A Ripe Moment

      It turns out the real hurricane blew through Wall Street last week, not Galveston. This morning, Manhattan is strewn chest-deep with the debris of banking and at this hour (seven a.m.) nobody knows how far, deep, and wide the damage will spread. The fear, of course, is that we are witnessing a classic "house-of-cards" or "dominos-in-a-row," situation, and that the death of Lehman Brothers and Merrill Lynch will cascade into a generalized collapse of the entire consensus of value that supports mediums of exchange.
     At least one thing ought to be clear: this has happened due to the negligence and misfeasance of the regulating authorities, namely the Republican Party, and that now all the hoopla surrounding Sarah Palin can be swept away revealing that group to be what they actually are: the party that wrecked America. I hope one or two Barack Obama campaign officials are reading this blog. You must commence the re-branding of the opposition right now. The Republicans must be clearly identified as, the party that wrecked America.
     Many things happening this week will be interesting to see and hear, but just now an outstanding question is how on earth can the Bank of America buy Merrill Lynch for $50 billion after assuming the liabilities of the tarbaby known as Countrywide? But that little detail may be lost in the din as other banks and bank-like organizations start crashing like sequoia trees in a national forest.
     I wish I knew whether this extravaganza of ruin might settle the question as to whether America goes into hyperinflation or implacable deflation, but the net effect is that money is leaving the system in big gobs. And if not money per se, then the idea of money as represented in certificates, contracts, counter-party positions, and gentlemen's agreements. This is the day that America finds itself a much poorer nation. The capital we thought was there, is gone.
      A lot of it was actually translated over the years into Hamptons villas, Gulfstream jets, and other playthings that will now go up on Ebay or some equivalent as we turn into Yard Sale Nation in a general liquidation of remaining assets. Of course, the trouble in a situation like this, where absolutely everybody is trying to pawn off assets, is that there are very few buyers on the scene, so the prices of all these things go down down down. Everything is for sale and nobody has any money.
      This was essentially the state of things in the Great Depression of the 1930s, and the only escape from that turned out to be the mobilization for war. And in the aftermath of that terrible war, we were the only industrial nation that hadn't been bombed to rubble. What's more, we had a very handsome supply of industrial world's primary resource, oil, at our disposal. So we spent the next thirty years making oodles of things and selling them to people in other lands (lending them the money to buy), until these nations were back on their own feet and solvent. And after 1975, the industrial club picked up a bunch of new members and they all began to clean our clock.
      So, as our industrial base waned, and our factories got old and brittle, and our labor force was steeply under-bid by cheaper labor forces, we embarked on a quest for "the new economy." This was represented in successive turns as the information economy, the consumer economy, the high-tech economy, et cetera. They were all ruses, aimed at concealing the truth -- which was that we had become a society no longer producing things of value, no longer generating real wealth. The final act of this farce has been the so-called "financial industry."
      That "industry" turned out to be most earnestly devoted to the production of complex swindles. They were so finely engineered that it took twenty years for the swindles to stand revealed, and they were cleverly hitched to the primary thing that the American public vested its identity in: house-and-home. Thus, much of the public finds itself in very real danger of becoming homeless and broke.
      We generally recognize that some wicked-massive transfer of wealth occurred in the process of the mortgage fiasco, but it remains to be seen whether any residue of this wealth can actually be retained, as represented by currencies, contracts, and supposed securities. The wholesale settling of debt now underway may leave an awful lot of this stuff with no value.
      We should be frightened by the political implications of this Great Implosion of presumed wealth. Some group of somebodies will have to clean up this mess. Moving toward a major election, it is hard to imagine the American people giving the clean-up task to the very group that created the mess -- no matter how many cute little faces Sarah Palin can make on TV. Both parties have so far managed to ignore the gathering crisis of banking and money, but they can't ignore the sequoia trees crashing down around their ankles and shaking the earth they stand on.
    At issue now will be the question of legitimacy in all its human social dimensions. Is our money legitimate? Is the authority of our elected officials legitimate? Are our values and ideas legitimate? These are the things that will determine what kind of future we find ourselves in.
      So, to begin this process, and to clarify the situation, I urge readers of this blog to identify the Republican Party by its new brand-name: the party that wrecked America. At least, then, we can reinstate one cardinal value into the juddering structure of what we claim to believe: that actions have consequences, that you can't just swindle and loot a society and walk away with the swag.
     Spread the word, change the tone of this campaign, and keep posted. This will be a momentous week.
____________________________________
My new novel of the post-oil future, World Made By Hand, is available at all booksellers.

