently touted as great boons are destroying thier communities and lives, and they would value people who can provide real leadership in this area.

[philski]

It was Carol King wasn't it who sang "It's life's illusions I recall..." You are certainly gifted at skewering these illusions Mr Kunstler. Do you offer anything as consolation in the absense of these illusions or is it all just cold turkey in Clusterfuck Nation?

[hooting]

Because the landscape has become so ugly and many of the citizens in it despiccable, we sit inside our McMansions watching old movies from an idyllic era, and polish our granite slab counters because there's not enough wood left in the world to make counters out of wood, and there's nothing outside beautiful to look at anymore. The Christmas season is now the consumer season, and the idea that we may be a people with cosmic consciousness is now scoffed at. Globalism is something we're told we need, and yet nobody knows how to do anything any more but grow fat and flip the remote.

PO question: What do we see when we turn out the lights? I can't tell you, but it will be ours (apologies to Beatles).

[Dumas]

Oh my! Jim Kunstler and I had just about the same idea about George Bailey at just about the same time (mine came last Friday). Am I turning into a prescient JHK clone? Is this like Phillip K. Dick's pre-crime?

http://suddendebt.blogspot.com/

AAaaargh!

PS But of course!! It IS almost Christmas and the movie is in just about everyone's mind. Pheeew ...I'm saved.

[New York Hillbilly]

Its funny that the Town (Seneca Falls NY) that capra wrote this story in and based his movie on has turned into the same as every other town has. Other than some small "trinket shops",and a couple of museums, Seneca Falls has gone the way of every other town in upstate NY. All the industry has left, all the shops that held main street together have gone too. the only thing Seneca falls (and neighbor, Waterloo) can boast about is haveing the BIGGEST Landfill in the state.... "Seneca Meadows" on a clear day you can see it from 20 air miles away

[bud4wiser]

I knew it was "Henry" and I didn't have to google it - I just watched the "Capra-classic" last night -- for about the 15th or 23rd time - so I know it's "Henry." Henry Potter......

The "meaning" of the movie, which I'll assume you understand, was that any man that "has friends" is indeed richer in life than a millionaire despot.

I'll also assume, you remember that George Baily bought a "fixer-upper" inside the town of Bedford Falls.

Another "something" missing in your essay this week, it's an understanding of the wretched life the slums of the 20s and 30s produced for so much of any urban area's population. Curiously, Capra never felt it necessary to actually give film-time to what Potter's tenements looked liked.

I would imagine those kind of images were still plenty fresh in most of the movie going audiences.

While no one could foresee the eventual style-shift of American culture that suburbia would produce, no one would ever argue that it was the failure of landlords and urban planner/managers that produced it.

As you so aptly repeat, the current situation will soon require that "other arrangements be made."

[Jerry Johnson]

From a very non credible source. Of course, credible is a rather strained word.

http://www.halturnershow.com/ChinaToDumpUSDollars.html

Of course it is an old trick to tell the exagerated truth to a non credible disseminator. Maybe a couple hundred billion comming? The idea itself will someday be irresistable. A use for a loss provided you recognize the loss far ahead of the curve.

Just plain fabrication too.

[Jerry Johnson]

Oops, pardon the typos.

[ryan costa]

We sure blew our industrial lead and so many other advantages. I imagine it is mostly the Globalists' fault: trade should have been kept much more modest, and suburbia never subsidized at the rate it has been.

What a great wasted opportunity.

I have a plan though: If we can get about 30,000 Germans, Czechs, and Scandinavians to settle in Cleveland along Lorain road from West 25th all the way to Rocky River Road it will turn out alright. In addition, we will need 10,000 ethnic Japanese from Peru to settle in northern Cleveland from west 25th to East 100th Street.

It is ok, they are smart people. They know how to run businesses and live in cities.

Go Forth!

Let the Post-Industrial Economy return to being the Re-industrial economy. Let the Globalists be revealed as frauds and Wrong.

If George Bush, Alan Greenspan, Donald Rumsfeld, and their team members had been the leaders of the Dinosaurs, They Dinosaurs would have gone extinct Twice!

[liberals in bondage]

Ain't hindsight grand?

[Jerry Johnson]

Good intentions more often than not turn into very bad results. The old conservatives thought one should test the waters a bit before jumping to starry eyed do goodism may have been vindicated.

In this case though, most of the horrible ill effects of suburbanization occurred from changed circumstances. In 1946, the vets had only started their breeding program. The nature of the breeding is such that planning is haphazard. We had very strong immigration limitations in place. Very few could perceive the chain of events that would add fifty percent to the population of 1946 through their own breeding.

Housing in 1946 was , to say the least decrepit. People were living in hovels everywhere. relatively few homes had been built since 1930. THe prexisting stock of urban dwellings ran the gamut from cold water flats with one communal bathroom per floor to exquisite huge eight room apartments that were dirt cheap by todays standards, even allowing for inflation.

