This page has been archived and commenting is disabled.

Clusterfuck Nation ThinkTank's 2010 Forecast: Definitely Not Rosy

Tyler Durden's picture





 

As there are less than 48 hours in 2009, which everyone except Goldman's bonus recipient corps can't wait to be over, some last minute opinions on what awaits us in 2010. This one comes from James Howard Kunstler, author of the Long Emergency and the Clusterfuck Nation blog. As one can imagine from the title, we don't anticipate Mr. Kunstler will be making the CNBCOMCAST tour of propaganda duty circuit any time soon.

 


 

The Center does Not Hold...But Neither Does the Floor

Introduction

     There are always disagreements in a society, differences of opinion, and contested ideas, but I don't remember any period in my own longish life, even the Vietnam uproar, when the collective sense of purpose, intent, and self-confidence was so muddled in this country, so detached from reality. Obviously, in saying this I'm assuming that I have some reliable notion of what's real.  I admit the possibility that I'm as mistaken as anyone else.  But for the purpose of this exercise I'll ask you to regard me as a reliable narrator. Forecasting is a nasty job, usually thankless, often disappointing - but somebody's got to do it. There are so many variables in motion, and so much of that motion is driven by randomness, and the best one can do in forecasting amounts to offering up some guesses for whatever they are worth.

     I begin by restating my central theme of recent months: that we're doing a poor job of constructing a coherent consensus about what is happening to us and what we are going to do about it.

     There is a great clamor for "solutions" out there. I've noticed that what's being clamored for is a set of rescue remedies - miracles even - that will allow us to keep living exactly the way we're accustomed to in the USA, with all the trappings of comfort and convenience now taken as entitlements.  I don't believe that this will be remotely possible, so I avoid the term "solutions" entirely and suggest that we speak instead of "intelligent responses" to our changing circumstances. This implies that our well-being depends on our own behavior and the choices that we make, not on the lucky arrival of just-in-time miracles.  It is an active stance, not a passive one. What will we do?

     The great muddlement out there, this inability to form a coherent consensus about what's happening, is especially frightening when, as is the case today, even the intelligent elites appear clueless or patently dishonest, in any case unreliable, in their relations with reality. President Obama, for instance - a charming, articulate man, with a winning smile, pectorals like Kansas City strip steaks, and a mandate for "change" - who speaks incessantly and implausibly of "the recovery" when all the economic vital signs tell a different story except for some obviously manipulated stock market indexes. You hear this enough times and you can't help but regard it as lying, and even if it is lying ostensibly for the good of the nation, it is still lying about what is actually going on and does much harm to the project of building a coherent consensus. I submit that we would benefit more if we acknowledged what is really happening to us because only that will allow us to respond intelligently. What prior state does Mr. Obama suppose we're recovering to?  A Potemkin housing boom and an endless credit card spending orgy?  The lying spreads downward from the White House and broadly across the fruited plain and the corporate office landscape and through the campuses and the editorial floors and the suites of absolutely everyone in charge of everything until all leadership in every field of endeavor has been given permission to speak untruth and to reinforce each others lies and illusions.

     How dysfunctional is our nation? These days, we lie to ourselves perhaps as badly the Soviets did, and in a worse way, because where information is concerned we really are a freer people than they were, so our failure is far less excusable, far more disgraceful. That you are reading this blog is proof that we still enjoy free speech in this country, whatever state of captivity or foolishness the so-called "mainstream media" may be in.  By submitting to lies and illusions, therefore, we are discrediting the idea that freedom of speech and action has any value.  How dangerous is that?

Where We Are Now

     2009 was the Year of the Zombie. The system for capital formation and allocation basically died but there was no funeral. A great national voodoo spell has kept the banks and related entities like Fannie Mae and the dead insurance giant AIG lurching around the graveyard with arms outstretched and yellowed eyes bugged out, howling for fresh infusions of blood... er, bailout cash, which is delivered in truckloads by the Federal Reserve, which is itself a zombie in the sense that it is probably insolvent. The government and the banks (including the Fed) have been playing very complicated games with each other, and the public, trying to pretend that they can all still function, shifting and shuffling losses, cooking their books, hiding losses, and doing everything possible to detach the relation of "money" to the reality of productive activity.

     But nothing has been fixed, not even a little. Nothing has been enforced.  No one has been held responsible for massive fraud. The underlying reality is that we are a much less affluent society than we pretend to be, or, to put it bluntly, that we are functionally bankrupt at every level: household, corporate enterprise, and government (all levels of that, too).

     The difference between appearance and reality can be easily seen in the everyday facts of American economic life: soaring federal deficits, real unemployment above 15 percent, steeply falling tax revenues, massive state budget crises, continuing high rates of mortgage defaults and foreclosures, business and personal bankruptcies galore, cratering commercial real estate, dying retail, crumbling infrastructure, dwindling trade, runaway medical expense, soaring food stamp applications.  Meanwhile, the major stock indices rallied. What's not clear is whether money is actually going somewhere or only the idea of "money" is appearing to go somewhere.  After all, if a company like Goldman Sachs can borrow gigantic sums of "money" from the Federal Reserve at zero interest, why would it not shovel that money into the burning furnace of a fake stock market rally?  Of course, none of this behavior has anything to do with productive activity.

      The theme for 2009 - well put by Chris Martenson - was "extend and pretend," to use all the complex trickery that can be marshaled in the finance tool bag to keep up the appearance of a revolving debt economy that produces profits, interest, and dividends, in spite of the fact that debt is not being "serviced," i.e. repaid.  There is an awful lot in the machinations of Wall Street and Washington that is designed deliberately to be as incomprehensible as possible to even educated people, but this part is really simple: if money is created out of lending, then the failure to pay back loaned money with interest kills the system.  That is the situation we are in.

      The inertia displayed by our system - especially its manifest ability to keep stock markets levitating in the absence of value creation - is strictly a function of its size and complexity. It is running on fumes. I thought it would finally crash and burn in 2009. The Dow Jones industrial average certainly fell on its ass last March, bottoming in the mid-6000 range.  But then it picked its sorry ass off the ground and rallied back up again thanks to bail-outs and ZIRPs and really no other place to look for returns on the accumulated wealth of the past two hundred years, especially for large institutions like pension funds that need income to function.  I'd called for a Dow at 4000. A lot of readers ridiculed that call.  Was it really that far off?

     A feature of 2009 easily overlooked is what a generally placid year it was around the world. Apart from the election uproar in Iran, there were few events of any size or potency to shove all the various wobbly things - central banks, markets, governments, etc - into failure mode.  So things just kept wobbling.  I don't think that state of affairs is likely to continue.  With that, on to the particulars.

The Year Ahead    

     Just about everything which evaded fate via gamed numbers, budgets, and balance sheets in 2009 seems destined to hit a wall in 2010.  To pick an arbitrary starting point, it is hard to see how states like California and New York can keep staving off monumental changes in their scale of operations with further budget trickery.  Those cans they've been kicking down the street have fallen through the sewer grate.  What will they do?  They can massively raise taxes or massively lay off employees and default on obligations - or they can do all these things. The net result will be populations with less income, arguably impoverished, suffering, and perhaps very angry about it.  Welcome to reality.  Will Washington bail the states out, too?  I wouldn't be surprised to see them pretend to do so, but not without immense collateral damage in everybody's legitimacy and surely an increase in US treasury interest rates.

      But backing up a moment, I'm writing between Christmas and New Year's Eve. The frenzied distractions of the holidays ongoing for much of Q4-2009 are still in force.  In a week or so, when the Christmas trees are hauled out to the curbs (and it turns out that municipal garbage pickup has been curtailed for lack of funds) a picture will start to emerge of exactly how retail sales went leading up to the big climax. My guess is that sales were dismal. Reports of such will start a train of events that sends many retail companies careening into bankruptcy, including some national chains, leading to lost leases in malls and strip malls, leading to a final push off the cliff for commercial real estate, leading to the failure of many local and regional banks, leading to the bankrupt FDIC having to go to congress directly to get more money to bail out the depositors, leading again to rising interest rates for US treasuries, leading to higher mortgage interest rates for whoever out there is crazy enough to venture to buy a house with borrowed money, leading to the probability that there are few of the foregoing, leading to another hard leg down in house values because so few are now crazy enough to buy a house in the face of falling prices - all of this leading to the recognition that we have entered a serious depression, which is only a facet of the greater period of hardship we have also entered, which I call The Long Emergency.

