Begging the Question: Recovery to What?

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It’s a curious symptom of the consensus trance zombifying the American public and its auditors in the media that something like a “recovery” is now deemed to be underway. And, as events compel me to repeat in this space, it begs the question: recovery to what? To Wall Street booking stupendous profits by laundering “risk” out of bad loans with new issues of tranche-o-matic securitized paper? This I doubt, since there isn’t a pension fund left from San Jose to Bratislava that would touch this stuff with a stick, even if it could be turned out in collector’s editions of boxed sets.

Does it mean that American “consumers” (so-called) are awaited momentarily in the flat-screen TV sales parlors with their credit cards fanned-out like poker hands, ready for “action?” Not too likely with massive non-performance out in cardholder-land, and half the nation’s electronics inventory wending its way onto Craig’s List. Are we expecting more asteroid belts of new suburbs carved in the loamy outlands of Dallas and Minneapolis, complete with new highway strips of Big Box shopping and Chuck E. Cheeses? Go to banking’s intensive care unit and inquire (if you can) among the flat-lining production home- builders and the real estate investment trusts on life support when they expect to rev up the heavy equipment.

The idea that we’re about to resume the insane behavior that induced the current epochal malaise of economy is so absurd it will only be heard in the faculty dining halls of the Ivy League. And if America is not picking up where it left off eighteen months ago – the orgy of spending future claims on wealth unlikely to accrue – then what is our destiny? Based on what’s out there in the organs of public thinking, it seems that we don’t want to think about it.

So many forces are arrayed against a return to the previous “normal” that we will be lucky, in another eighteen months, to still find ourselves speaking English and celebrating Christmas. What’s “out there” is a panorama of mutually reinforcing critical problems pertaining to how we live on this continent. Like the obesity, heart disease, and diabetes that plague the public, these problems are disorders of lifestyle habits and the only possible “cure” is a comprehensive revision of lifestyle. With the onset of spring weather and the cheez doodles and monster truck rallies and NASCAR tailgate barbeques and the drive-in beer emporiums all beckoning, can the public shift its attention from these infantile preoccupations to saving its own ass?

So far, the most striking piece of the economic fiasco is the absence of any galvanizing spirit among the millions getting crushed in the tragic unwind of our relations with money. It will be interesting to see, for instance, if there is any uproar over the evolving story of Goldman Sachs’ latest raid on the U.S. Treasury, after booking billions in taxpayer-funded payouts funneled through AIG, based on double-hedged credit default swaps. Such magic tricks are understandably hard to follow, but a dozen-or-so federal attorneys with a middling background in differential calculus might suss out the trail that leads from Ben Bernanke’s work station to Lloyd Blankfein’s cappuccino machine. Something similar may be said in regard to revelations last week of White House economic advisor Larry Summers’ connection with a number of hedge funds shoveling millions into his deep pockets for showing up once a week to cheerlead their “innovations” – not to mention his shadowy visits to the Goldman Sachs gravy train even after he signed onto the Obama campaign. As long as the stock markets seem to rally – no matter what else is really going on in America – nobody will pay much attention to these disgusting irregularities.

Since it is that time of year, and I am haunting the gardening shop, one can’t fail to notice the many styles of pitchforks for sale. My guess is that the current mood of public paralysis will dissolve in a blur of blood and spittle sometime between Memorial Day and July Fourth, even with NASCAR in full swing, and the mushrooming ranks of the unemployed lost in raptures of engine noise and fried cornmeal. It doesn’t take too many determined, pissed-off people to create a lot of mischief in a complex society.

On the agenda in the second quarter of ’09 are ominous rumblings in the oil and food sectors. Half a year of cratered oil prices have decimated the oil industry and we’re driving at 100-miles-an-hour straight off a cliff into a new kind of supply crisis – even if industrial production and global exports remain moribund. So many drilling rigs are being decommissioned that the oil industry itself looks like it’s preparing for its own death, investment in exploration and discovery has withered with the credit markets, and the world may never recover from the year long hiccup in oil industry activity – translation: peak oil is biting back now with a vengeance. Its peakness will look peakier and the yawning arc of depletion beyond will look steeper and pose a threat to every globalized and continental-scale enterprise in the known world.

