Zombie Economics

   Though Citicorp is deemed too big to fail, it's hardly reassuring to know that it's been allowed to sink its fangs into the Mother Zombie that the US Treasury has become and sucked out a multi-billion dollar dose of embalming fluid so it can go on pretending to be a bank for a while longer. I employ this somewhat clunky metaphor to point out that the US Government is no more solvent than the financial zombies it is keeping on walking-dead support. And so this serial mummery of weekend bailout schemes is as much of a fraud and a swindle as the algorithm-derived-securities shenanigans that induced the disease of bank zombification in the first place. The main question it raises is whether, eventually, the creation of evermore zombified US dollars will exceed the amount of previously-created US dollars now vanishing into oblivion through compressive debt deflation.
      My guess, given the usual time-lag factor, is that the super-inflation snap-back will occur six to eighteen months from now. And the main result of all this will be our inability to buy the imported oil that comprises two-thirds of the oil we require to keep WalMart and Walt Disney World running. At some point, then, in the early months of the Obama administration, we'll learn that "change" is not a set of mere lifestyle choices but a wrenching transition away from all our familiar and comfortable habits into a stark and rigorous new economic landscape.
      The credit economy is dead and the dead credit residue of that dead economy is going where dead things go. It came into the world as "money" and it is going out of this world as a death-dealing disease, and we're not going to get over this disease until we stop generating additional zombie money out of no productive activity whatsoever. The campaign to sustain the unsustainable is, besides war, the greatest pitfall this society can stumble into. It represents a squandering of our remaining scant resources and can only produce the kind of extreme political disappointment that wrecks nations and leads to major conflicts between them. I don't know how much Mr. Obama buys into the current adopt-a-zombie program -- his Treasury designee Timothy Geithner was apparently in on this weekend's Citicorp deal -- but the President would be wise to steer clear of whatever the walking dead in the Bush corner are still up to.
     All the activities based on getting something-for-nothing are dead or dying now, in particular buying houses and cars on credit and so it should not be a surprise that the two major victims are the housing and car industries. Notice, by the way, that these are the two major ingredients of an economy based on building suburban sprawl. That's over, too. We're done building it and the stuff we've already built is destined to loose both money value and usefulness as the wrenching transition goes forward.
      All this obviously begs the question: what kind of economy are we going to live in if the old one is toast? Well, it's also pretty obvious that it will have to be based on activities productively aimed at keeping human beings alive in an ecology that has a future. Once you grasp this, you will see that there is no reason to despair and more than enough for all of us to do, so we can recover from the zombie nation disease and get on with the next chapter of American history -- and I sure hope that Mr. Obama will get with the new program.
      To be specific about this new economy, we're going to have to make things again, and raise things out of the earth, locally, and trade these things for money of some kind that we earn through our own productive activities. Don't make the mistake of thinking this is optional. The only other option is to go through a violent sociopolitical convulsion. We ought to know from prior examples in world history that this is not a desirable experience. So, to avoid that, we really have to put our shoulders to the wheel and get to work on things that matter, and do it at a scale that is consistent with what the world really has to offer right now, especially in terms of available energy.
      In my view -- and I know this is controversial -- a much larger proportion of the US population will have to be employed in growing the food we eat. There are many ways of arranging this, some more fair than others, and I hope the better angels of our nature steer us in the direction of fairness and justice. The prospects of a devalued dollar imply that we very shortly will not be able to get the all the oil-and-gas based "inputs" that have made petro-agriculture possible the past century. The consequences of this are so unthinkable that we have not been thinking about it. And, of course, the further implications of current land-use allocation, and the property ownership issues entailed, suggests formidable difficulties in re-arranging the farming sector. The sooner we face all this, the better.