      This depression will be a classic deleveraging, or resolution of debt. Debt will either be paid back or defaulted on.  Since a lot can't be paid back, a lot of it will have to be defaulted on, which will make a lot of money disappear, which will make many people a lot poorer. President Obama will be faced with a basic choice.  He can either make the situation worse by offering more bailouts and similar moves aimed at stopping the deleveraging process - that is, continue what he has been doing, only perhaps twice as much, which may crash the system more rapidly - or he can recognize the larger trends in The Long Emergency and begin marshalling our remaining collective resources to restructure the economy along less complex and more local lines. Don't count on that.

      Of course, this downscaling will happen whether we want it or not. It's really a matter of whether we go along with it consciously and intelligently - or just let things slide. Paradoxically and unfortunately in this situation, the federal government is apt to become ever more ineffectual in its ability to manage anything, no matter how many times Mr. Obama comes on television. Does this leave him as a kind of national camp counselor trying to offer consolation to the suffering American people, without being able to really affect the way the "workout" works out? Was Franklin Roosevelt really much more than an affable presence on the radio in a dark time that had to take its course and was only resolved by a global convulsion that left the USA standing in a smoldering field of prostrate losers?

     One wild card is how angry the American people might get.  Unlike the 1930s, we are no longer a nation who call each other "Mister" and "Ma'am," where even the down-and-out wear neckties and speak a discernible variant of regular English, where hoboes say "thank you," and where, in short, there is something like a common culture of shared values.  We're a nation of thugs and louts with flames tattooed on our necks, who call each other "motherfucker" and are skilled only in playing video games based on mass murder. The masses of Roosevelt's time were coming off decades of programmed, regimented work, where people showed up in well-run factories and schools and pretty much behaved themselves. In my view, that's one of the reasons that the US didn't explode in political violence during the Great Depression of the 1930s - the discipline and fortitude of the citizenry.  The sheer weight of demoralization now is so titanic that it is very hard to imagine the people of the USA pulling together for anything beyond the most superficial ceremonies - placing teddy bears on a crash site.  And forget about discipline and fortitude in a nation of ADD victims and self-esteem seekers.

     I believe we will see the outbreak of civil disturbance at many levels in 2010.  One will be plain old crime against property and persons, especially where the sense of community is flimsy-to-nonexistent, and that includes most of suburban America. The automobile is a fabulous aid to crime. People can commit crimes in Skokie and be back home in Racine before supper (if supper is anything besides a pepperoni stick and some Hostess Ho-Hos in the car). Fewer police will be on guard due to budget shortfalls.

      I think we'll see a variety-pack of political disturbance led first by people who are just plain pissed off at government and corporations and seek to damage property belonging to these entities. The ideologically-driven will offer up "revolutionary" action to redefine some lost national sense of purpose. Some of the most dangerous players such as the political racialists, the posse comitatus types, the totalitarian populists, have been out-of-sight for years. They'll come out of the woodwork and join the contest over dwindling resources. Both the Left and the Right are capable of violence. But since the Left is ostensibly already in power, the Right is in a better position to mount a real challenge to office-holders. Their ideas may be savage and ridiculous, but they could easily sweep the 2010 elections - unless we see the rise of a third party (or perhaps several parties). No sign of that yet. Personally, I'd like to see figures like Christopher Dodd and Barney Frank sent packing, though I'm a registered Democrat. In the year ahead, the sense of contraction will be palpable and huge. Losses will be obvious.  No amount of jive-talking will convince the public that they are experiencing "recovery."  Everything familiar and comforting will begin receding toward the horizon.

Markets and Money

     I'll take another leap of faith and say that 6600 was not the bottom for the Dow. I've said Dow 4000 for three years in a row.  Okay, my timing has been off.  But I still believe this is its destination.  Given the currency situation, and the dilemma of no-growth Ponzi economies, I'll call it again for this year: Dow 4000. There, I said it. Laugh if you will....

    I'm with those who see the dollar strengthening for at least the first half of 2010, and other assets falling in value, especially the stock markets. The dollar could wither later on in the year and maybe take a turn into high inflation as US treasury interest rates shoot up in an environment of a global bond glut.  That doesn't mean the stock markets will bounce back because the US economy will only sink into greater disorder when interest rates rise.

        Right now there are ample signs of trouble with the Euro. It made a stunning downward move the past two weeks.  European banks took the biggest hit in the Dubai default.  Now they face the prospect of sovereign default in Greece, the Baltic nations (Estonia, Latvia, Lithuania), the Balkan nations (Serbia, et al), Spain, Portugal, Italy, Ireland, Iceland and the former soviet bloc of Eastern Europe. England is a train wreck of its own (though not tied into the Euro), and even France may be in trouble.  That leaves very few European nations standing.  Namely Germany and Scandanavia (and I just plain don't know about Austria). What will Europe do?  Really, what will Germany do? Probably reconstruct something like the German Deutschmark only call it something else... the Alt.Euro?  As one wag said on the Net: sovereign debt is the new sub-prime! The Euro is in a deeper slog right now than the US dollar (even with our fantastic problems), so I see the dollar rising in relation to the Euro, at least for a while. I'd park cash in three month treasury bills - don't expect any return - for safety in the first half of 2010. I wouldn't touch long-term US debt paper with a carbon-fiber sixty foot pole.

       I'm still not among those who see China rising into a position of supremacy.  In fact, they have many reasons of their own to tank, including the loss of the major market for their manufactured goods, vast ecological problems, de-stabilizing demographic shifts within the nation, and probably a food crisis in 2010 (more about this later).

     Though a seemingly more stable nation than the US, with a disciplined population and a strong common culture with shared values, Japan's financial disarray runs so deep that it could crash its government even before ours.  It has no fossil fuels of its own whatsoever.  And in a de-industrializing world, how can an industrial economy sustain itself? Japan might become a showcase for The Long Emergency.  On the other hand, if it gets there first and makes the necessary adjustments, which is possible given their discipline and common culture, they may become THE society to emulate!

     I'm also not convinced that so-called "emerging markets" are places where money will dependably earn interest, profits, or dividends.  Contraction will be everywhere. I even think the price of gold will retrace somewhere between $750 and $1000 for a while, though precious metals will hold substantial value under any conditions short of Hobbesian chaos. People flock to gold out of uncertainty, not just a bet on inflation. My guess is that gold and silver will eventually head back up in value to heights previously never imagined, and it would be wise to own some. I do not believe that the federal government could confiscate personal gold again the way it did in 1933. There are too many pissed off people with too many guns out there - and I'm sure there is a correlation between owners of guns with owners of gold and levels of pissed-offness.  A botched attempt to take gold away from citizens would only emphasize the impotence of the federal government, leading to further erosion of legitimacy.

            Bottom line for markets and money in 2010: so many things will be out of whack that making money work via the traditional routes of compound interest or dividends will be nearly impossible. There's money to be made in shorting and arbitrage and speculation, but that requires nerves of steel and lots and lots of luck.  Those dependent on income from regular investment will be hurt badly.  For most of us, capital preservation will be as good as it gets - and there's always the chance the dollar will enter the hyper-inflationary twilight zone and wipe out everything and everyone connected with it.

Peak Oil

      It's still out there, very much out there, a huge unseen presence in the story, the true ghost-in-the-machine, eating away at economies every day.  It slipped offstage in 2009 after the oil spike of 2008 ($147/barrel) over-corrected in early 2009 to the low $30s/barrel.  Now it's retraced about halfway back to the mid-$70s.  One way of looking at the situation is as follows.  Oil priced above $75 begins to squeeze the US economy; oil priced over $85 tends to crush the US economy.  You can see where we are now with oil prices closing on Christmas Eve at $78/barrel.

     Among the many wishful delusions operating currently is the idea that the Bakken oil play in Dakota / Montana will save Happy Motoring for America, and that the Appalachian shale gas plays will kick in to make us energy independent for a century to come.  Americans are likely to be disappointed by these things.

       Both Bakken and the shale gas are based on techniques for using horizontal drilling through "tight" rock strata that is fractured with pressurized water. It works, but it's not at all cheap, creates plenty of environmental mischief, and may end up being only marginally productive. At best, Bakken is predicted to produce around 400,000 barrels of oil a day.  That's not much in a nation that uses close to 20 million barrels a day.  Shale gas works too, though the wells deplete shockingly fast and will require the massive deployment of new drilling rigs (do we even have the steel for this?). I doubt it can be produced for under $10 a unit (mm/BTUs) and currently the price of gas is in the $5 range. In any case, we're not going to run the US motor vehicle fleet on natural gas, despite wishful thinking.