Comments

[steve duncan]

Maybe this has all been the fault of Republican negligence and criminality. Maybe Democrats have some answers or a new approach. However, since Obama called Palin a pig and since he wants grade school children starring in porn films I'm going to have to vote for McCain.

[BigRIJoe]

Yes that's an interesting comment.As a Walmart Greeter, I have the pulse of the "silent majority" as it was described by Mr. Nixon. Trust me; the chicks with their "tramp stamps", the "men" with the confused look in their eye, and hockey moms view Barack Hussein Obama as the enemy of the people. We're fast becoming a nation of SpicSpooks(apologies to Dan Jenkin's character Randy Juan Lanez in SEMI-TOUGH)and the most popular items going out of Walmart today are MREs, ammo and cigarettes!

[jim e]

Good to know...don't shop there.

[msjanket]

Another truly great post, Jim. Not sure if I can blame the Republican party for the demise of this country, per se. Americans are a wasteful tribe, blow their money in bad places, and buy homes they can't afford. The Party didn't make them overbuy, either. I'm just not sure the blame game can be applied to the Republicans. Bad regulatory agencies? Did any Democrats make money in the crazy money markets? Or, being superpatriots, did they hold back, buy modest homes and mini-cars?
When you play the blame game, bro, you are on very thin ice.

Lovely post, memorable.

[Dave]

please, these are fucking banks we're talking about here. they manipulate digits. anybody can manipulate digits ane there are plenty of more banks out there.

now the fact that people believe that digits on a screen somehow, neccisarily, coresponde with the value of things that they eat drink wear or fuck, now that's a problem of the first order.

nothing to do with democrats or republicans, what bullshit.

[David Mathews]

"But that little detail may be lost in the din as other banks and bank-like organizations start crashing like sequoia trees in a national forest."

About time, too ...

I am eagerly awaiting the moment in which the shills and liars of CNBC display abject cold-blooded terror as they witness their world crumbling away to dust.

As for myself, I am spending my time on the beach and devoting my attention to animals much older, wiser, more peaceful and happier than the miserable primate, the Homo sapiens:

http://www.flickr.com/dmathew1

[Dave]

wow, DM is back. now that's always a good sign.

[can you see it?]

"America the Great" and all our different opinions. Wonder what those differences will be like when we are to broke to pay for the police and all our National Guard are overseas protecting the oil and it's distribution to anywhere but the US.? Will we agree to disagree of take that Walmart ammo and start shooting?

[TroutBum]

Yes, Jim is correct, the GOP is the party that wrecked America, just look at the Federal Debt. About 75% of the $10 Trillion of debt came from Reagan, Bush I and Bush II. What did we get for that debt; not a better education system, not a better health care system, not a better mass transit system, not an alternative energy system and certainly not a better infrastructure. No, we got the world's leadership in smart bombs, financial pornography and Billionaires.

[Matt Norwood]

Congratulations on your most compelling vindication yet, Mr. Kunstler. Expect the people who have been calling you crazy for the last several years to be on television this week talking about how everyone knew this was going to happen.

[TroutBum]

Regarding the crisis on Wall Street.......

Under the neoCon ideology, when Mr. Profit walked in the door, he promply threw out Ms. Risk Management and her evidently illegimate daughter,
Govt. oversight and regulation.

[westville_girl]

Steve Duncan, I hope you were being sarcastic!

[OilMonkey]

Never underestimate the stupidity, ignorance, foolishness or denial of the American people. From the commercial success of Pet Rocks to the easily debunked urban legend of nine-eleven-was-an-inside-job John-and-Mary Q. Public will buy and believe anything.

McCain and Palin have an excellent chance to ascend to the throne.

Personally, I'm looking forward to their reign.

Both American Idol parties-and-candidates will strive to maintain an unsustainable status quo thereby assuring the end of empire and the continuance of a long, slow descent to a lower-energy, fewer-resources, less-stuff reality. But McCain and Palin will probably do more ill advised, reckless damage in a shorter amount of time.