      As the fiesta of "globalism" (Tom Friedman-style) draws to a close -- another consequence of currency problems -- we'll have to figure out how to make things in this country again. We will not be manufacturing things at the scale, or in the manner, we were used to in, say, 1962. We'll have to do it far more modestly, using much more meager amounts of energy than we did in the past. My guess is that we will get the electricity for doing this mostly from water. It may actually be too late -- from a remaining capital resources point-of-view -- to ramp up a new phase of the nuclear power industry (and there are plenty of arguments from the practical and economic to the ethical against it). But we have to hold a public discussion about it, if only to clear the air and get on with other things, namely the new activites of alt.energy. But I would hasten to warn readers (again!) that we'll probably have to do these things more modestly too (don't count on giant wind "farms"), and that we are liable to be disappointed by what they can actually provide for us (don't expect to run WalMart on wind, solar, algae-fuels, etc).
      In any case, we're not going back to a "consumer" economy. We're heading into a hard work economy in which people derive their pleasures and gratification more traditionally -- mainly through the company of their fellow human beings (which is saying a lot, for those of you who have forgotten what that's about). Our current investments in "education" -- i.e. training people to become marketing executives for chain stores -- will delude Americans for a while about what kind of work is really available. But before long, the younger adults will realize that there are enormous opportunities for them in a new and very different economy. We will still have commerce -- even if it's not the K-Mart blue-light-special variety -- and the coming generation will have to rebuild all the local, multi-layered networks of commercial inter-dependency that were destroyed by the rise of the chain stores. In short, get ready for local business. It will surely be part-and-parcel of our local food-growing and manufacturing activities.
      I hate to keep harping on this -- but since nobody else is really talking about it, at least in the organs of public discussion, the job is left to me -- we have to get cracking on the revival of the railroad system in this country, if we expect to remain a united country. This is such a no-brainer that the absence of any talk about it is a prime symptom of the zombie disease that has eaten away our brains. Automobiles (the way we use them) and airplanes are utterly dependent on liquid hydrocarbon fuels, and you can be certain we'll have trouble getting them. You can run trains by other means -- electricity being state-of-the-art in those parts of the world that do it most successfully. I know that California just voted to create a high-speed rail link between Los Angeles and San Francisco. It's an optimistic sign, but it shows more than a little techno-grandiose over-reach. High speed rail would require a mega-expensive re-do of the tracks. We need to scale our ambitions for this more realistically. California (and every other region of America) would benefit much more from normal-speed trains running every hour on the hour on tracks that already exist than from a mega-expensive, grandiose sci-fi program that might not get built for ten years. The dregs of the Big Three automakers can and should be reorganized to produce the rolling stock for a revived railroad system.
     Even amidst the financial carnage underway right now, the public is enjoying a respite from high-priced gasoline, but it is due to be short-lived. As I've already said, we are in danger not just of oil prices going way back up again, but of losing access to our supplies from the exporting countries. In other words, we're just as likely to face shortages as high prices, and soon. Oil shortages are certain to produce a political freak-out here unless we get our heads screwed on right -- and this means that Mr. Obama had better prepare quickly for a comprehensive action plan in the face of such an emergency (which has to include a robust public information initiative).
     In the meantime, Mr. Obama must dissociate himself from all activities aimed at the care-and-feeding of zombies. Mr. Obama is correct that there is one president and one government at a time, and since this is the case in reality, he must avoid being contaminated by the choices they make as their clock ticks out. Obviously, world markets might be more disturbed if Mr. Obama were to step up and actively contradict everything that is being done to cultivate zombies right now. He is in a very delicate position. But being a man of intelligence and sensibility, he may successfully navigate this rough passage.
     That this melt-down is building straight into the Christmas holidays is one of those accidents of history that leaves one reeling in wonder and nausea. The cable networks better be prepared to bombard the public with round-the-clock showings of It's A Wonderful Life, because they're going to need all the moral support they can get as zombies stalk through the silent night, holy night.
____________________________________
My new novel of the post-oil future, World Made By Hand, is available at all booksellers.   

