Falling Into Fall

      So many shoes are poised to drop this week that the American scene might be confused for the world's greatest-ever clog dancing festival, but a closer look will reveal a circle of cavorting skeletons.
     Last week's ripe moment turned out to be the Thursday night Washington photo op when Treasury Secretary Paulson and Fed Chief Bernanke emerged from a huddle with House Speaker Nancy Pelosi and just about every other legislative eminentissimo in an attempt to reassure the nation that its financial system had not turned into something like unto a truckload of stinking dead carp. I don't know about you, but I got two distinct vibes from the faces in that particular tableau: 1.) abject fear, and 2.) a total lack of conviction that they knew what they were doing.
      The product of that huddle was a cockamamie scheme for the US treasury to absorb all the losses from a twenty-year binge in which Wall Street created and retailed the most complex set of swindles ever seen on this planet Earth. The background music to the tableau was the whoosh of a several trillion dollars exiting the US financial system never to be seen again.
     The next day (Friday) many particulars of that scheme began to emerge -- such as the complete lack of oversight and review mechanisms for Treasury's new power to monetize private business failures and frauds -- and the stock market soared in response. Other new features of the reformed capital landscape also resolved later that day, like a new experiment aimed at eliminating the short sale as a way of guaranteeing that henceforth market bets could only be placed on the upside of the table. It will be interesting to see how that reform works out in the days ahead.
     Over the weekend, all these various playerz retreated into their gilded bunkers to negotiate the details, and by Sunday night, among other things, Goldman Sachs and Morgan Stanley -- the two remaining investment giants left standing -- announced that they would metamorphose into regular banks in order to qualify for additional truckloads of government loans in exchange for any leftover fraudulant securities still lurking in their vaults. Another new provision had the Treasury rescuing swindled foreign companies, too -- in effect, saving the world, which seemed at least, how you say, pretty ambitious.
      By this morning, many new arguments had been raised by a suddenly de-zombified congress as to whether the proposed grand bail-out might reward recent Wall Street turpitudes and incentivize future mis-deeds and it looks like enough objections may be lodged to gum-up the process before it even goes into effect -- which, of course, would tend to revert the whole reeking cargo of trouble to its original train-wreck trajectory. I guess we'll see what happens now.
      Any way you paint this grotesque panorama, it looks like a very new chapter of history for life in the USA. Basically, we are a much poorer nation than we were even a couple of years ago, and we have a much-reduced ability to project our will around the world, or even among our own floundering sectors and regions. Most troubling to me is the question of legitimacy that now hangs over the proscenium like a guillotine blade. Factoring in the old saw that history doesn't repeat but it rhymes, I think the situation emerging is rather like the crisis of legitimacy that preceded the Civil War. Then, in the 1850s, the nation's two symbiotic political parties, Whig and Democrat, entered a zone of fatal discredit. The White House had been occupied by a sequence of empty cravats named Fillmore, Pierce, and Buchanan, and so much pent-up mistrust roiled the centers of power that the nation entered a convulsion.
      At issue then was the great festering unresolved polity of slavery. The Whig party, in its oafish, craven fecklessness, disappeared so quickly from the scene that an embarrassed God Almighty seemed to have hooked it off-stage in a nanosecond. Into the vacuum stepped an awkward lawyer from Illinois -- widely mocked by the coarser elements of what was then called the press as a figure resembling an ape in a stovepipe hat. He accomplished one crucial thing in the process of his emergence: he deployed a potent rhetoric that captured the essence of the crisis and clarified it for all to understand what was at stake -- and then the convulsion commenced in earnest.
     The Republican Party amounts to today's Whigs. Their candidate for president, John McCain, is trying to run away from his own party -- as one might shrink away from a colony of importuning lepers. I am actually not kidding when I label the Republicans "the party that wrecked America," because I believe that is truly how the popular strain of history will regard them when (maybe if) the wreckage of their ministrations ever clears. But history doesn't repeat exactly. The current figure from Illinois, Barrack Obama, has yet to offer a truly crisis-clarfying rhetoric, though he labors under the expectation of being able to do so. Like his long-ago predecessor, he is mocked by the coarser elements of what we call "the media" these days -- Fox News and the moron-rousers of talk radio.
     Some of the issues yet-to-be-clarified concern the behavior of the American public in the broad sense. We have obdurately resisted the reality of the energy crisis that hangs over everything we do (as slavery hung over the 1850s), from the way we inhabit the landscape to the way we do daily business in our 240-million-plus fleet of cars and trucks that ply the ribbons of asphalt and the lagoons of parking that now run from sea to shining sea where the fruited plain was replaced by the Wal Marts.
     Mr. Obama isn't kidding either when he alludes to the change America faces, though history has not yet rhymed enough for his rhetoric to really set forth the terms of this change in its stark particulars. And even if he is able to articulate these things, he won't forestall the convulsion anymore than Lincoln held back a war between the states. That prior crisis was when America learned good and hard how tragic life could be, and it colored our national character for a century -- until we chucked it all to become a society of overfed clowns, with God Almighty replaced by Ronald McDonald. That pageant of happy idiocy is now ending. Like everyone else in this fraught and nervous land, I'm standing by to see what transpires in the days just ahead.
____________________________________
My new novel of the post-oil future, World Made By Hand, is available at all booksellers.