So many dire elements are ranging around our food production system (i.e. farming), from widespread drought and water table depletion to “input” shortages (especially fertilizers) to sickness in credit availability, that we’re all one bad harvest away from something that will make Pieter Bruegel-the-elder’s “Triumph of Death” look like Vanity Fair’s annual Oscar Party in comparison.

Barack Obama, charming as he is, had better drop his pretensions about kick-starting the old consumer economy, fire the Wall Street clowns and parasites who are running that futile exercise, and start preparing a US Lifeboat Economy aimed at reducing the scale and scope of our outlays so we can survive the coming siege of austerity. Meanwhile, I’m glad that he finally got a dog for the White House, because the President knows full well where to turn in Washington if you want some genuine love and affection.

Regards,

James Howard Kunstler
for The Daily Reckoning Australia

James Howard Kunstler
(born 1948) is an American author, social critic, and blogger who is perhaps best known for his book The Geography of Nowhere, a history of suburbia and urban development in the United States. He is prominently featured in the peak oil documentary, The End of Suburbia, widely circulated on the internet. In his most recent book, The Long Emergency (2005), he argues that declining oil production is likely to result in the end of industrialized society and force Americans to live in localized, agrarian communities.
James Howard Kunstler

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29 Comments on "Begging the Question: Recovery to What?"

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[…] Barack Obama, charming as he is, had better drop his pretensions about kick-starting the old consumer economy, fire the Wall Street clowns and parasites who are running that futile exercise, and start preparing a US Lifeboat Economy aimed at reducing the scale and scope of our outlays so we can survive the coming siege of austerity. Meanwhile, I’m glad that he finally got a dog for the White House, because the President knows full well where to turn in Washington if you want some genuine love and affection. The Daily Reckoning Australia […]

Dan
Guest
Obama won’t sack the Wall Street clowns who put him there in the first place – he’d rather die first. Alternatively, they’d rather him die first, take your pick. All of this is like buying a car. If your old car works, then it’s easy to make a considered, unhurried decision. But if the old car is dead, and you absolutely have to work to avoid going broke, then you are going to be a sucker for any used car that the salesman shows you – and it’s very likely to be the lemon nobody else would buy. As much… Read more »
rick e
Guest

Check this out Stephen long on ABC late line. Click on (glimmer of hope based on a long shot) 3 min 30 seconds http://www.abc.net.au/lateline/

I wonder if he reads the DR?

Greg Atkinson
Guest

I guess the author forgets about the S&L crisis and the various market crashes, bubbles and scandals we have had before? Will we resume the bad lending practices of the past…of course we will, they will just be in a different form so that they can slide around what ever new regulations come into force :)

Ned S
Guest
Greg Atkinson – Yes, governments and banks and markets are definitely very keen on a return to the good old days (of 2007 at least) – Except for the French and Germans who remain a bit recalictrant apparently? But your point is well taken – Rely on the governments of (most) developed Western nations to fib, cheat, bluff, fudge, fiscally stimulate, inflate their way out of all problems and you’ll be spot on – If you had been my investment advisor over even the last 10 years, I very well may be a mega-millioniare right now … Dead serious! (But… Read more »
Greg Atkinson
Guest
Ned S I am not saying that the turkeys will solve any long term problems but the global economy is a big place. The U.S. will probably take a long time to recover from this mess (and maybe never fully) but there will be winners….not sure who they will be though (wish I did). A lot of wealth has been destroyed and assets have changed hands but the world will go on. I appreciate things look very bad, (and they are) but the global economy has the amazing ability to bounce back..it just takes time. I know this is not… Read more »
Ned S
Guest
Greg Atkinson – Have had a look at your “The great recession swindle” article – I concur. Lots of comments I’d love to make but at the moment I’ll have to settle for just confining myself to a few in relation to one general topic: The GFC has caused me to question many things about how the governments of developed Western democracies operate. Some thoughts (but no answer sadly): * If I recall correctly one of the American founding fathers made a comment to the effect that Yes this democracy thing may serve us pretty well for quite a while… Read more »
Dan
Guest
Ned S – the Soviet Union’s positive points (of managing cities, transportation and health) were not because of Stalinism or Communism or any other ideology, but simply through the presence of meritocracy. It’s as simple as that. If you introduce a proper merit based system in any area of society, that area will prosper and excel. Allow corruption to take over, and stagnation and degradation will occur. The system of government in this regard is irrelevant. The GFC, water mismanagement, infrastructure mismanagement, political incompetence, are all due to incapable (and corrupt) people being promoted over and above the capable (and… Read more »
Chris
Guest