     Several other story elements in the oil drama have remained on track to make our lives more difficult.  Oil export rates continue to decline more steeply than oil field depletion rates.  Exporters like Iran, Mexico, Saudi Arabia, Venezuela, are using evermore of the oil they produce (often as state-subsidized cheap gasoline), even as their production rates go down.  So, they have less oil to sell to importers like the USA - and we import more than 60 percent of the oil we use. Mexico's Pemex is in such a sorry state, with its principal Cantarell field production falling off a cliff, that the USA's number three source of imported oil may be able to sell us nothing whatsoever in just 24 months.  Is there any public discussion about this in the USA?  No. Do we have a plan?  No.

     A new wrinkle in the story developing especially since the financial crisis happened, is the shortage of capital for new oil exploration and production - meaning that we have even poorer prospects of offsetting world-wide oil depletion.  The capital shortage will also affect development in the Bakken play and the Marcellus shale gas range.

            Industrial economies are still at the mercy of peak oil.  This basic fact of life means that we can't expect the regular cyclical growth in productive activity that formed the baseline parameters for modern capital finance - meaning that we can't run on revolving credit anymore because growth simply isn't there to create real surplus wealth to pay down debt.  The past 20 years we've seen the institutions of capital finance pretend to create growth where there is no growth by expanding financial casino games of chance and extracting profits, commissions, and bonuses from the management of these games - mortgage backed securities, collateralized debt obligations, credit default swaps, and all the rest of the tricks dreamed up as America's industrial economy was shipped off to the Third World.  But that set of rackets had a limited life span and they ran into a wall in October 2008. Since then it's all come down to a shell game: hide the giant pea of defaulted debt under a giant walnut shell.

       Yet another part of the story is the wish that the failing fossil fuel industrial economy would segue seamlessly into an alt-energy industrial economy.  This just isn't happening, despite the warm, fuzzy TV commercials about electric cars and "green" technology.  The sad truth of the matter is that we face the need to fundamentally restructure the way we live and what we do in North America, and probably along the lines of much more modest expectations, and with very different practical arrangements in everything from the very nature of work to household configurations, transportation, farming, capital formation, and the shape-and-scale of our settlements.  This is not just a matter of re-tuning what we have now.  It means letting go of much of it, especially our investments in suburbia and motoring - something that the American public still isn't ready to face.  They may never be ready to face this and that is why we may never make a successful transition to whatever the next economy is.  Rather, we will undertake a campaign to sustain the unsustainable and sink into poverty and disorder as we fight over the table scraps of the old economy... and when the smoke clears nothing new will have been built.

       President Obama has spent his first year in office, and billions of dollars, trying to prop up the floundering car-makers and more generally the motoring system with "stimulus" for "shovel-ready" highway projects.  This is exactly the kind of campaign to sustain the unsustainable that I mean.  Motoring is in the process of failing and now for reasons that even we peak oilers didn't anticipate a year ago. It's no longer just about the price of gasoline.  The crisis of capital is making car loans much harder to get, and if Americans can't buy cars on installment loans, they are not going to buy cars, and eventually they will not be driving cars they can't buy. The same crisis of capital is now depriving the states, counties, and municipalities of the means to maintain the massive paved highway and street system in this country. Just a few years of not attending to that will leave the system unworkable.

     Meanwhile President Obama has given next-to-zero money or attention to public transit, to repairing the passenger railroad system in particular.  I maintain that if we don't repair this system, Americans will not be traveling very far from home in a decade or so. Therefore, Mr. Obama's actions vis-à-vis transportation are not an intelligent response to our situation.  And for very similar reasons, the proposal for a totally electric motor vehicle fleet, as a so-called "solution" to the liquid fuels problem, is equally unintelligent and tragic. Of course something else that Mr. Obama has barely paid lip-service to is the desperate need to retool our living places as walkable communities. The government now, at all levels, virtually mandates suburban arrangements of the most extremely car-dependent kind. Changing this has to move near the top of a national emergency priority list, if we have one.

     Even with somewhat lower oil prices in 2009, the airlines still hemorrhaged losses in the billions, and if the oil price remains in the current zone some of them will fall back into bankruptcy in 2010.  Oil prices may go down again in response to crippled economies, but then so will passengers looking to fly anywhere, especially the business fliers that the airlines have depended on to fill the higher-priced seats. I believe United will be the first one to go down in 2010, a hateful moron of a company that deserves to die.

     My forecast for oil prices this year is extreme volatility.  A strengthening dollar might send oil prices down (though that relationship has temporarily broken down this December as both oil prices and the dollar went up in tandem for the first time in memory). So could the cratering of the stock markets, or a general apprehension of a floundering economy.  But the oil export situation also means there is less and less wiggle room every month for supply to keep pace with demand, even in struggling economies if they are dependent on foreign imports. Another part of the story that we don't pay attention to is the potential for oil scarcities, shortages, and hoarding. We may see the reemergence of those trends in 2010 for the first times since 1979.

Geopolitics

     The retracement of oil prices in 2009 took place against a background of relative quiet on the geopolitical scene.  With economies around the world sinking into even deeper extremis in 2010, friction and instability are more likely. The more likely locales for this are the places where most of the world's remaining oil is: the Middle East and Central Asia. The American army is already there, in Iraq and Afghanistan, with an overt pledge to up-the-ante in Afghanistan. It's hard to imagine a happy ending in all this. It's increasingly hard to even imagine a strategic justification for it.  My current (weakly-held) notion is that America wants to make a baloney sandwich out of Iran, with American armies in Iraq and Afghanistan as the Wonder Bread, to "keep the pressure on" Iran. Well, after quite a few years, it doesn't seem to be moderating or influencing Iran's behavior in any way. Meanwhile, Pakistan becomes more chaotic every week and our presence in the Islamic world stimulates more Islamic extremist hatred against the USA. Speaking of Pakistan, there is the matter of its neighbor and adversary, India. If there is another terror attack by Pakistan on the order of last year's against various targets in Mumbai, I believe the response by India is liable to be severe next time, leading to God-knows-what, considering both countries have plenty of atom bombs.

      Otherwise, the idea that we can control indigenous tribal populations in some of Asia's most forbidding terrain seems laughable. I don't have to rehearse the whole "graveyard of empires" routine here. But what possible geo-strategic advantage is in this for us?  What would it matter if we pacified all the Taliban or al Qaeda in Afghanistan? Most of the hardest core maniacs are next door in Pakistan.  Even if we turned Afghanistan into Idaho-East, with Kabul as the next Sun Valley, complete with Ralph Lauren shops and Mario Batali bistros, Pakistan would remain every bit as chaotic and dangerous in terms of supplying the world with terrorists. And how long would we expect to remain in Afghanistan pacifying the population?  Five years?  Ten Years? Forever? It's a ridiculous project. Loose talk on the web suggests our hidden agenda there was to protect a Conoco pipeline out of Tajikistan, but that seems equally absurd on several grounds.  I can't see Afghanistan as anything but a sucking chest wound for dollars, soldiers' lives, and American prestige.

     What's more, our presence there seems likely to stimulate more terror incidents here in the USA. We've been supernaturally lucky since 2001 that there hasn't been another incident of mass murder, even something as easy and straightforward as a shopping mall massacre or a bomb in a subway.  Our luck is bound to run out.  There are too many "soft" targets and our borders are too squishy. Small arms and explosives are easy to get in the USA.  I predict that 2010 may be the year our luck does run out.  Even before the start of the year we've seen the attempted Christmas bombing of Northwest-KLM flight 253 (Amsterdam to Detroit). One consequence of this is that it will only make air travel more unpleasant for everybody in the USA as new rules are instated limiting bathroom trips and blankets in the final hour of flight.

      As far as the USA is concerned, I think we have more to worry about from Mexico than Afghanistan. In 2009, the Mexican government slipped ever deeper into impotence against the giant criminal cartels there. As the Cantarell oil field waters out, revenue from Pemex to the national government will wither away and so will the government's ability to control anything there. The next president of Mexico may be an ambitious gangster straight out of the drug cartels, Pancho Villa on steroids.