Rural and small housing had atrophied for twnty years or more due to the agricultural depression that preceded the great depression. There was literally no housing available on almost any standard. Families had been cramped together in the home place for a decade and a half. The young men went to war and the wives and relatively few kids stayed on with the family.

Our house was the classic craftsman period house so sought after now. A palace. My cousins moved from the family house, in one case, to a converted garage. One room with a bath. THey lived there until they built their own house in the fifties. By then, I was in HS and being a very decent carpenter helped out.
We even cut our own timber and milled it at the family farm. Hauled the stuff back home 300 miles in my dads 1935 Ford truck the next year. My uncle was a bricklayer for my godfather whose family had a millwork plant. The result was that even the interior finish work was self produced using lumber from the home place.

The mindset was so completely different then that I suspect most people today could not even remotely appreciate the differences sixty years have wrought.

A huge grievous error in finance set us on the past to cancerous suburbanization. Most new housing was financed by FHA and VA mortgages. These "programs" financed only new construction to maximize full employment.

Rehabilitating urban housing was twenty years away. I bought a small house in Chicago's Lincoln Park for $12,500 in the sixties. The area was red lined. I borrowed $7,500 from what was probably the last Building and Loan Society in Chicago. It was located at Lincoln and Halsted near the famed Biograph Theatre. It was controlled by a local attorney -realtor who gave it free space in his office. Had he not secured the financing I would have rented for another year or two. The house was torn down in 2003 to build an upscale store on Armitage Av. west of Halsted. The owner sold it for better than a million bucks. FHA would not touch this area even in the seventies. It moved directly from red lined to fancy priced in three years. Yuppie paradise today.

[borealis]

I could swear that JHK has blogged on "It's a Wonderful Life" before. Now I really have to see this movie. I'd love to see a film satyrizing this movie and having it play out exactly as JHK shows; with the vacant and dead city core, the S&L bailouts, the increase of segregation and the ghettos and public housing projects..."It's an Aweful Life".

[steck]

' It was Carol King wasn't it who sang "It's life's illusions I recall..." '

No, that's from the song "Both Sides Now", which was written by Joni Mitchell, and made popular by Judy Collins.

And it's "Carole" King.

Just keeping the posters honest ...

[ryan costa]

The S and L bailout was necessary because de-regulation led to the the bond and lending markets going nuts and collapsing.

It was mostly explained well in Michael Lewis' book, "Liar's Poker", though he didn't go into the sprawl aspect of it so much.

[ross]

I went to your site, Dumas and I can't wait to hear what you think will happen with respect to debt. Whatever happens, I posit that it will be stranger than fiction and involve the dollar becoming worthless.

BTW, JJ, how reliable is Hal Turner?

[Jerry Johnson]

Liars Poker is a must read to understand what is going on now. The book gives a detailed history of how mortgage securitization was finally achieved by Solly.

I was treated to an outsider's demonstration of Liar's Poker almost ever time I visited Solly in thje sixties. I was considered "Madison Avenue" being in publishing where salaries were a pittance compared to Solly. They thought it was great fun to pop off C Notes on a whim. They were great carousers, but that was the turf where I was king. Expense accounts were great in the magazine business.

The simple truth is that S&L's were driven out just to create the movement provided by the mortgage backed security business. But for the emergence of money market funds, the MBS grift would never have happened. The MMF's provided the funds for MBS grifting.

[kd]

Great post, Jim.

*

For Patrizia:

"I read in the papers here a while back some teachers come across a survey that was sent out back in the thirties to a number of schools around the country. Had this questionnaire about what was the problems with teachin in the schools. And they come across these forms, they'd been filled out and sent in from around the country answerin these questions. And the biggest problems they could name was things like talkin in class and runnin in the hallways. Chewin gum. Copyin homework. Things of that nature. So they got one of them forms that was blank and printed up a bunch of em and sent em back out to the same schools. Forty years later. Well, here come the answers back. Rape, arson, murder. Drugs. Suicide. So I think about that. Because a lot of the time ever when I say anything about how the world is goin to hell in a handbasket people will just sort of smile and tell me I'm gettin old. That it's one of the symptoms. But my feelin about that is that anybody that cant tell the difference between rapin and murderin people and chewin gum has got a whole lot bigger of a problem than what I've got. Forty years is not a long time neither. Maybe the next forty of it will bring some of em out from under the ether. If it aint too late."

-Cormac McCarthy, No Country for Old Men

[Mike]

Good post, Jim. Interesting take on it all. And I like "It's A Wonderful Life" too. Seems like one of those flicks that everybody uses to get their irony on, and dish about how it's so "sappy" and "sentimental," and all those other synomyms the cynical use to say "it's alive," or "it's hopeful."

And by the way, congrats to Jim, and everyone else (including myself), for winning Time Magazine's Person of the Year.