Comments

[bud4wiser]

JK, I'm not so sure the "zombie" metaphor is accurate. My take figures Zombies only want enough for themselves, these bastards want whatever, and however ALL they can take.

Never, in the history of the planet, have so few, assured a shit-storm for so many for so long.

February, 2009, the storm arrives.

[Frank Gifford]

Thanks for the post Jim. Your ability to see the state of our situation seems uncanny. Unfortunately, large swaths of Americans, as you well know, are living in various fantasy lands. To implement the kind of realistic building for a changed future you and many others advocate, I believe will require many of those now living in fantasy land learn to see more clearly the reality of our situation. How do we help with this? Well, for one, I think we can offer simple words of reassurance to those who are angry. Beneath the anger is fear. Also, there is a group that works in this area. ISHK, http://ishkbooks.com. For our part, my mate Bonnie and I have this project in West Virginia, EntropyPawsed, http://entropypawsed.org where we hope to help with the transition to a nature linked low energy future. The lives of the children of future generations depend upon the choices we now make. I again urge the cultivation of a realistic positive vision and the wisdom, courage, strength, and perseverance to make this vision a reality. Jim, your vision is one to aspire to from how I see it. Thanks for your tireless efforts!

[carfree]

There has been more talk about trains here in New Mexico. The commuter train between Santa Fe and Albuquerque is set to begin running next month. Governor Richardson pushed through the purchase of rail right-of-way all the way north to the Colorado border, and there is some talk about a Denver to Las Cruces rail line. I also read in the paper that more rail lines are planned to fan out from Chicago.

Granted, they're still not pouring as much money and attention into rail as they should, but it has picked up some in the past couple of years.

[Elvis]

I agree with bud4wiser, our friendly bankers and MBA's have, in there thoroughly infinite greed and absolute stupidity, engineered a massive "clusterfuck" that will re-write history.

Unfortunately, it is the poor (read "Middle Class") that will bear the pain. And don't think for a second that Obama will change much. The same people that engineered this fiasco put him in power, and will make up his cabinet, to ensure the status quo.

The problem is much deeper than most can admit or even realize. Profit is the cancerous disease that has sickened the world economy. Profit economics, so ingrained in our thinking, corporations, schools and institutions is the underlying malicious code. Until it is eradicated, and until there is a huge paradigm shift of thought away from the profit model, we're fucked as human beings.

[Empedocles]

Jim is right that what isneeded is more localization and less dependency on large centralized power, whether economic or political. Localization is an attempt to resist globalization and support local community businesses, arts, and agriculture. There many reasons for this movement: environmentalists support how localization reduces energy costs and protects local farmland from development, anti-corporate activists support local independent small businesses from corporate chains, economic activists argue for keeping dollars on the local community rather that going to Wall Street or China. Although all of these movements are associated with the Left, the Democratic party is the party of strong centralized government, not decentralized local government. It is the Republicans who are mostly associated with Federalism, although through the neo-cons the Republican party has become the party of big government conservatism. Most of those who champion localization have not yet taken the step from local business to local government, but there is an opportunity for a new political coalition of the paleo-cons and neo-libs seeking decentralized government and to push power as far as possible to localities and to demand the ability to make decisions concerning the course of their communities. If the Republicans can break the grip of the neo-cons, and re-brand their philosophy “localization” rather than Federalism, they have the best chance of attracting those interested in localization.

[jfp]

... is destined to loose both money ....

And so the internet claims yet another victim.

[DanaJ]

Actually, I think the Zombie metaphor is accurate, at least as far as the general populace is concerned. Just talking to people in the checkout line at the Safeway, almost no one has any idea what is really happening around them, and of course no clue about what to do about it. Almost each and every one is living in a state of denial, just ask them if they have even dared to open and read their latest 401k or IRA statements to see how much they have lost, and almost every one will say not, or if they have they regretted it.

We are kind of like those unfortunate citizens of Pompeii oh so many years ago, the earth is shaking underneath out feet, the sky is darkening, but our leaders are saying everything is OK, don't worry, go shopping. Meanwhile the local volcano is looking more Mt Doomish by the second, and those in power are sailing off in their yachts to safety. If we can just make it to Xmass, every thing will be alright?
The volcano will erupt with force after the xmass season as stores report the worst sales ever, and layoff millions accross the country, or just close for business.
Yep, heckofajob Georgie, heckofajob....

