The Bottom of This Society’s Ability to Process Reality

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Euphoria managed to out-run swine flu a few weeks ago, as the epidemic- du-jour, with “consumer” confidence jumping and the big bank stocks nudging up. The H1N1 virus fizzled for now, at least in terms of kill ratio, though we’re warned it might boomerang in the fall with a vengeance. No one was surprised to see Chrysler roll over like a possum on a county highway, but the memory of their muscle cars will linger on like a California surfing song. Here in the northeast, where Sundays are not spent at the NASCAR oval, the spring foliage reached the tenderly explosive stage and it was hard to feel bad about anything.

For now, the “bottom” is in – that is, the bottom of this society’s ability to process reality. It may continue for a month or so, but events are underway that are beyond the command of personalities. We’re done “doing business” in all the ways that we’ve been used to, but we just can’t get with the new program. Let’s count the ways:

1. The revolving credit economy is over. It’s over because we can’t increase energy inputs to the system, which is one way of saying “peak oil.” Of course hardly anybody believes this right now because the price of oil crashed nine months ago, along with global manufacturing and trade. But nothing has changed on the peak oil scene – except perhaps that ever more new oil projects have been cancelled for lack of financing, which will boomerang on us (even if swine flu doesn’t) in the form of much lower future oil production. In any case, the credit fiesta is over, and the “consumer” economy with it, because industrial growth as we have known it is over. It’s over globally, too, though all regions of the world will not experience its demise the same way at the same rate.

The Asian nations may swap things around a while longer but China is basically up the creek without a paddle. They have less oil left than we have (which is saying, not much at all) and they won’t corner the rest of the global oil market without starting World War Three. Meanwhile, they’re running out of water and food. Good luck becoming the next global hegemon. Oh, and Japan imports 90 percent of its energy; India over 80 percent. Fuggeddabowdit.

Credit will not vanish everywhere overnight – even in the U.S.A. – because it is not distributed equally everywhere. But it will vanish in layers, and here in the U.S.A. a very broad layer of the lower and middle classes are now losing their access to it in one way or another – personally, in small business – and they will never get it back. Anyone who intends to thrive in the years just ahead had better plan on doing it on the basis of accounts receivable – and what they receive might not even necessarily come in the form of U.S. dollars. It may come in the form of gold or silver or in the promise of reciprocal services rendered.

This has enormous implications for two of the items in which our credit-dispensing operations are most deeply vested: houses and cars. Unfortunately, these are exactly the things that economic life has been based on for decades in our nation, which leads to the next categories:

2. The suburban living arrangement is over, along with all its accessories and furnishings. Taken as “all of a piece,” the suburban expansion was one sixty-year-long culmination of hypertrophy. We did it because we could. We won a world war and threw a party. We had lots of cheap land and cheap oil. It made lots of people lots of money and all its usufructs have become embedded in our national identity to the dangerous degree that the loss of them will provoke a kind of national psychotic breakdown. In fact, it already has. The completely unrealistic expectation that we can resume this way of life is proof of it.

The immediate problem is that we can’t build anymore of it. The next problem will be the failure of the stuff that already exists. The first stage of that is now palpable in the mortgage foreclosure fiasco and, just beginning now, the tanking of malls, strip centers, office parks and other commercial property investments. The latter will accelerate and become visible very quickly as retail tenants bug out and weeds start growing where the Chryslers and Pontiacs once parked. The next stage, which involves large demographic shifts in how we inhabit the landscape, has not quite gotten underway.