[Jerry Johnson]

Ross, I consider Hal Turner to be about as unreliable as they come. It is quite possible he was fed something to start the pschology going.

His analysis is hardly spot on. This is just the kind of thing that big players mess with to start pressure building. Clearly, the Chinese are required to some things soon on a number of fronts. First , they must go for the jugular with respect to terminating US ventures in Eurasia. Secondly, they must stop accumulating dollar holdings as much as possible. Thirdly, they need to convert their existing holdings before a panic meltdown as much as possible.

Of course, all this may be overridden by geopolitical advantage rearing it's head. An American expulsion from Eurasia and reduction to third class player would be worth a lot of money. The money consumed here in the initial stages of a FINWAR move might only lose 10-15% in conversion to another currency. The key here is realism with respect to dollar holdings. How might they bail out? What they cannot save in a conversion move are still dollars that can spent in the US. The Chinese know full well that , like them, we would never allow the Chinese to dictate US internal or external policy.. EVER!!

Circumstances are so tempting tonight, I cannot concieve of a better time to bring Bush down politically by a FINWAR move. Bring him down before the new Congress by creating political and financial chaos with no Congess and they have a political leper in the executive no matter what happens to Bush for two full years. Two more years of financial chaos will quickly terminate US hegemony everywhere. Never get another opportunity.

As to the Saudi's cutting off the Chinese.. a totally hollow threat as of tonight. They and the Russians have cultivated the Iranians. I fully expect they will aid the Iranians in a take down of the Sunni Kingdoms. THus the new trumvirate that the EU and Japan kowtow to are Russia, China and Iran. India and the rest will fall into line very fast. The Iranians will oversee new fundy governments to replace the Kingdoms.

Combined they win the world, even while distrusting each other because the US committed geopolitical suicide under Bush.... our Commodus.

[Jerry Johnson]

We are not without our own ways to counter a Chinese FINWAR move. The most potent is a rapid move vast devaluation of the dollar followed by the announcement that all foreign loans will be paid off rather than roll over. Bush & Co would debate this move till it was of no value. I sense everyone will come to see this if they have not already.

I also suspect that the Chinese and Russians see this happening anyway in the near to moderate term future anyway. It is a case of who beats out the other.

So, either way, the Chinese best customer stays cutomer only if the goods are free. If they cannot see that, then we should buy China and not pay for it. Everyone sees this but our leadership. Been obvious for a couple of years, perhaps longer.

[mr. x]

Speaking of movies, has anyone else seen Apocalypto?

[ross]

If I had to come up with a present day scheme to allow a foreign nation to protect the value of a trillion dollar surplus, I'd look to the pms market, especially the silver mart since there is a massive concentrated short position. See the writings of Ted Butler.

http://www.investmentrarities.com/tb-archives.html

In essence I'd set in motion a plan to acquire massive quantities of the physical metal while going long the futures. I would demand delivery of the metal at expiration no matter where the price of the underlying happened to be, and then watch the exchanges default. The silver market is rotten through and through and ripe for the picking for the player with enough wherewithal and moxie. Can you say $200 dollar an ounce silver?

[ross]

I found this entertaining.

http://cyclone696.blogspot.com/

[Jerry Johnson]

Protection is not an offensive strategy. Would a trillion dollars buy China armed forces sufficient to compel the US to do exactly what they say? To irrevocably lose their hegemony.

Their geostrategists are not merchants concerned about bourgeosie matters. I do hope that this is not the case because then , in the end, we have won over the Chinese.

Of course, they must have or had a plan to do exactly as you say. My bet is they have been pursuing your plan for a number of years now. It must not have been too successful though or they would not be 70% placed in dollar paper. One thing is obvious , placing half of their gross export shipments in dollars that are effectively of no value to their economy in a dead asset means the dollars were priced into their quotes to US buyers. It is the same as the US paying the price of a Jaguar for a cheap Chevy from China. They would have sold it to us for the Chevy price but knew if they left the grift profits in the US , the US grifters would not care so long as the money financed deficits. Something like this has been going on for a long time because the funds holdback does no damage to their exporter business units or their economy.

Might Boeing survive if half it's export receipts were never paid Boeing because the state banks simply withheld it for investment in the US? This is exactly what has been going on in China. That is China stands in for Boeing. Damn, why not the same deal with the Saudi's? Of course, Petro Dollars make all the difference.

Nations make mistakes that expose them to their adversaries. Put it this way, Jesse James wants to rob the First National bank of Northfield and along comes a train from the Denver Mint filled with bullion. Jesse has the smarts to quickly organize a different hit. Which opportunity prevails?

The key question then is do money clerks lead China? They do seem to be plodders and keyboard clackers. Bureaucrats just like in the US. Take some doing because our bureaucrats burn a trillion or so every year, at least , if utility use of funds means anything. Thats a lot of worthless fighters and armoured Humvee's.