正文
September 3, 2007
Crunch Time
Like a lot of observers in thrallto the agony of the financial markets, I have been commenting onless-than-the-Big-Picture in recent weeks. The Big Picture is thehealth of American society, which includes both its economy andculture. In healthier times, finance was but one part of the economy,the means for raising capital investment to apply to productiveactivity. For the past two decades, we have allowed it to become an endin itself.
As US manufacturing decamped to low-labor-cost nations,we turned increasingly to the manufacture of abstruse investmentschemes designed to create "value" ingeniously out of thin air ratherthan productive activity. These succeeded largely because of themomentum of legitimacy American institutions accumulated in the yearsafter the Second World War. The rest of the world believed ouringenuity was backed by credibility. That momentum has about run out.
You will hear about central banks and hedge funds and derivatives andmortgage backed securities, and all kinds of jargon, but the issue willreally come down to matters other than finance. Are we building asociety with a future? Does our culture affirm life or yearn fordestruction? Are our daily ceremonies and rituals meaningful or empty?Are our hopes and dreams consistent with what reality has to offer? Canwe look in the mirror and say that we are upright people?
I thinkwe are in trouble with all these things. But I doubt we can give up ourcurrent behavior without going through a convulsion. The psychology ofprevious investment is, for us, a force too great to overcome. We willsell the birthrights of the next three generations in order to avoidchanging our behavior. We will blame other people who behavedifferently for the consequences of our own behavior. We will notunderstand the messages that reality is sending us, and we will driveourselves crazy in the attempt to avoid hearing it.
I haven'tchanged my view of what is happening to us. We have run out our stringof stunts and tricks in the money rackets. We've spent our legitimacy.The rest of the world will strive mightily to get free of theirobligations to us, including their respect for the value of ourcurrency. The meta-cycle of suburban development, including the"housing" and all its accessories in roads and chain stores, is hittingthe wall of peak oil. The suburban build-out is over. This will come asan agonizing surprise to many. The failure to make infinitesuburbanization the permanent basis for an economy will rock oursociety for years to come. Hundreds of thousands of unemployed men withpick-up trucks and panoplies of power tools will feel horribly cheated.I hope they don't start an extremist political party when the re-po mencome to take their trucks away.
Even under the best circumstances,with a nationwide change of heart, and really wise leadership, Americawould find it difficult to make the necessary changes that new realityrequires. Of course, reality will force us to make these changeswhether we're on board with the program or not. The only variable ishow much turmoil may ensue in the process. If we resist doing whatreality commands, our trouble is certain to be worse.
What doesreality command? Well, first of all (and especially for the benefit ofthe enviro-progressives I have met recently, who want gold medals forbuying hybrid cars) we'd better drop the idea that there is any waywhatsoever to preserve our system of happy motoring. The car as a massmarket phenomenon, and enabler (dictator, really) of all our daily lifearrangements, is finished. We'd better find something else to talkabout, or the American future will amount to little more than acolossal circle-jerk on an increasingly unfixable freeway. I am hugelyworried (obviously) that even the intelligent-and-educated fraction ofour society cannot focus on anything but how to keep all the carsrunning. A failure to drop this, and move on to more practicalendeavors, will lead automatically to a failure of reasonable politicsin this country. It is already manifest in the abysmal failure of theDemocratic candidates for president to address the looming oil importcrisis that will certainly be underway as soon as any of them isinaugurated.
Reality commands that we prepare to rebuild our smalltowns and small cities and downsize our gigantic metroplexes. Realitycommands that we get serious about local food production and localeconomies. Reality commands that we rebuild the kind of public transitthat people will be grateful to travel on. Reality commands that weprepare to rebuild our harbor facilities for a revival of maritimetrade, using ships and boats that do not necessarily run on oil.Reality commands that we put an end to legalized gambling, in order forthe public to re-learn one of the primary rules of adult life -- thatwe generally should not expect to get something for nothing.
Thetrouble we are seeing in the financial sector is largely a result ofblowback from tens of millions of people who tried to get something fornothing. It is a circumstance that is now beyond the control of theBushes, Paulsons, and Bernankes. Their intended-to-be-soothingstatements on Friday will not hold back the implosion of cascadingdefaults and cumulative insolvency. A few "poster children" may besymbolically rescued to try to prop up confidence in this-or-thatpaper, but an awful lot of other people and institutions will just godown, unfortunately, because of their own bad choices.
A strangenew meta-reality will assert itself in America: that shit happens. Wewill see the ruined people and feel bad about them, but we will not beable to un-do the shit that has happened to them, that they havebrought upon themselves. This is how the idea of moral hazard returnsto a society that has lost its way. Meanwhile, there is too much to dofor the survivors to sit around wringing their hands and beingcrybabies. You can start by taking all the mental effort that you arecurrently wasting on the subject of cars, and how to run them on fuelsother than gasoline, and instead focus your energy on how to rescue ourpolitical institutions so that a truly informed public can reconstructa bankrupt society into a living and credible republic.
http://kunstler.com/mags_diary22.html
Crunch Time
Like a lot of observers in thrallto the agony of the financial markets, I have been commenting onless-than-the-Big-Picture in recent weeks. The Big Picture is thehealth of American society, which includes both its economy andculture. In healthier times, finance was but one part of the economy,the means for raising capital investment to apply to productiveactivity. For the past two decades, we have allowed it to become an endin itself.