      Another potential world locale for conflict may be Europe as the European Union begins to implode under the strains of the monetary system. The weaker nations default on their obligations and Germany, especially, looks to insulate itself from the damage.  Except for the fiasco in Yugoslavia's breakup years ago, Europe has been strikingly peaceful for half a century.  For most of us now living who have visited there, it is almost impossible to imagine how violent and crazy the continent was in the early twentieth century. I wonder what might happen there now, with more than a few nations failing economically and the dogs of extreme politics perhaps loosed again.  History is ironical.  Perhaps this time the Germans will be the good guys, while England goes apeshit with its BNP.  Wouldn't that be something?

     One big new subplot in world politics this year may be the global food shortage that is shaping up as a result of spectacular crop failures in most of the major farming regions of the world.  The American grain belt was hit by cold and wet weather and the harvest was a disaster, especially for soybeans, of which the USA produces at least three-quarters of the world's supply.  Crops have also failed in Northern China's wheat-growing region, in Australia, Argentina, and India. The result may range from extremely high food prices in the developed world to starvation in other places, leading to grave political instability and desperate fights over resources. We'll have an idea where this is leading by springtime. It maybe the most potent sub-plot in the story for 2010.

Conclusions

     The Long Emergency is officially underway.  Reality is telling us very clearly to prepare for a new way of life in the USA. We're in desperate need of decomplexifying, re-localizing, downscaling, and re-humanizing American life.  It doesn't mean that we will be a lesser people or that we will not recognize our own culture.  In some respects, I think it means we must return to some traditional American life-ways that we abandoned for the cheap oil life of convenience, comfort, obesity, and social atomization.

     The successful people in America moving forward will be those who attach themselves to cohesive local communities, places with integral local economies and sturdy social networks, especially places that can produce a significant amount of their own food. I don't think that we'll be living in a world without money, some medium of exchange above barter, but it may not come in the form of dollars. My guess is that for a while it may be gold and silver, or possibly certificates issued by bank-like institutions representing gold-on-hand. In any case, I doubt we'll arrive there this year. This is more likely to be the year of grand monetary disorders and continued shocking economic contraction.

     Political upheaval can get underway pretty quickly, without a whole lot of warning.  I'm still waiting to hear the announced 2009 bonuses for the employees of the TBTF banks.  All they said before Christmas was that thirty top Goldman Sachs employees would be paid in stock instead of money this year, but no other big banks have made a peep yet.  I suppose they'll have to in the four days before New Years.  I still think that could be the moment that shoves some disgruntled Americans into the arena of protest and revolt.  Beyond that, though, there is plenty room for emotions to run wild and for behavior to get weird.

        President Obama will have to make some pretty drastic moves to salvage his credibility. I see no sign of any intention to seriously investigate or prosecute financial crimes. Yet the evidence of misdeeds piles higher and higher - just this week new comprehensive reports of Goldman Sachs's irregularities in shorting their own issues of mortgage-backed securities, and a report on the Treasury Department's issuance of treasuries to "back-door" dumpers of toxic mortgage backed securities. And on Christmas Eve, when nobody was looking, the Treasury lifted the ceiling on Fannie Mae and Freddie Mac's backstop money to infinity. Even people like me who try to pay close attention to what's going on have lost track of all the various TARPs, TALFs, bailouts, stimuli, ZIRP loans, and handovers to every bank and its uncle in the land.

     Good luck to readers in 2010. To paraphrase Tiny Tim: God help us, every one....

h/t Steve Koh

 


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 12/30/2009 - 14:00 | Link to Comment CheapKUNGFU
CheapKUNGFU's picture

First time I have agreed with EVERY word of a piece like this...

I am no Chumbawamba, buy gold bithces!

And these math questions are getting more difficult.

Wed, 12/30/2009 - 14:00 | Link to Comment RobotTrader
RobotTrader's picture

Seems like every time a Gloom and Doomer posts something like this, the following happens:

1.  Dollar rallies to new highs, re-establishing itself as the premier reserve currency

2.  Consumer stocks, REIT's go even higher as short interest reaches unsustainable levels (read today's WSJ about the insane put activity in the REITs).

3.  Treasury yields collapse, as the fearful public is scared by the huge advance in stocks, and pile even more of their savings into bond funds.

4.  Short-term traders instantly flock to T-Bills upon the slightest whiff of trouble in stocks.  Ergo, witness today's T-Bill auction at ZERO PERCENT!!

Just more of the same self-reinforcing feedback loops, egged on by aggressive momentum traders who pay no attention to the news feeds.

 

LOL....

 

 

Wed, 12/30/2009 - 14:24 | Link to Comment RobotTrader
RobotTrader's picture

Wed, 12/30/2009 - 23:41 | Link to Comment Rusty Shorts
Rusty Shorts's picture

GS is the Monolith, or...Polylith?

Wed, 12/30/2009 - 15:00 | Link to Comment john_connor
john_connor's picture

Somewhere in between the gloom and doom and a stock explosion to SnP 1400 is something very nasty, like a stagflationary environment where stocks oscillate within a trading range.  IMO, however, we are at or near the top of that range, notwithstanding the bullish flag that would take us up another 50-60 SnP points or so.  Dow 4000?  Dunno, seems a bit extreme; however anything is possible with the O team at the helm.

Just another day at the tables.

Wed, 12/30/2009 - 16:43 | Link to Comment El Hosel
El Hosel's picture

Robo,

Nothing could be more sane than put activity in the REITs.

Collapse in yields?

http://stockcharts.com/h-sc/ui?s=$tnx&p=W&yr=3&mn=0&dy=0&id=p76142745927

Wed, 12/30/2009 - 19:53 | Link to Comment Problem Is
Problem Is's picture

"Seems like every time a Gloom and Doomer posts something like this, the following happens..."

Mr. Kunstler has been consistent with his views week in and week out, year in and year out.

To investors timing is everything, it determines your profit. To the masses, if Mr. Kunstler's analysis is correct, then timing is only important to the extent that you are in a reasonably secure sustainable place when the giant turd from the sky comes crapping down.

So to the masses, did you predict the S&P in 2009 is of less importance than the trend indicated and what to do about it. Mr. Kunstler has given consistently the same analysis, adjusting for new facts along the way, as markets have been up and markets have been down.

If this is the first time you have read his work, then maybe the second time the markets will be down... taking probability AND market manipulation into account.

Wed, 12/30/2009 - 14:02 | Link to Comment Segestan
Segestan's picture

Totally .. Disagree. Saving the auto industry is more important than any foreign war. What Obama has failed at is re-industrialization. Banning third worlders. Putting Heavy tariffs on everything they sell. Creating a level playing field.

Wed, 12/30/2009 - 18:59 | Link to Comment Anonymous
Thu, 12/31/2009 - 01:49 | Link to Comment sethstorm
sethstorm's picture

For once, someone doesn't just cheer for the East. 

...but then there are folks just returning the favor to junk your reply.

 

Thu, 12/31/2009 - 19:49 | Link to Comment jm
jm's picture

This will guarantee a depression and war.  Anybody with children or grandchildren should junk this bullshit.

We should and do manufacture what we are the best at: tech.  If industrial sectors are too incompetent or socialized to make items that people will buy, then fuck them. 

 

Sun, 01/03/2010 - 14:46 | Link to Comment Uncle Remus
Uncle Remus's picture

BAAAAAAAAAAAAAAAAAAAAHAHAHAHAHAHAHAHAHAHA.

Jeebus, that was funny.

Wed, 12/30/2009 - 14:16 | Link to Comment Crime of the Century
Crime of the Century's picture

I am not a Kunstler fan, and agree with many of his points grudgingly. He talks his book(s), but he certainly is articulate and readable. His biases are not hidden, so that is certainly a point in his favor. I just happen to prefer Celente when it comes to getting my bad news 200 proof.

Wed, 12/30/2009 - 14:23 | Link to Comment Internet Tough Guy
Internet Tough Guy's picture

Kunstler predicts TEOTWAWKI every Dec. 31. At least Denninger goes back and scores his predictions after the fact.