Ned S – I enjoy you interesting musings. You might also consider the benefits of a ‘benevolent dictatorship’. True – it all goes sour if you get a ‘dud’/self interested/megalamanic dictator, but if you score a benevolent, compentent ruler – it can have a lot going for it!

I would agree that what we currently experience is hardly true ‘democracy’ – but a democratic facade overlaying the unelected ‘warlords’ of the media, finance, business and other tribal groups of our society. The involvement of the masses on election day is a mere formality (to avoid uprisings!)

Ned S
Guest

Dan – Meritocracy – I had to look up the meaning of that – But Yes, providing we make sure we have a Mother Theresa type or two in there to balance the mix it sounds good to me. But I’m tricked how one gets such a system in place – Using democratic process to vote in popularly elected governments obviously doesn’t achieve it. But the alternative of NOT being able to line our masters up on a reasonably regular basis and call them to general account seems particularly unpalatable. Your thoughts please?

Greg Atkinson
Guest
Ned S – I am see a lot of problems with our current form of democracy but I think Winston Churchill once said like that democracy was the worst form of government except for all the other ones. I am not a big fan of the Soviet system because it did result in the pretty inefficient use of resources and a few too many people digging at salt mines. I agree with you comments about politicians and short sighted government and I am not really sure what the answer is but I have an idea in mind that I just… Read more »
Ned S
Guest
Chris – Benevolent Dictatorship – Valid point – The key word being “benevolent” I guess. With the common thread running through the various posts I’ve read on it here possibly being that lots of systems can work pretty well, providing the right/best people are in place at the top. The questions being a) how to ensure that we get them there in the first place, b) how to make sure their successors are the right/best people too and c) how to be have some safeguards built into the system to toss them out just in case either a) a genuine… Read more »
Greg Atkinson
Guest

Maybe the Romans had the right idea…after all for their faults they did have a pretty good run and done okay for a bunch of farmers? Perhaps we just need a senate and an emperor?

Ned S
Guest
Greg Atkinson – Yes, I think it was Churchill said that re democracy. An entertaining gent was Winnie – If I recall correctly he also said something along the lines of You can always rely on America to do the right thing … Eventually! (We can only hope he was correct in that I guess.) I don’t want to sound like I’m singing the praises of the old Soviet system big time at all, because a) I simply don’t know enough about it and b) from the little I think I might know about it, I strongly suspect there were… Read more »
Ned S
Guest
Greg Atkinson – Re Rome – Lucius Cornelius Sulla comes to mind – Not a particularly benevolent dictator at all. But certainly a very effective one. One of the quaint things about Rome is when they did actually get one of the best possible men in the job (Julius Caesar – He even inclined towards forgiving his enemies – At least if they were Roman), the lesser mortals who felt they’d been outshone, did the Ides of March routine on him. And they had just a bit more up their sleeve than being a “bunch of farmers” as you surely… Read more »
Richo
Guest

Dan,
Your car analogy would have been more astute if you had mentioned public transport or cycling as unappealing but possible alternatives.

Dan
Guest

Richo – Re: Car analogy. Yeah, actually the best idea would be to move house so that a car is no longer required. But every analogy breaks at some point!