This culture is not going to voluntarily power-down and consume less so I'm all in favor of accelerating the processes of reality. McCain, Palin and company are tailor-made accelerants.

Not to mention the entertainment value of befuddled-madman-bully McCain and vacuous-Creationist-Barbie Palin: PRICELESS!

[LaughingAsRomeWasBurningDown]

Markets 'tumbled' and 'plummeted' today. I think these newscasters will need to be finding new words soon.

[DanaJ]

7:00 PST and the Holy Dow is already down almost 400. Its gonna be a FUN ride today!

Sorry Jim, its not going to happen. The Republicans have outclassed the Demos in the blame-game, and somehow they will figure out a way to lay all the blame on the Demo Congress.
The Demos have that deer in the headlights look, they cant seem to understand just what is happening to them. They look down and see their pants around their ankles, and feel the Rethugs groping them, but just cant understand how they are getting so screwed. Is it perhaps because they were neutered by the Repugs a long time ago, and as an after thought the Repugs also took out the their spines? Oh, the Demos are such a sad bunch of fcuks. Look at Pelosi caving in on offshore oil drilling. Sheesh. She might as well lay down nekked and let Big Dick screw her on the Senate floor. "Oh, but Big Dick, I took impeachment offa the table?!" "Shut the fcuk up bitch! I gotta little impeachment for you!"
Yeah, we are soooo screwed, and the Repubs will walk away from it all, and the Demos will be left holding the bag o' shit with that dumb look on their faces with a sad "But it's not fair?"
Too bad sucker....
Perhaps I should head off to Walmart and buy some Spam & ammo. Oh, and a few cartons of Cigs.

[msjanket]

Yeah, debts were run up by Republican presidents. But, Democrats benefited from those expenditures. Ask if Boxer-Feinstein-Pelosi benefited from those expenditures. Were they critical when they all made bazillions from Republican policies? When things are good, love is in the air. When things sink, we point the finger. If there's one thing about all Americans I realize, it's that they have very short memories.
Rather than lambasting each other, can't we find a way to remedy things? Democrats writing in this forum think Obama has the answers? Surely you jest. Spend your way out of debt the Obama way...great slogan.
We are in love with easy money, aren't we? Yeah, winning at the craps table, the slots, the table games. Winning is so easy. But we never stop to realize that every boom is followed by some sort of crash. And, we are not guilty by ourselves. OPEC nations don't have the world by the shorthairs, what happens when oil runs out? Russia has high unemployment and a lousy economy sans oil, what happens to them as oil runs lower and lower? We are a profligate WORLD, not merely a profligate USA. Why do so many Americans have pot bellies? We have money to buy food and gorge, very simply. And, we have little or no discipline. One having money spends same. We had it, we spent it, we made some lousy choices. Overpopulation is gonna get us all in a few generations. It's about time we started selling Martian real estate, get those lots while they are still cheap. Get some inflation, some leverage, make exorbitant money. Then wonder why things crash as they do.
We are in uncharted waters, folks. If you want a great read, try John Kenneth Galbraith's book on the Crash of '29. Simply an eye opener, magnificent in how it shows things are pretty much the same now as they were way back then. And, scary as hell.

[Nicholas Paredes]

Perhaps seeing the 3 Penny Opera this weekend was some sign from above that there will always be somebody who wants to make a buck at the expense of another. There are also plenty of chumps to vote against their self interest by voting using their reflexes instead of their brains. Of course, with the education system we have built up to the very internationally marketable university level, how could we expect the cannon fodder to know the difference between a dinosaur and a plush toy from the Creationist Museum. The difference between keeping government out of their meth labs, and out of banks is always a salable proposition in the hinterlands as well.

One problem I find is that most of the jobs will be lost in the big cities, not Alabama. It will take true catastrophe for the farm lands to recognize the financiers and designers of the machinery of war are the management. Once money for chips stops flowing, they will be dragged along by their nether regions. This will take more than LB or ML to falter.

[msjanket]

Another truly great post, Jim. Not sure if I can blame the Republican party for the demise of this country, per se. Americans are a wasteful tribe, blow their money in bad places, and buy homes they can't afford. The Party didn't make them overbuy, either. I'm just not sure the blame game can be applied to the Republicans. Bad regulatory agencies? Did any Democrats make money in the crazy money markets? Or, being superpatriots, did they hold back, buy modest homes and mini-cars?
When you play the blame game, bro, you are on very thin ice.