Wed, 12/30/2009 - 14:30 | Link to Comment Anonymous
Wed, 12/30/2009 - 16:52 | Link to Comment Blindweb
Blindweb's picture

Chapman, Celente, and Kunstler all agree on PMs at least

Wed, 12/30/2009 - 14:15 | Link to Comment TraderMark
TraderMark's picture

A thought provoking, if rosy, counter argument by The Economist

America - the Ponzi Scheme that Works!

http://www.fundmymutualfund.com/2009/12/economist-america-ponzi-scheme-that.html

Wed, 12/30/2009 - 14:53 | Link to Comment Andrei Vyshinsky
Andrei Vyshinsky's picture

"America - the Ponzi Scheme that Works!

For whom?

Wed, 12/30/2009 - 14:58 | Link to Comment cougar_w
cougar_w's picture

Wouldn't claiming "I have a working Ponzi scheme you should invest in" normally constitute a felony?

cougar

Fri, 01/01/2010 - 14:40 | Link to Comment PolishHammer
PolishHammer's picture

until it doesn't

 

The Economist writers have no clue about the life in the U.S.  What a fairy tale.

Wed, 12/30/2009 - 14:22 | Link to Comment A Man without Q...
A Man without Qualities's picture

"European banks took the biggest hit in the Dubai default."

I was not aware there had been a default yet?

Wed, 12/30/2009 - 15:01 | Link to Comment cougar_w
cougar_w's picture

Think of it as a sort rolling default. Even an massive avalanche starts as something small.  But as soon as you see it coming you cano go ahead and write yourself off.

cougar

Wed, 12/30/2009 - 14:24 | Link to Comment primus
primus's picture

I like JHK Clusterfuck Nation. I have it bookmarked along with ZH. I have yet to hear anyone put together a cohesive argument against anything JHK says. The thing is, much of what he says will play out over the next 50 years.

As for his '10 prediction, my fiancee is a prosecutor for the state. One paragraph rang especially true:

"Unlike the 1930s, we are no longer a nation who call each other "Mister" and "Ma'am," where even the down-and-out wear neckties and speak a discernible variant of regular English, where hoboes say "thank you," and where, in short, there is something like a common culture of shared values.  We're a nation of thugs and louts with flames tattooed on our necks, who call each other "motherfucker" and are skilled only in playing video games based on mass murder."

Thugs and Louts indeed.

Wed, 12/30/2009 - 14:43 | Link to Comment Zombie Investor
Zombie Investor's picture

After that Barbara Boxer incident, I don't think we'll be hearing the word "ma'am" anymore.

Wed, 12/30/2009 - 20:01 | Link to Comment Problem Is
Problem Is's picture

In California, if you call a woman around your age "ma'am" they instantly think:

1. You are calling them old.... grandma old.

2. You are implying they are much older than you (see 1).

Unless you have a southern accent. My friend says "ma'am" with his big ole thick Ar Kansas accents and women eat it up. I said it and I got "Don't you 'ma'am' me!" It's a regional thing...

Wed, 12/30/2009 - 21:01 | Link to Comment A Nanny Moose
A Nanny Moose's picture

Perhaps she prefers to be called Babs. Somebody dropped a house on her sister fo' sho'

Sun, 01/03/2010 - 14:49 | Link to Comment Uncle Remus
Uncle Remus's picture

*snort*

Wed, 12/30/2009 - 15:06 | Link to Comment cougar_w
cougar_w's picture

Yup. That is the sort of raw meta-analysis JHK does best. You have to read his stuff very carefully and think about what he is saying about people as much as about situations. It is the people that will either save you, or kill you.

"The Long Emergency" was a breathtaking read. His exact predictions could be 100% wrong and yet he remains 100% correct. And if you don't understand how could work then you don't really understand the human drama.

cougar

Wed, 12/30/2009 - 16:50 | Link to Comment Anonymous
Thu, 12/31/2009 - 01:39 | Link to Comment rational
rational's picture

I actually found this one of the most wrong-headed statements in this rant.   More to the point unlike the 1930's we have social security, unemployment insurance and foodstamps.  I won't argue that these are infinitely sustainable, but the fact is we don't have and won't soon see the kind of desperate anger that having an empty belly and hungry children at home breeds.

Wed, 12/30/2009 - 14:27 | Link to Comment Anonymous
Wed, 12/30/2009 - 14:31 | Link to Comment DaveyJones
DaveyJones's picture

saw this yesterday. Kunstler and Chris Martenson are some of the more interesting (and eloquent) voices in the forest of the trees.

Wed, 12/30/2009 - 14:35 | Link to Comment no cnbc cretin
no cnbc cretin's picture

Jim, is a very smart guy. People who don't like him, are people that just don't get it.

Wed, 12/30/2009 - 14:38 | Link to Comment The Rock
The Rock's picture

Kindles and swindles bitches!!

Wed, 12/30/2009 - 14:38 | Link to Comment Implosion Therapy
Implosion Therapy's picture

It seems that all the predictions range from not so bad to buy gold and go long on lead...if those are the margins then either way its not gonna be pretty. Im an economic idiot so its scary watching the debate in that light...I rarely see anybody say the sun is rising and the birds are chirping ,all is well in The Republic.

Wed, 12/30/2009 - 15:08 | Link to Comment Mad Max
Mad Max's picture

I rarely see anybody say the sun is rising and the birds are chirping ,all is well in The Republic.

Just turn on any of the major networks or CNBC... stay away from Bloomberg though.  Not enough Prozac being shipped there, apparently.

Wed, 12/30/2009 - 15:17 | Link to Comment cougar_w
cougar_w's picture

What is scary about Kunstler is that he digs into what motivates people, and what they do from motivation. He's a lot like Albert Hitchcock that way. Bordering creepy.

Readers on ZH like to focus on discrete outcomes, like the price of an asset, because that is where the arbitrage opportunities exist. But lurking in the shadows behind outcomes are motivations. Motivations shape great events, and we are currently mired in a great event. Perhaps the greatest in a century. Or even ten centuries. And the unexamined motivations of the playerz are driving everyone forward into the unknown like sheep to a precipice.

It will turn out to be much tougher to arbitrage the unknown. That is the realm of politics and demagoguery, not economics (CDS not withstanding) and the unknown often becomes the fertile ground of much mischief and madness.

cougar

Wed, 12/30/2009 - 16:13 | Link to Comment Anonymous
Wed, 12/30/2009 - 16:53 | Link to Comment Anonymous
Wed, 12/30/2009 - 14:43 | Link to Comment Rainman
Rainman's picture

I vividly recall the public outrage and distrust of government during the VietNam era. But I have not witnessed those same feelings applying to BOTH government AND private financial institutions simultaneously until now. I suspect the mood will worsen with the incompetent, greedy and corrupt leadership we presently have in both sectors.

Furthermore, a surprise military conflict of major proportion is very likely in a period of multinational economic distress......not a Grenada, Iraq, Afghanistan skirmish......but a much more resource heavy confrontation bred by policymaking weaknesses and sovereign debt defaults.

Saddle up for a rough ride these next 3 years.

 

Wed, 12/30/2009 - 14:49 | Link to Comment Anonymous
Wed, 12/30/2009 - 14:52 | Link to Comment Anonymous
Wed, 12/30/2009 - 15:26 | Link to Comment cougar_w
cougar_w's picture

And what's really strange right now is that I don't think anyone can clearly make a case the it is either "yes" or "no".

This is life at the bottom of the rabbit hole, where the rules are made up as you go. If the answer is "yes you can do that" then what sort of world emerges on the other side? I mean, think about that a moment. It's like we've passed through a black hole in space-time and end up in another universe with vastly different physical laws.

The "laws" of economics gleaned over centuries as if by a priestly class interpreting the Divine Will of God as revealed in chicken entrails would simply cease to exist. All we thought we knew about fiat money systems would need to be rewritten. Ideas concerning asset real value, reexamined. The proper role of central banking, up for grabs. I seriously cannot guess where we end up if the answer turns out to be "yes you can do that".

cougar

Wed, 12/30/2009 - 15:48 | Link to Comment Mad Max
Mad Max's picture

I wouldn't worry about this too much, because I don't see it being possible that "yes you can do that" will work indefinitely.  I do remember that absurd things have a tendency to last longer than they should, but not forever.

Wed, 12/30/2009 - 17:52 | Link to Comment cougar_w
cougar_w's picture

What if "capitalism" as we frame it is the absurdity? A couple hundred years is a good run, but it might have been fueled less on pragmatism and reality and more on free energy, and the shift might have happened a long time ago and been lost to racial memory. The invisible hand may be invisible precisely because it is not there.

Many here lament the "death of real capitalism". So I'm not too far off the mark. The question must then be... will it ever return?