Comments

[Philski]

"...process of his emergence: he deployed a potent rhetoric that captured the essence of the crisis and clarified it for all to understand what was at stake."

You are the one deploying this potent rhetoric!

[LaughingAsRomeWasBurningDown]

Great column today. One nitpick:

> mocked by the courser elements

coarser, right?

[sharon]

All the intelligent commentary execrates this bailout. But everyone I talk to has fallen for the line of bullshit that it is "the only alternative."

[irahan]

It's NOT going to be pretty. What this country has created will literally destroy it and cause a tsunami of suffering which has already started for many. Do we deserve this? Most but not all. Unfortunately few if any will escape.

[Mark]

JHK predicted this CF all along. I never, in my 55 years, would think the poop would be hitting the fan this badly. Free markets my ass. The bozos who jabber about that want their markets saved as soon as their idiotic use of them destroys them. I hear 40,000 jobs may be lost on "The Street". Boo fucking hoo. Good riddance.

[DanB]

I haven't heard anybody refer to the S&L bailout of the 80's and the lessons that weren't learned from it. I remember the day Reagan signed the bill deregulating them. I had just finished a book on the depression and the events leading up to it. I told my brother in law to remember this day, because the S&Ls would all go belly up at some time in the future. Of course they had been regulated after the depression to avoid the reckless speculation they had been involved during the 20s. The reason history repeats itself is because human nature never changes and thus when confronted with situations similar to ones that happened in the past, people will make the same mistakes. The reason is because nobody pays attention to the lessons of history. The old saying "Those who do not remember the past are condemned to repeat it" is just as true today as ever. Anybody with two brain cells to rub together and a recollection of history could have called this one.

[DanB]

I haven't heard anybody refer to the S&L bailout of the 80's and the lessons that weren't learned from it. I remember the day Reagan signed the bill deregulating them. I had just finished a book on the depression and the events leading up to it. I told my brother in law to remember this day, because the S&Ls would all go belly up at some time in the future. Of course they had been regulated after the depression to avoid the reckless speculation they had been involved during the 20s. The reason history repeats itself is because human nature never changes and thus when confronted with situations similar to ones that happened in the past, people will make the same mistakes. The reason is because nobody pays attention to the lessons of history. The old saying "Those who do not remember the past are condemned to repeat it" is just as true today as ever. Anybody with two brain cells to rub together and a recollection of history could have called this one.

[2LegsBad]

Right now reading this blog is like being in a deep sea submersible, looking out the porthole as a fleet of giant 200ft long squid cruise past our meek spotlights like the signs and wonders of the angry Cthuluan gods of old. When might one of these giant beast turn its big round eye in our direction and with the flash of tenticle we disappear into a pitch black maw.
"It's kind of exciting though!" Says a Happy Idiot.