Dan
Guest
Ned S – Briefly re: Meritocracy. To my thinking, identifying and promoting people on the basis of merit is firstly a cultural phenomenon. Like the “work ethic” in Germany, or society’s deep regard for academic achievement in Singapore. Secondly, low level social systems can encourage merit basis, such as transparency in job application processes, universal examination processes at school (no fiddling of results by private school teachers, for example), equality of education (through equal pay of teachers across the public/private divide), freedom of information, whistle blowing and so forth. Thirdly, systems of government can be better or worse at producing… Read more »
Ned S
Guest

Dan – Distributionism eh? – Thanks. (I like your thought re democracy having failed the scaling test.)

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Ned S
Guest

I just phoned the CBA to leave some positive feedback – Yes, the Australian ONE! The chap who answered thought that was possible but wasn’t sure how it was done and had to check before putting me onto the appropriate area (“Client Relations” if recall corectly?) Look for the good I reckon. Look for the bad I reckon. And make the most appropriate possible noises about both – I reckon???

Ned S
Guest

Here is a somewhat radical thought perhaps? :- How come if America gets to affect the world so much, the ONLY people who get to vote in American elections are Americans? That just seems a bit unreasonable and unfair to me? (But then I’m not an American of course.)
I think other even naughtier thoughts on occassion I fully suspect?!

Greg Atkinson
Guest

Ned S – I have gone out on a limb and written a piece on how I would change our system of government. Please have a look at: Bring back the toga Feel free to drop your comments over there as well so I can kick off a debate on the subject.

Ned S
Guest
Greg Atkinson – Re your “Bring back the toga” article: There is nothing there I’d see as being a show stopper at all. Two broad comments and then some more specific ones: Broadly speaking a) We either have have way more bottoms on seats in Canberra than we actually need (given that they’ll just vote along party policy lines anyway) OR we have way too few of them (if our aim is for them to be achieving truly effective representation of their constituents who they know and to whom they are known) – You allude to that problem when you… Read more »
Greg Atkinson
Guest
Ned S, thanks for the feedback. I agree with your comments about political parties and think we would be better served by having shifting alliances based on the issues at hand. For example an alliance could be formed to support certain legislation rather than people being tied to voting along party lines. To do this however we would need to think about how we could support the rise of minor parties and independents. I am a little cautious about your decision group suggestion as it would seem to focus a lot of power on a very small group of people.… Read more »
Dan
Guest
Party politics is a way of having a democratic process without having to bother with doing what people actually want. If you want a two year old to do what you want, give it two options, each of which is a rewording of the same thing. It works, and the two year old will not lose face. Most two year olds never cotton onto this trick. Most adults don’t either. Another way to look at it is to say that a good democracy is necessarily an unstable one. If we had regular hung parliaments, people crossing the floor every other… Read more »
Greg Atkinson
Guest

Dan party politics is also a way to concentrate power because the major parties can simply outspend the minor parties and independents. I guess in OZ we did have a moment there when the Democrats could have made a difference but they imploded and so any faint hope of change went the same way as a certain senators Doc Martins.

Ned S
Guest
Greg Atkinson and Dan – I’d feel happier with our current form of democracy if we saw people crossing the floor a lot too. But the party politics system precludes that of course. Floor crossers tend to find themselves standing as independants at the next election I’d think? (Without party supplied funds to get their message out.) Which actually might not be a bad thing at all because most of that party funding comes from sources that expect to be remembered when it is time for policy to be made if my take on it is correct? So to my… Read more »
Ross
Guest
The bit about American politics is their ability to design a 2 party system, that like Dans says is just a conglomeration off a common pool of clubbed societies driven by the fraternites and their links with the various mafias that fund or nurture the parties be they industrial, industrial-defence, gay, jewish, union, or public service. You vote for who they dress in one of two colours of football guernsey and they push forward. And this is said to be democracy and unfortunately it has taken a grip in Australia and the UK. In fact it is more destructive the… Read more »
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