Well ...  what if it can't? What if the engine not only has fallen out the bottom, but was never evident? The whole thing could have been a head-fake which the winners (every one of us here) took as a literal blessing from God and a sign of The Most Wondrous Machine.

Probably not the usual fodder for ZH. I'm just grappling with the prospect that BB+gang pull of something and that this is a signal all by itself. A signal that we've been fooling ourselves. We won't know for a few years ... but if this Ponzi fraud turns out to have legs, then I'm saying the prior rules of the game are toast and everything we thought about value and productive investment is then as useless a yardstick as smoke to measure anything.

cougar

Wed, 12/30/2009 - 18:32 | Link to Comment Anonymous
Wed, 12/30/2009 - 18:34 | Link to Comment Mad Max
Mad Max's picture

That's an interesting point, but my knowledge of history (and it wasn't my major) tells me that some form of capitalism has been the standard and default form of human existence since the Sumerians, and all other "economic systems" have been short term aberrations.

Of course, you could quite reasonably argue that the modern US system really is not capitalism.

Thu, 12/31/2009 - 02:31 | Link to Comment Seer
Seer's picture

The absudity is the Ponzi Scheme of perpetual growth on a finite planet.  Capitalism just happens to be the most efficient vehicle for growth-creation.  Capitalism is best defined through/by Jevons Paradox.

Economics itself is the story line told by the ruling rich.  It's the story that keeps them in power: infinite growth is no different than "just click your heels together"... (BTW - I'd once heard that The Wizrd of Oz was based on the rich greedy bankers)

Wed, 12/30/2009 - 16:29 | Link to Comment trav777
trav777's picture

Bear in mind that the athenians continued to accept copper coins at face long after their true value had fallen.  They knew it was a token currency and yet everybody conspired to say so what.

The answers to those questions posed are easy...no, no, and no.

You cannot get something for nothing.  The laws of physics TRUMP the supposed laws of economics.  Don't give a shit how cheaply you give money away, it won't make pumping water uphill to let it flow downhill produce more net energy.  Period.  The laws of thermodynamics and all physical sciences are INVIOLABLE.

You pit the will of man against the physical world and the world wins.  This isn't The Matrix, where reality is plastic.

Money does not melt steel.   Money does not power cars.  Money does not make things move.  Energy does.  Our entire set of beliefs about economics is a joke...it always was about energy.  Don't believe me?  Try not eating, see how far your creativity stretches. 

Wed, 12/30/2009 - 16:56 | Link to Comment Anonymous
Wed, 12/30/2009 - 18:52 | Link to Comment trav777
trav777's picture

And I think you are out of your fkin mind.

Jump off a building and concoct some reality for me.  Gravity will be there waiting to embrace you whether you like it or not, whether you believe it or not, whether you accept it or not.

I used no metaphors, I said that physics trumps economics.

Wed, 12/30/2009 - 16:49 | Link to Comment Anonymous
Wed, 12/30/2009 - 21:32 | Link to Comment Anonymous
Thu, 12/31/2009 - 12:16 | Link to Comment Anonymous
Thu, 12/31/2009 - 12:18 | Link to Comment Anonymous
Thu, 12/31/2009 - 12:20 | Link to Comment Anonymous
Wed, 12/30/2009 - 14:58 | Link to Comment Anonymous
Wed, 12/30/2009 - 15:36 | Link to Comment cougar_w
cougar_w's picture

It feels good and at the same time if you have young children it is a continuous nightmare.

Kunstler can be 100% wrong on the details and yet be 100% correct in the end, because we are not facing a series of outcomes any more but the resolution of a position a hundred years in the making, or two-hundred. The glass house is breaking, and we are in it. It is not the individual sharps falling that matter then, but the slow rolling avalanche of them all that will cut us to pieces.

A future of rolling dismemberment is the most horrific thing I can contemplate. Clive Barker could work with this stuff.

cougar

Wed, 12/30/2009 - 23:38 | Link to Comment Anonymous
Wed, 12/30/2009 - 15:21 | Link to Comment Anonymous
Wed, 12/30/2009 - 15:22 | Link to Comment ozziindaus
ozziindaus's picture

I lost interest and, IMO, James lost credibility once he started ranting on about the Islamist terrorist fear mongering horse shit. The US has never been attacked that it didn't either plot, plan, execute or have prior knowledge of. Why would it happen now? Does it want it to happen? Is this a self fulfilling prophesy?

Dow 4000 seems plausible but not in 2010. The market can not bottom for many more years just by the shear nature of the statement. What is expected to reignite the market and cause it to rise again within a year? 

Wed, 12/30/2009 - 15:24 | Link to Comment Anonymous
Wed, 12/30/2009 - 15:24 | Link to Comment Orly
Orly's picture

If Americans decide to rise up in the "social upheaval" sense that Kunstler talks about (and I sure hope they do...), change could come much more rapidly than one thinks.

Just look at the period between 1965 and 1975- a mere ten years- and what upheaval came in all matters of social construct, economic viability and generational outlook.  True, these were the Baby Boomers and they screwed it up beyond belief...but my point is that it was fast.

Get ready coz here I come...

Wed, 12/30/2009 - 15:42 | Link to Comment Anonymous
Thu, 12/31/2009 - 00:11 | Link to Comment Orly
Orly's picture

I didn't mean worthless, ether.  I meant swift.

Quick, close your eyes:

Kennedy dead

Johnson out

Nixon out

Ford gone

Carter the clown

How long did that take? Seems like fifteen minutes...and that's only the politics.  Didn't even mention King, Lennon or the Berlin Wall.

Things tend not to evolve slowly. Rather, the change is brutal and ruthless, swift and decisive.  That's all I meant.

I only hope that we don't screw this one up, too.

Thu, 12/31/2009 - 00:18 | Link to Comment Anonymous
Thu, 12/31/2009 - 10:37 | Link to Comment Anonymous
Thu, 12/31/2009 - 04:44 | Link to Comment Anonymous
Wed, 12/30/2009 - 19:32 | Link to Comment Anonymous
Wed, 12/30/2009 - 15:32 | Link to Comment Anonymous
Wed, 12/30/2009 - 15:33 | Link to Comment Brahms Third Racket
Brahms Third Racket's picture

"We're a nation of thugs and louts with flames tattooed on our necks, who call each other "motherfucker" and are skilled only in playing video games based on mass murder."

Ouch!

I do disagree somewhat with his notion about the public's response in the last great depression. We certainly were a more "polite" people then.  However anger was beginning to boil up. The reason it didn't explode was that the elites of that time at least had enough sense to cobble together some "make work" job programs like WPA and CCC that were actually effective in so far as they kept people busy and put some money in their pockets. Amazingly, for some reason, nothing of this sort has even been seriously considered this time around. I guess that diverting some money to help the people would have meant that much less for today's bankers. Can't have that.

 

Wed, 12/30/2009 - 15:46 | Link to Comment Mad Max
Mad Max's picture

If you're reading ZH, you at least have access to a computer with internet, and an interest in finance and big picture economics.  Chances are very good you have a college degree (especially given your articulate comments) if not more.  You are not the type of ignorant, lazy mob animal who he is warning about.  If you want to see who he's warning about, go to a local Walmart during normal bankers' hours (9-4:30), visit a local bar that doesn't look nice and is in a marginal area, or go to an NFL game in a major city (Green Bay doesn't count) and watch the crowd (box seats and 50 yard line doesn't count, either).  I think you will see what his warning is about.

Also, be mindful of the "Bonus Army" and the fact that the 1930's did in fact have some social unrest.  I don't think a black in the south in 1933 would have said all was peaceful and orderly.

Wed, 12/30/2009 - 16:08 | Link to Comment WaterWings
WaterWings's picture

Well put, Mel Gibson.

Wed, 12/30/2009 - 16:17 | Link to Comment Brahms Third Racket
Brahms Third Racket's picture

LOL..No, I didn't think he was referring to me personally. That was just one of the most cuttingly concise descriptions I've seen.  And I've been to Jets and Eagles games (cheap seats) so...yeah.

Wed, 12/30/2009 - 16:37 | Link to Comment trav777
trav777's picture

well, we didn't have a entertainment clan then whose product glorified the basest among us.  The base people were kept in check with violence.  You could even slap women then and they you and people would whenever anyone's mouth got out of line.