3. The Happy Motoring fiesta is over. You’d think that with Chrysler crawling into the bankruptcy court, and GM just weeks away from the same terminal ceremony, the news media would begin to suspect that the foundation of everyday life in this country was cracking. Instead, all we hear is blather about “market share” shifting to Toyota. News flash: not only will we make fewer automobiles in the U.S.A., but Americans will buy far fewer cars made anywhere. We’ll keep the current fleet moving a while longer, but when it’s too beat to repair, we won’t be changing it out for a new fleet – despite all the fantasies about hybrids, plug-and-drive electrics, and so on. The masses will be too broke to buy these things. What’s more, they will be very resentful of the shrinking economic “elite” who can afford them. And, anyway, our roads and highways are destined to fall apart very quickly because there is no way we can sustain the necessary rate of normal maintenance. Meanwhile, we remain completely un-serious about public transit – even about fixing the vestiges that still exist. The airline industry, of course, will be toast inside of five years.

4. Our food production system is approaching crisis. There’s no way we can continue the petro-agriculture system of farming and the Cheez Doodle and Pepsi Cola diet that it services. The public is absolutely zombified in the face of this problem – perhaps a result of the diet itself. President Obama and Ag Secretary Vilsack have not given a hint that they understand the gravity of the situation. It is probably one of those unfortunate events of history that can only impress a society in the form of a crisis. It also happens to be one of the few problems we face that public policy could affect sharply and broadly – if we underwrote the reactivation of smaller, local farm operations instead of shoveling money to giant “agribusiness” (or Citibank, or Goldman Sachs, or AIG…). I maintain that this may be the year that the crisis gets our attention, because capital is suddenly harder to get than fossil-fuel-based fertilizer.

All these epochal discontinuities present themselves, for the moment, as a season of muted “hope” and general apathy. The days are suddenly mild. We’ve resumed old and happy habits of grilling meat outdoors and motoring to those remaining places that were not blanketed with franchised food huts and discount malls. We have a new, charming president with an appealing family. Newly-minted dollars are flowing to the “shovel-ready.” The new bad news is less bad than the old bad news (or seems to be). And the year just past has been such a bummer that our hard-wired human nature tells us that good things must be just around the corner.

Personally, I think a lot of good things await us, but not the ones we’re expecting – not a return to buying Slurpees on credit cards. It will be very salutary to leave behind the junk empire we’ve accumulated and move into an epoch of quality and purpose. For the moment, though, our hopes reside elsewhere.

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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16 Comments on "The Bottom of This Society’s Ability to Process Reality"

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Biker Pete
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Kunstler’s predictions are visionary and inspiring, but not new. I have an article from The Vancouver Sun (1995) predicting much of what he foretells. Those of us who shifted our focus to “…move into an epoch of quality and purpose…” in that period, have been rewarded amply. It’s a pity that the US failed to see the writing on the wall and make the cultural and demographic changes necessary way back in the Nineties.

Alex Caras
Guest
A clear, succinct and probably very accurate synopsis of the current and future reality we face. However I must question your comment regarding China being “basically up the creek without a paddle”. My understanding is that China recently stiched up a high profile energy deal with Russia that will essentially ensure it has secure energy supplies for the foreseeable future, with the US basically relegated to being an aloof bystander to this transaction (see http://www.china.org.cn/english/environment/162886.htm). Surely this places China in a much better position for considerable growth over the next 10 – 20 years than most OECD countries?
Biker Pete
Guest

I agree, Alex. It’s a mistake to write China off. Kunstler’s other points are relevant, particularly to the US. I did wonder about his point re. fuel efficient motoring: “…the fantasies about hybrids, plug-and-drive electrics, and so on. The masses will be too broke to buy these things. What’s more, they will be very resentful of the shrinking economic “elite” who can afford them.” Mass resentment of Porsche and Ferrari owners has not caused much drama so far! Who cares if my fuel-miser gets 100 km for 4.3L? Resentful of others’ choices? Get a life..!! :)