[ForeignObserver]

As a foreign observer I am totally flabbergasted by the fact that the American public just seems to except this rip-off by the Bush administration.

He will be long gone when the full impact of this disaster becomes clear.

I would think the crowds were marching down the streets with hay forks by now, demanding Bush's head on a plate.

[Riddick]

Jim is right on target as usual. His voice is like a growing wind in the maelstrom of greed, failure and bailout that whirls around all of us. Yes, we are all severely FARKED! The question is when will it ALL come a-tumblin down? And how hard will it crash for the sheeples? I sincerely hope folks reading here have back-up food plans, alternative heating solutions, etc. I can now almost guarantee that as the future unfolds you will need very bit of them and then wish you had much, much more.

Simply put, this is no joke. No TV or Hollywood extravaganza, this is TSHTF.

[DanaJ]

At a quarter of 7 here on the Left Coast the Holy Dow is already down 100 points! Wouldn't be surprised to see it go below 10k.
DanB, gotta agree with you. Back in the late 90s when they were talking about repealing Glass-Stengel (or what ever) because it "wasn't needed anymore" I thought: Uh-oh, here comes another Depression.
Like I said on the previous post, this is nothing but a bail out of the big Hedge funds, not the so-called 'little guy', its about saving Wall Streets ass, not Main St. The could give a shite about Main ST & the little guy.
We the tax payers will all be asked to assume the position. The Banksters will get to keep their ill-gotten gains.

[denise]

can someone tell me where the intelligent commentary execrating the bailout (aside from here) is taking place?

[BlackDouglas]

Kunstler fan from the early 90s just become a clusterfuck regular. You all may want to check out http://www.newsdissector.com/blog/ for another, if equally grim, pov. Schechter is what journalists should be and he puts his money where his mouth is.
Meanwhile, I beg to differ with DanB's take on "human" nature. In my experience, we call it human nature when it's bad, overlooking the fact that there are as many good impulses in humanity as bad ones. The problem is that the structures of power encourage the exercise of the bad sort and make it difficult if not impossible to exercise the good sort. Are the structures of power a manifestation of "human" nature? Only insofar as our culture has unfolded in a force field with a male charge. But we have a choice, guys. We can decide what human values we wish to pursue and which aspects of human nature we wish to cultivate.

[David Mathews]

I think it safe to predict that a bankrupt and insolvent nation will not enjoy the luxury of consuming 25% of the world's resources for very much longer ... expect oil to flow to more productive parts of the world from now on until the end of time itself.

I am very much in favor of this crisis and approve of however much suffering the Americans must experience. For so many decades the Americans have felt entitled to everything and responsible for nothing and we let the rest of the world go to hell under our leadership. Now that same hell has reached America and the American people are going to become personally acquianted with impoverishment and deprivement.

Good. This is pure justice.

As for myself, I devote my attention to living things:

http://www.flickr.com/dmathew1

[Empedocles]

How can Kunstler spend the first half of this post attacking this criminal bailout, then spend the second half praising Obama when OBAMA SUPPORTS THE BAILOUT!
You also never hear Kunstler mention that Obama in an international interventionist when Kunstler is a non-interventionist.
You never hear Kunstler mention that Obama supports off shore drilling when Kunstler is in favor of conservation.
You never hear Kunstler mention that Obama is for free-trade when Kunstler is a protectionist.
You never hear Kunstler mention that Obama is for centralized power when Kunstler is for localization.
I just don't get Kunstler's support for Obama. I can only guess that he's blinded by Obama's rhetoric which lets people see whatever they want to see, despite the facts.

[genconc]

saa@concision.com URL: Comments:I've been reading that this bailout if it goes through will cost each taxpayer from $2000 to $5000. I expect the real amount will be much higher. These people shouldn't be getting bailouts, they should be getting life sentences. But if they do get bailed out then I think it's only fair that the Fed refinance my mortgage and credit card debt at 1%. Preview Post

[Schizoid]

RE: The takeover of the United States government by bankers and corporations:

"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered." Thomas Jefferson, President of the United States 1801-1809

"I believe that banking institutions are more dangerous to our liberties than standing armies." Thomas Jefferson, 1816

"We have come to be one of the worst ruled, one of the most completely controlled and dominated, governments in the civilized world -- no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and the duress of small groups of dominant men..." Woodrow Wilson, President of the United States 1913-1921

I find it hard to believe that we have been taken by surprise.