Backlash will grow against those who will have appeared to have destroyed us.  One need only understand what Bavarian producers called weimarks to get what happened 10 years later.

The disproportionate ethnic composition of Hollywood and the banking community poses a huge risk to Kunstler because he is of the same ethnicity.  Surely he has a 2nd passport like the rest do.

Wed, 12/30/2009 - 22:16 | Link to Comment Hammer59
Hammer59's picture

Good observation.

Wed, 12/30/2009 - 23:42 | Link to Comment Anonymous
Wed, 12/30/2009 - 15:42 | Link to Comment Gimp
Gimp's picture

Thought provoking. Very well written. He does bring interesting points of which you hear no discussions on by our inept political or business leaders:

1. Serious oil shortages within 24 months

2. Rising food prices

3. Wasteful wars in far away places that have little to do with national security

4. Massive sovergin defaluts leading to civil unrest

5. Collapse of Mexico which is very real and much more serious to the USA then Afganistan ever was

6. Finally the on-going chaos in Pakistan that is likely to imploe in 2010 leading to more terrorist attacks worldwide.

Apart from the above everything is peachy and I am looking forward to the Superbowl. Happy New Year!

Wed, 12/30/2009 - 16:08 | Link to Comment Anonymous
Wed, 12/30/2009 - 20:45 | Link to Comment Rainman
Rainman's picture

And don't forget the thousands of fucked-over WWI veteran pensioners getting the shit kicked out of them by General MacArthur's troops in D.C. It's a chilling history lesson for those contemplating a run on the Capitol to confront our government masters.

Wed, 12/30/2009 - 16:13 | Link to Comment Anonymous
Wed, 12/30/2009 - 16:16 | Link to Comment Gimp
Gimp's picture

sorry about the typos and spelling errors

Wed, 12/30/2009 - 16:28 | Link to Comment Zina
Zina's picture

"The next president of Mexico may be an ambitious gangster straight out of the drug cartels, Pancho Villa on steroids." - It's no problem: Colombia already has a president (Alvaro Uribe) that is an ambitious gangster straight out of the drug cartels. And he's a good friend of  US government.

Ronaldo!

 

Wed, 12/30/2009 - 16:36 | Link to Comment Mad Max
Mad Max's picture

If you think that the US "war on drugs" may be, ahem, a little peculiar, I highly suggest the book "Reefer Madness" that came out within the last 10 years.

Wed, 12/30/2009 - 16:59 | Link to Comment WaterWings
WaterWings's picture

Exato, as melhores amizades no mundo tem a ver com as drogas. De qual parte do Brasil e voce?

Wed, 12/30/2009 - 17:41 | Link to Comment Zina
Zina's picture

Xurupita! Um salve pros mano da Xurupita!

Wed, 12/30/2009 - 18:48 | Link to Comment WaterWings
WaterWings's picture

Incrivel. Demorou! Demorou! Engraçadíssimo.

http://www.youtube.com/watch?v=Z1Q9BzYBFnU

Wed, 12/30/2009 - 18:55 | Link to Comment trav777
trav777's picture

WE ARE BAHIA!!

Wed, 12/30/2009 - 16:46 | Link to Comment Anonymous
Wed, 12/30/2009 - 16:47 | Link to Comment Anonymous
Wed, 12/30/2009 - 21:12 | Link to Comment spekulatn
spekulatn's picture

Well said, #178160.

 

I don't mind reading Mr. Kunstler, as long as I keep a fresh perspective.

SNIP>>

 

What to Ask

In coming to the Oracle, it is important that you remain cognizant of the following four stages of consultation:

 

  • Step 1: Clearly Understand Your Reasons for Seeking the Oracle. You should be motivated by a need to have answered an important question about your life. In other words, it’s a waste of time to ask the Oracle about the right time is to get a haircut: the Oracle works on a much larger scale.

     

  • Step 2: Formulate Your Question. Recognize that in ancient times, you would have been interviewed by the attending priests in preparation for an audience with the Oracle. The priests were responsible for ensuring that cases brought before the Oracle were genuine and possessed of an appropriate gravitas. You would have undergone rituals to assist in the proper framing of your question. As those ancient “controls” are not present here, you are asked to take your time in the formulation of a question that is relevant, useful, and beneficial.
  •  

  • Step 3: Pose Your Question. Entering the Adydon (the holiest part of the Temple of Apollo) and clicking the Submit button is the modern-day equivalent of putting your question to the Pythia. As was the case in ancient times, your answer will come instantly.
  •  

  • Step 4: Contemplate The Response. Oracles are meant to give advice to shape your future actions. At times, the answer can seem ambiguous – but that is a key aspect of its wisdom: How you interpret the Pythia’s words says as much about you as it does about the Oracle.

May you find what you seek.

 

http://www.delphicoracle.net/

 

 

HAPPY NEW YEAR ZEROHEDGIES

 

Wed, 12/30/2009 - 16:58 | Link to Comment Forbes
Forbes's picture

>"Loose talk on the web suggests our hidden agenda there was to protect a Conoco pipeline out of Tajikistan, but that seems equally absurd on several grounds."

Umm, the pipeline was a Unocal project proposed in 1997. Project never got off the ground. That's some mighty loose talk...maybe try some web browsing to learn the facts, then you won't get distracted by strawman arguments, conspiracy theories, and, well, loose talk...just a thought.

Wed, 12/30/2009 - 17:57 | Link to Comment SDRII
SDRII's picture

if you don't think that pipeline politics has anything to do with afpak presence and a blocking manuever for land routes to china then you are simply misinformed on the latest iteration of the great game - there is a reason Brezhinkski has been dusted off for another go around. Case and point, note the recently inagurated pipeline from tajik (or Kirgst?) to China and the proposed iranian pipelines to terminate in india (with implications for filling nabucco and obviating some of the strategic noose over the straits of malacca held by the US Navy).

By extension, the Yemen scenario is timely. Over a month ago the Saudis sent in the air force and the US was already assisting per reports with specops people, likely deployed from the relatively recently inagurated Africom command right across the water on the African continent. To no-one's surprise (outside of the MSM reports on al queada), the Yemen insurgency is reportedly iranian backed.

 

Thu, 12/31/2009 - 00:24 | Link to Comment Orly
Orly's picture

Now you're putting the pieces together SDRII.

It is all about the pipeline to save Big Oil, even when we have enough NatGas to last the entire North American Continent well over fifty years right under our feet.

Abandon the Pipelines!

Fuck Big Oil!

The entire kit and kaboodle comes down to this nonsense of promoting and protecting something half the world away to ensure profits for the very, very few amongst us.

Wake up, America!

Wed, 12/30/2009 - 17:06 | Link to Comment crosey
crosey's picture

The correction is coming, and cannot be avoided, the momentum fundamentals are simply too great.  Of course, human history is replete with our thoughts and beliefs of how we can "avoid it THIS time".  Won't happen. 

Be prepared, take care of your family, and your neighbors.  That's how we will get through this.

Remember Adm. Farragut's rallying call..."God alone decides the contest, but we must put our shoulders to the wheel."  So true.

Wed, 12/30/2009 - 18:42 | Link to Comment Zippyin Annapolis
Zippyin Annapolis's picture

Interesting write up. However he lacks on the oil point on a fundemental fact:  

  """Oil export rates continue to decline more steeply than oil field depletion rates.  Exporters like Iran, Mexico, Saudi Arabia, Venezuela, are using evermore of the oil they produce (often as state-subsidized cheap gasoline), even as their production rates go down.  So, they have less oil to sell to importers like the USA - and we import more than 60 percent of the oil we use.""

 

Canada is the largest oil and gas exporter to the US, has been for years--Mexico is a side show--and there are hundreds of years of oil in the Alberta sands formation available to the US--of course we may just screw that up due to complete incompetence, GHG hysteria and induce the Canadians to simply export the resource to---China.

Wed, 12/30/2009 - 19:33 | Link to Comment Screwball
Screwball's picture
Canada approves PetroChina oil-sand investment - http://www.marketwatch.com/story/canada-approves-petrochina-oil-sand-inv...
Wed, 12/30/2009 - 20:39 | Link to Comment Anonymous
Thu, 12/31/2009 - 17:23 | Link to Comment Zippyin Annapolis
Zippyin Annapolis's picture

Yes, the oil sands play needs energy inputs to be produced (what energy production doesn't?) but your metric regarding nat gas demand assumes no increase in current gas production, no Alaska gas pipeline and a nat gas scarcity. In fact nat gas reserves are exploding worldwide due to technology change. There is also talk of using nuclear energy to produce the energy needed to produce oil sands. Given the remote location and national need re Canada this is a real alternative.  The oil sands production is costly to ramp up but the average cost per unit of production drops more or less on a linear cost curve with increased output, unlike conventional hydrocarbon production. The 3.5 to 4 "cap" mentioned is an illusion and breaching it will be more likely than not if peak oil is even close to a reality.