[BigRIJoe]

Just what are the "ethical" arguements against nuclear power? This oughta be a side-splitter.

[greenbeans]

"a much larger proportion of the US population will have to be employed in growing the food we eat."

Its time to stop putting sanitizer gel on the kids' hands every 5 minutes. Tell them its OK to get their hands in the dirt, to get a little sweaty and smelly, and to learn where their food comes from...because its fun and since Daddy's funds dried up they're not going to go to college anyway.

[orangetabby]

The modern Republican party (since Reagan) has created the monster of the "too big to fail" mega-corporation that we see today. How did these giants get so big as to be teetering on the brink, threatening to take down America with them?? It was the Republican worship of deregulation, "free" markets (ie free to steal) and contempt for "anti-trust" laws and other oversight which would've kept things in check. And now here we are, a world of Wal Marts on every corner, financial centers teetering on the brink, and monopolistic control of everything that must be bailed out or we all surely die! And Democrats have been no better, watching quietly as the rapacious Republican pigs did their business.

The best way to protest all of this is to refuse to buy corporate, period! Instead support the local infrastructure that will rise from the carnage when Wall Street is finished imploding and we have big box ghost towns across the country. Local people, esp food producers actually have values and pride in their product and are not slave to the "profit" motive of the mega-corps. These are the people to give your $$ to support.

Personally, I will never deal with a "bailed out" company again. My consumer confidence is at zero and gets smaller with each bail out that passes. Hear that CON-gress?!

[Dave]

i'm gonna lose some wieght and become a pirate. that's what i've always wanted to do any way. so this shit is perfect.

[Dave]

who ever heard of a fat pirate?

[Dave]

"Just what are the "ethical" arguements against nuclear power? This oughta be a side-splitter."

whatever they are, you can be sure that the arguments for nuclear power are even funnier. ever heard of a nuclear powered pirate ship? cockbreath.

[asoka]

Yes, pirates, or Vikings, are a more apt metaphor.

Did you notice JHK has moved TSHTF back out to six to eighteen months? A time period in which an Obama team intervention may succeed into moving it out even further. TSHTF is always just around the corner... no, a better metaphor would be TSHTF is always out at a six to eighteen month "time horizon"...

And you know how horizons are.

[Dave]

just stupid, nuclear powered pirate ships. who ever heard of such a thing? not while i have anything to say about it.

[Dave]

fuck trains, we should all be gearing up for long boats. anyone who mentions nuclear anything has to row.

[Dave]

budwieser, if i don't see the fucking rapture this coming february i'm gonna be awfull pissed off. me an my pirate buddies are gonna come looking for you.

[The Wonk]

Bud4wiser says: "JK, I'm not so sure the "zombie" metaphor is accurate. My take figures Zombies only want enough for themselves, these bastards want whatever, and however ALL they can take."

Bud, you're right. JHK should have used the vampire analogy instead.

First, vampires suck the life out of others, which describes the financial vultures to a tee.

Second, vampires are quite the rage this week, with the movie "Twilight" grossing $70 million over the weekend (my 14-year-old daughter and her friends being part of the mass).

[Dave]

Yes, pirates, or Vikings, are a more apt metaphor.

shoot askosa, i ain't engaging in no stinking fucking metaphors, like choochoo trains and shit.

[Dave]

or zombies fer christ's sake, vampires niether. we's talking fact, not fiction round here.

[Dave]

14 yo girl? that's a wench in training; i always say.

[Dave]

remember budwieser, rapture in february, or that's your last prediction.

[Dave]

ever

[oneEyeOpen]

DanaJ sez:

"The volcano will erupt with force after the xmass season..."

Hopefully, your head will be in the fucking volcano.

[oneEyeOpen]

orangetabby sez:

"Local people, esp food producers actually have values and pride in their product and are not slave to the "profit" motive of the mega-corps."

Riiiiight. I know a lot of farmers who grow food for charity. They are not interested in any profit whatsoever.;.}