As US manufacturing decamped to low-labor-cost nations,we turned increasingly to the manufacture of abstruse investmentschemes designed to create "value" ingeniously out of thin air ratherthan productive activity. These succeeded largely because of themomentum of legitimacy American institutions accumulated in the yearsafter the Second World War. The rest of the world believed ouringenuity was backed by credibility. That momentum has about run out.
You will hear about central banks and hedge funds and derivatives andmortgage backed securities, and all kinds of jargon, but the issue willreally come down to matters other than finance. Are we building asociety with a future? Does our culture affirm life or yearn fordestruction? Are our daily ceremonies and rituals meaningful or empty?Are our hopes and dreams consistent with what reality has to offer? Canwe look in the mirror and say that we are upright people?
I thinkwe are in trouble with all these things. But I doubt we can give up ourcurrent behavior without going through a convulsion. The psychology ofprevious investment is, for us, a force too great to overcome. We willsell the birthrights of the next three generations in order to avoidchanging our behavior. We will blame other people who behavedifferently for the consequences of our own behavior. We will notunderstand the messages that reality is sending us, and we will driveourselves crazy in the attempt to avoid hearing it.
I haven'tchanged my view of what is happening to us. We have run out our stringof stunts and tricks in the money rackets. We've spent our legitimacy.The rest of the world will strive mightily to get free of theirobligations to us, including their respect for the value of ourcurrency. The meta-cycle of suburban development, including the"housing" and all its accessories in roads and chain stores, is hittingthe wall of peak oil. The suburban build-out is over. This will come asan agonizing surprise to many. The failure to make infinitesuburbanization the permanent basis for an economy will rock oursociety for years to come. Hundreds of thousands of unemployed men withpick-up trucks and panoplies of power tools will feel horribly cheated.I hope they don't start an extremist political party when the re-po mencome to take their trucks away.
Even under the best circumstances,with a nationwide change of heart, and really wise leadership, Americawould find it difficult to make the necessary changes that new realityrequires. Of course, reality will force us to make these changeswhether we're on board with the program or not. The only variable ishow much turmoil may ensue in the process. If we resist doing whatreality commands, our trouble is certain to be worse.
What doesreality command? Well, first of all (and especially for the benefit ofthe enviro-progressives I have met recently, who want gold medals forbuying hybrid cars) we'd better drop the idea that there is any waywhatsoever to preserve our system of happy motoring. The car as a massmarket phenomenon, and enabler (dictator, really) of all our daily lifearrangements, is finished. We'd better find something else to talkabout, or the American future will amount to little more than acolossal circle-jerk on an increasingly unfixable freeway. I am hugelyworried (obviously) that even the intelligent-and-educated fraction ofour society cannot focus on anything but how to keep all the carsrunning. A failure to drop this, and move on to more practicalendeavors, will lead automatically to a failure of reasonable politicsin this country. It is already manifest in the abysmal failure of theDemocratic candidates for president to address the looming oil importcrisis that will certainly be underway as soon as any of them isinaugurated.
Reality commands that we prepare to rebuild our smalltowns and small cities and downsize our gigantic metroplexes. Realitycommands that we get serious about local food production and localeconomies. Reality commands that we rebuild the kind of public transitthat people will be grateful to travel on. Reality commands that weprepare to rebuild our harbor facilities for a revival of maritimetrade, using ships and boats that do not necessarily run on oil.Reality commands that we put an end to legalized gambling, in order forthe public to re-learn one of the primary rules of adult life -- thatwe generally should not expect to get something for nothing.
Thetrouble we are seeing in the financial sector is largely a result ofblowback from tens of millions of people who tried to get something fornothing. It is a circumstance that is now beyond the control of theBushes, Paulsons, and Bernankes. Their intended-to-be-soothingstatements on Friday will not hold back the implosion of cascadingdefaults and cumulative insolvency. A few "poster children" may besymbolically rescued to try to prop up confidence in this-or-thatpaper, but an awful lot of other people and institutions will just godown, unfortunately, because of their own bad choices.
A strangenew meta-reality will assert itself in America: that shit happens. Wewill see the ruined people and feel bad about them, but we will not beable to un-do the shit that has happened to them, that they havebrought upon themselves. This is how the idea of moral hazard returnsto a society that has lost its way. Meanwhile, there is too much to dofor the survivors to sit around wringing their hands and beingcrybabies. You can start by taking all the mental effort that you arecurrently wasting on the subject of cars, and how to run them on fuelsother than gasoline, and instead focus your energy on how to rescue ourpolitical institutions so that a truly informed public can reconstructa bankrupt society into a living and credible republic.
http://kunstler.com/mags_diary22.html
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