Greg Atkinson
Guest
The problem with all these forward looking predictions is they are being written with today’s technology in mind. There are so many gaping holes in this crystal ball gazing effort I am not sure where to begin. Honestly every time there is a crisis the same old stories get rehashed…motoring was suppose to be dead during the oil crisis back in the 1970 for example but never fear, cars will be around and doing well in some form for decades to come. Food production scary stories have been around for decades but if people just do a little research they… Read more »
Dan
Guest
Greg, while I agree with you, I would hazard to guess that many of the ‘gaping holes’ in people’s analysis are simply things left unsaid because they are unpleasant. With those things inserted the picture can become alarmingly clear sometimes. For example, nobody seems to consider that China might want to spread its tentacles across the globe in a way other than economically, or that the US might want to do the same to justify its own existence, or whatever else. Nobody talks about what the long term aims of the growing empires could be. Do we seriously think China… Read more »
Biker Pete
Guest

In fact, Kunstler, probably considering Japan’s fuel situation in the thirties, does specifically raise the unpleasant prospect of China’s potential aggression, faced with energy deficits, Dan.

Greg Atkinson
Guest
Biker Pete, Dan..I hear what you are saying. However you might recall it was not that long ago that Americans were in fear of the Japanese taking everything over :) Seriously though, China as it is today has enough internal problems to keep them occupied and I reckon Asia is coming to understand that they need to co-operate or they all will be in serious trouble. Anyway you do not need to invade anymore to get your hands on resources. You go to Africa and buy into a regime or buy shares in a struggling Australian mining company. Mind you,… Read more »
Biker Pete
Guest

Jeez, Greg… why would the US ever think Japan meant them harm… Pearl Harbor aside, of course. Megalomaniacs? Our happy world has _never_ experienced megalomania before. This would be something entirely new… unprecedented! I think we can safely rule out despots, dictators and totalitarian governments, don’t you? ;)

Lachlan
Guest

I reckon too that on average, people should become more self reliant by growing their own food. Its a good insurance policy under the circumstances.
Cash profit from primary production is a rare bird indeed and now assett appreciation is being wiped out as an upside to those retiring from the land. A continuation of the system we do have requires stable economic conditions….which are leaving town. The availability of food might decrease and the cost of it may rise.

Pete
Guest

I didn’t mind the article. Yes, it is a little bit extreme, but at the moment with so much going on economically it is easy to forget about those ‘other’ things before a crisis point is reached.

So perhaps that is how the Government feels ;)

Btw, great comment Dan, very insightful

Lachlan
Guest

Radio today reports that cautious French investors are moving out of stocks and into stock…as in live heifers. Investors receive 5% on on their bovine investment while the farmer is allowed to keep manure, milk and male calves.

Dan
Guest

That’s very interesting Lachlan. For a minute there I thought of a pile of bovine excrement, but actually it’s a pretty good idea – at least they are real animals, and even if 1 in 10 die of plague, at worst one would break even.

Lachlan
Guest

Yeah Dan. I suppose there could be a devil in the detail but from afar it seems a good move… albeit a ripple (as per tide/wave analogy). Our lives may get simpler yet. Mind you I already live on a farm.

Lachlan
Guest

I mentioned assett deflation in regard to farm land above. However this may only be a short lived phenomena if at all… post consideration of all of the above. Fundamentals for residential property may be looking sad (esp.US). However according to the logic above then the fundamentals for productive farmland assetts are improving immensley.

Carlos
Guest

The megalomaniaphobes need to get a grip. 2009 is a world away from Pearl Harbour. We have something today called the internet, along with skype, email and mobile phones. We are quite literally now, one people. I play bridge regularly – 4 people on 4 different continents. Nobody wants to bomb their friends. On a list of fears topped by climate change and peak oil, invasion by “foreign” power is way down the ranks, somewhere below death by swine flu / terrorist bomb.

Biker Pete
Guest

Carlos, you’re 100% correct. This bridge between people is a sure guarantee that North Korea is just being playful; and that there’s nothing on the cards in Iran… I really hope and pray you are correct, but I doubt the internet will prevent some old dying fool who wants his name writ large in the history books trying to nuke his neighbour holding a better hand… .

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