Lovely post, memorable.

[lefty]

I want to offer my condolences to the croupiers at lehman brothers casino and bandits at merrill lynch mob. we are all little eichmanns today.

[Flamsey]

Holy Cow... so this is what it is like to watch a car wreck in slow motion... all this talk of what... not so much talk of how... really how, the nuts and bolts deep down reasons... and why no one in these "banks" saw this coming... after all, we all did.

[msjanket]

Yes, if we go down to the beaches we can see love's harmony in simple creatures. WE can see various fishes devour others. We can see crabs eating the rotting bodies of other creatures killed by other fishes and arthropods. We can watch oystercatchers pick up their prey and drop same onto the rocks below, thereby smashing them and permitting a lovely feast of another peaceful, wisdom filled creature. Nature is so peaceful and calm. I always loved National Geographic's pictures of leonine lovelies chasing and gaffing gazelles with compelling eye teeth and tearing flesh asunder.
Yes, Nature provides us with perfect pictures of love and harmony, and shows us that mankind is one big Nasty fella. I'm not young anymore but I've realized over the years that humans are vicious and terrible creatures while Nature is only too wonderful.
Let's all dream of puffy white clouds in the blue skies. Let's all realize that we are the worst things on this Earth. I long for those vestigial days when all things were so, so, blissful and we were all happy. Why can't we just go back and be simple creatures once again? I long to chop wood with my tired, old creaking back. I long to till my large garden by hand with rudimentary hoes and shovels. I long to dig a root cellar beneath my house and store God's roots there overwinter. My wife wants to churn rich milk into butter, weave natural fibers into roughhewn shirts and pants. We are OK with losing half of our children to natural childbirth due to various diseases. We want to worship in the old church built by the elders. I long for the outhouse of my childhood days on the North Dakota prairie.
It's time to go back, go way back. Are you all ready for the glorious return to those good ol' days?
Happiness is just around the corner...give us a couple millenia and we will be happy once again.
Simple is good. Good is simple.

[asoka]

Jim,

Nice try to blame the Republicans. Their response will be that the Democrats have been in control since 2006! And people will believe it, even with the budget surplus Bill Clinton left us in the midst of the Reagan/Bush trashing of the economy.

[Consultant]

"The Republicans have outclassed the Demos in the blame-game"

I'd say outclassed is the wrong word. Out sleazed, yes.

Some of the posts here seem to want destruction. You folks are a sorry piece of sh!t. Losers. Uncaring, f#cked up losers. Do you have kids, grandkids? Do you care about them? It may come to pass that they have to wallow in the dirt, but it's not something I look forward to seeing. And I will not make excuses for the people who made it happen. I'm against frauds, criminals and lazy fools in either Party.

Some of you who voted for Bush-twice-aren't man or woman enough to admit the simple fact that Bush/Cheney blew it big time. You don't appear to be smart enough to realize that the Republican (or Democratic) Party doesn't represent most Republican voters, it represents the corporations that run the Republican Party. It's the Party that literally doesn't give a shit about you. So quit defending the Party that wrecked America!

More than a few Democrats (i.e. Lieberman) participated in or sat by while the Republicans systematically raped this country. No doubt about that. But if you vote Republican in November, you are certified insane.

Here's a question for you diehard "..I'm stickin' with McCain" types. Why bother with survival? Why not just walk off the edge of cliff?

[German Mike]

Nice post but...
"Of course, the trouble in a situation like this, where absolutely everybody is trying to pawn off assets, is that there are very few buyers on the scene, so the prices of all these things go down down down"
There are plenty of people with money. Namely foreign holders of $$ (China, OPEC to name a few) that are itching to turn those dollars into something less volatile.
As for the election. We're past the point of no return. That's why I am voting for McCain. That way the blame for this mess will fall where it belongs and the end game will play out faster than it otherwise would.

[DanaJ]

7:00 PST and the Holy Dow is already down almost 400. Its gonna be a FUN ride today!

Oops, typo, meant 300, but wtf, it'll be -4 or 500 soon enough.