[edgar sterling]

"...a colony of importuning lepers." ... nice imagery!

[FARfetched]

For those looking for other intelligent commentary on the bailout, Daily Kos had a pretty good article up yesterday… explaining why bailing AIG was necessary. Two words: worker's comp. If the worker's comp system goes Tango Uniform, who's going to pick up the slack? Anyone? Extend that to health care; if we depend on insurance companies, and they're falling over, how are those of us with insurance supposed to cope? I suspect it would lead to violence in the streets… that's coming anyway, but the bailout will postpone it.

Personally, I think the world governments should just declare a worldwide jubilee year: cancel all debts and start over. That would cause a lot of turmoil, to be sure, but at least the little guys would get some good with the bad.

And before I forget, FAR Future, Episode 52, is up:
http://farmanor.blogspot.com/2008/09/far-future-episode-52-its-big-one.html

[Lost Horizon]

JHK

"We...resisted the reality of the energy crisis that hangs over everything we do (as slavery hung over the 1850s)..."

Slavery was cheap energy.

That was the 19th century equivalent of the energy debate we are Not having.

The South's economy depended on cheap labor to function, just as the US economy depends on cheap energy.

The North got cheap waves of immigrant labor from Europe to power it's industy forward.

There is no cheap energy left, just conservation.

I used to say that 'Conservatives' in DuhMerika don't want to conserve Anything except their own bank accounts and their daughters virginity. (but Ms Palin even managed to fuck that up to.)

The solution this time around seems headed for turning most of DuhMerika into Debt Slaves.

History does Rhyme, do-da, do-da
.

[Nicholas Paredes]

It is not only government that will feel the wrath of scorn after the fallout, but the delegitimized financial system. Aside from loans that will be laughed at by those who refuse to abide by the past social stigma of bankruptcy, the markets will likely never return to the populist past. It wasn't until fairly recently that stock ownership was a common activity. And, the IMF may never loan us another dollar! Don't cry for us, Argentina!

Obama has at least echoed Krugman's call for some recourse. But, haste is necessary to support our rich friends, er banking system. Quick. Sign here. Don't worry, it will be fine! If Obama told us what he really thought, who would be there to here it, comprehend it, or distort it like our tragic Greek friends? It's all Greek to me, but Obama is better than an idiot and her dog as far as I'm concerned.

This is the first time I really felt that people could get pissed off enough, with hyper inflation or some other result, to begin picking up arms against the makers of this mess. I sort of can't believe that people are falling for this crap. As if the trillion dollar loan could not bring down the system...

[Nicholas Paredes]

LH,

Thank goodness their daughters held to the same high standards as mommy and daddy!

[Gryphon]

STOP THE BAILOUT for Wall $treet criminals!

Call Congress:

Demand immediate Debt Forgiveness for households making less than $250K/year.

OR

Promise a nationwide GENERAL STRIKE that will shut the country down until the taxpayers are protected.

Are we Citizens or Sheeple?

ACT NOW!!!

[djcrow22]

Emped,
Since when do facts matter? Or rules and regulations? Or laws and the Constitution? We can vote (D) or (R) or not vote at all, which half of us do now anyhow. The lesser of two evils again seems to apply. We can vote for the party that has championed NOT playing by the rules, regulations, laws and taking responsibility for their actions. That same party is now putting forward an unprecedented financial bailout plan that explicitly calls for the same absence of responsibility and accountability. Obama has a historic opportunity to step up and level with the American people. Whether he will or not remains to be seen. I am watching three capitalists debate whether the Bush tax cuts for the wealthy should be EXTENDED as this fraudulent financial scam is rammed through Congress in the fascist manner as the so called Patriot Act. Needless to say, I am not encouraged.

[emergentink]

Is there a reason why I should be paying my credit card bills next month?