Wed, 12/30/2009 - 19:26 | Link to Comment Miyagi_san
Miyagi_san's picture

Go long plywood ...sell glass. He forgot the draft (18-25yr olds) will be a form of welfare and internment, it will also be our SKIN in the game.

Wed, 12/30/2009 - 20:14 | Link to Comment fireangelmaverick
fireangelmaverick's picture

With all due respect to KUNTsler, he would

be pessimistic even if all our economic problems would

be solved and martians landed and started

peeing gasoline and started establishing USD as

their reserve currency.

Wed, 12/30/2009 - 20:45 | Link to Comment wackyquacker
wackyquacker's picture

yeah, really. Someone please open the window....time to jump. TD, you lose credibility featuring this clown- please limit his stuff to the finances. The Zero is better than this.

Wed, 12/30/2009 - 20:38 | Link to Comment Anonymous
Wed, 12/30/2009 - 21:36 | Link to Comment mkkby
mkkby's picture

"All they said before Christmas was that thirty top Goldman Sachs employees would be paid in stock instead of money this year, but no other big banks have made a peep yet.  I suppose they'll have to in the four days before New Years.  I still think that could be the moment that shoves some disgruntled Americans into the arena of protest and revolt."

Is this guy NUTS?  People will revolt over that?

He correctly describes the situation, but that's easy and stating the obvious.  His future predictions, like the one above, are moronic.  Waste of time.

 

 

Wed, 12/30/2009 - 22:07 | Link to Comment Anonymous
Wed, 12/30/2009 - 22:16 | Link to Comment Anonymous
Thu, 12/31/2009 - 11:44 | Link to Comment WaterWings
WaterWings's picture

This is clearly impossible without major retooling due to resource constraints.

Uh, no. Lets see some facts and figures before you make outrageous claims like that. If we could eliminate corruption this planet could support 100 billion (outrageous!). Plenty of good land that is being wasted. The problem isn't making a profit - the problem is corruption: the people that want to tax the profit.

And there is not such thing as prophecy when it comes to a fiat currency. We already know the outcome. Anyone that requests payment to explain the ending to you is a scammer. Fiat currency always returns to its natural value: zero, null, goose egg.

At a personal level, dont buy gold. You can not eat gold.

Who the hell do you work for? Buy gold for other people then? WTF? Sure, you can't eat gold, but you also can't eat inked paper. Nice try. Jeez.

If you want to understand where oil comes from, look at the map of tectonic plates. Ask yourself, with this map in front of your nose, what is so special about Saudi Arabia? or Gulf of Mexico? I promise, you will be enlightened.

Eh? Huh? Care to explain to us peak-oilers, s'il vous plait? I can't find Israel on the map, can you show me?

Wed, 12/30/2009 - 22:30 | Link to Comment Hammer59
Hammer59's picture

IMHO, what Kunstler has proclaimed is irrefutable to anyone possessing a modicum of common sense and a grasp of both human nature and current events. A desparate nation embraced Obama---and he has done nothing to help the vast majority of Americans. Operation Mayhem cited the massive global crop failures Tuesday--and Kunstler reiterates those facts. This is the most pressing problem facing us now.  To think that economic failure and social unrest will not occur rapidly is folly, and wishful thinking.

Things are going to get mighty rough soon. Aim for the tatoos.

 

Wed, 12/30/2009 - 22:36 | Link to Comment Anonymous
Thu, 12/31/2009 - 00:54 | Link to Comment glenlloyd
glenlloyd's picture

I read JHK every week, agree with him on many issues and especially on the suburbia / urban sprawl issue and have felt this way for years now, even before I began reading his column in 2008.

This year will be filled with much chaos...how it will manifest itself will be interesting to watch.

Thu, 12/31/2009 - 04:12 | Link to Comment Silver_Bullet
Silver_Bullet's picture

The peak oil scam misleads many people in geostrategic calculations.  The entire peak oil scam is based on the biological origin of petroleum thesis.  This thesis is false.  The modern Russian-Ukrainian theory of deep earth abiotic oil production is the proper way to go on any oil related issues.  Anyone interested in checking out the Russian theory should check out the materials at www.gasresources.net

 

That isn't a plug for a business or anything, they are academic papers and interviews that are all free by J.F. Kenney.  The Russian theory turned them from oil poor in 1946 to an energy giant today.  A major component of the wars being fought is to lock up oil; both for profits on an otherwise common resource and as a support operation for the dollar.  If people can escape peak oil and BOOP (biological origin of petroleum) then geostrategy turns on its head.  There is a reason that all the oil of Iraq has not been pumped directly into the dying American economy.  The reason is that the Neo-con plan for the oil was vetoed and the oil oligarchs locked it up to a substantial degree.

 

This is a war that is in part "blood for no oil".  The theme in Central Asia seems to be to disrupt the nations there and prevent any development or energy corridors to China.  There is no desire at all to stabilize Afghanistan.  The opposite is being carried out, and the intention is to export chaos and revolution to Pakistan and Iran through the Baluchis, Waziris and Pastuns among other elements.  All aid into AfPak is going to be sent to regional warlords in order to increase the centrifical force on Afghanistan and force the war into neighboring territories.

 

This is some sort of neo-realist move based on relative national strength.  If our oligarchs can undermine everyone else, then they will be relatively stronger going forward.  The key is to keep the rate of disintegration in Central Asia ahead of the rate of disintegration on Wall St and in the City.  This will probably not work in any case but it appears that this is what they are doing.

Thu, 12/31/2009 - 06:12 | Link to Comment SDRII
SDRII's picture

+10

Thu, 12/31/2009 - 14:58 | Link to Comment WaterWings
WaterWings's picture

Very, very interesting. Especially the 3rd paragraph. I can only nod my head at this moment. There is milk, and then there is meat! And I'm still chewing.

Thu, 12/31/2009 - 11:33 | Link to Comment blindfaith
blindfaith's picture

really does not seem that his 'observations' are any different than what in your heart you know is true.  But, there in lies the problem. Blindfaith is what has gotten us to this point.   We all know what the answers are...like smokers who don't even quit when their lungs are eaten up with cancer and the oxygen tank runs dry, they keep puffing away.   To some degree or other, all ZH readers are informed about every point Mr Kunstler has restated in this condensed form.  What you take from it, how you responded to it, will plan your activities for the next few years...or not.  As for me, I can SEE the water rising at MY back door, I live on the water so I don't have to wait for any offficial decelaration to sort the BS from truth, it is right infront of me.

Thu, 12/31/2009 - 14:56 | Link to Comment subqtaneous
subqtaneous's picture

 

That's right . . . and regular readers of his blog recongnize that this is, more or less, just a compilation of what he's written throughout the year.  Whether he's 100% accurate in predicting how facts bear out isn't nearly as important as (for those who say he's been doom & gloom every Dec 31 and proven wrong) how deftly, eloquently and, at times with hilarious gallows humour, makes obvious that these are the death throes.  In fact, one could reasonably argue that for the past three Dec 31st's, he's been correct . . . the question is, when will he be proven wrong?  I'm a little surprised at the jab he took at the tattoos, because by and large it's his own generation he usually reserves the harsh words for.  And, he regularly recognizes on his podcast that it's the X'ers and Millennials who'll wind up clearing out the clog in the plumbing in order to drain the swamp of this toxic sludge that's seeped into our whole society.

 

 

Thu, 12/31/2009 - 14:38 | Link to Comment Anonymous
Thu, 12/31/2009 - 17:32 | Link to Comment Anonymous
Fri, 01/01/2010 - 03:12 | Link to Comment Anonymous
Sat, 01/02/2010 - 14:01 | Link to Comment Anonymous
Mon, 01/04/2010 - 10:45 | Link to Comment Anonymous
Sun, 01/31/2010 - 07:10 | Link to Comment ivars
ivars's picture

Water.

Do NOT follow this link or you will be banned from the site!