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Systemic Turmoil, Structural Reform
Submitted by Howard Kunstler via Kunstler.com,
“The problem with the post-2007 world is that we are not in a cyclical recovery; we are in a structural depression defined as a sustained period of below-trend growth with no end in sight. The U.S. has caught the Japanese disease. Structural depressions are not amenable to monetary solutions, they require structural solutions.”
–James Rickards
Can anyone stabilize this bitch? At daybreak, anyway, the Federal Reserve governors were all bagging Z’s in their trundle beds. Maybe after a few pumpkin lattes they’ll jump in and tell their trading shills to BTFD. The soma-like perma-trance among those who follow markets and money matters appears to be ending abruptly with the recognition that sometimes robots and humans alike run shrieking to the exit. A pity when they get to the door and discover it opens onto a cliff-edge. Look out below.
All this trouble with money comes from one meta problem: aggregate industrial growth has ended. It has stopped more in some parts of the world than others, while in the USA it has actually been contracting. The cause is simple: the end of cheap energy, oil in particular. At over $70-a-barrel the price kills economies; under $70-a-barrel the price kills oil production. The bottom line is that, in the broadest sense, the world can no longer count on getting more stuff, except waste, garbage, political unrest, and the other various effects of entropy. From now on, there is only less of everything for a global population that has not stopped growing. The folks on-board are still having sex, of course, which has a certain byproduct.
This dynamic was plain to see a decade ago, but the people who run finance and governments thought it would be a good idea to maintain the appearance of growth via the usufruct mechanisms of central banking: ZIRP, QE, market intervention, and universal accounting fraud. It’s not working so well. Debt was generated in place of the missing growth, and now there is too much of it that can’t be repaid on a coherent schedule. Many nations, parties, and entities are in trouble with debt and the prospective defaults are starting to pile up like SUVs on a fog-bound highway. Greece is just the first one fishtailing into a guard-rail.
The magic moment will come when it becomes obvious that these systemic quandaries have no solution. The system itself is programmed for implosion, in particular and most immediately the banking sector, where most of the untruth and illusion is lodged these days. As it stands exposed, the people are compelled to shake off their faith in what it represents: order, authority, trust. Institutions fail and each failure acts as a black hole, sucking air, light, and even time out of the system.
In the natural course of things, structural reform can occur, but that natural course entails some degree of disorder and loss. If Deutsche Bank or Goldman Sachs founders a lot of people will be living in their cars — a first stop perhaps to not living at all. Sooner or later, though, the survivors will all have to live differently. Structural reform means, for instance, that you can no longer count on getting food the way you were used to getting it. No more 3000-mile Caesar salads and take-out tubs of Kung Po Chicken. That will be very traumatic in the early going. Eventually in the places where it is possible to grow food on a smaller scale, it will be done. Maybe not so much in the Central Valley of California anymore, but in other places: Ohio, Michigan, even New Jersey (“the garden state”). And once grown, it will be sold by means that differ from the supermarket.
Americans think that WalMart and its brethren are here to stay. They’re mistaken. Structural reform means reorganizing many layers of commerce around town centers — Main Streets — while the disintegrating strip malls await the salvage crews. Are we ready for that? Rebuilding local economies would put a lot of people back to work doing real things. All the blabber about “job creation” for the moment is only about increasing the share price of predatory corporations and the bonuses of their mendacious executives. Will the world miss them? Can we still make some things and move them around and put them up for sale? I think so.
Are you disturbed about the pervasive racketeering in health care (so-called) and higher education? Well, those grifts are eating themselves alive. Structural reform probably means far fewer and smaller colleges and far more and smaller local clinics free of the stupendous insurance chicanery that mystifies the public while it swindles them. There will be a lot of useful work for people who want to take care of other people, and certainly fewer MRIs.
Do you fear the end of mass motoring and the suburban infrastructure that it operates in? Maybe your children and their children will be happier in walkable neighborhoods — outlandish as that sounds. There is a hell of lot of rebuilding to do. It may not involve materials like strand-board and vinyl siding, but the newer and smaller buildings will probably last a whole lot longer and look better. And a lot of hands will be needed to do the work.
Will we ever again know banking on the JP Morgan scale? Not on any horizon I can imagine. But there are other ways to establish mediums of exchange, stores of value, and pricing mechanisms. You can be sure that banking will never again occupy 40 percent of gross economic activity in this land.
Today may not be the true event horizon for our diseased status quo, but it is probably, at least, the coming attraction trailer. Try not get puked on.
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Planned events are easy to control! This is just another game to scare people, it’s how the US and European governments control the masses. Greek debt was no good 5 years ago, not just last night!
Another fucking "everything is a conspiracy" idiot.
Duhhhhh.
The funny thing about panic.... you might look strange being the first to do it. But you sure don't want to be the last.
Structural change in the existing system (to fix it, before things fall apart) is what Rickards is talking about.
Kunstler is talking about structural changes that will needed after things fall apart)... not sure he gets the difference.
The only structural change that will ever count is change that restores and gets out of the way of private enterprise (kill the IRS, Obamacare, SS, Medicaid, etc, etc, and every violation of the free Right of Contract).
The problem is that the rate of participation in new business formation (which allows for a dynamic change in supply and demand patterns) has crashed from about 13% of the population around the turn of the century to near 3% today (WSJ report). You can thank .gov! ...from the tax code to the zoning code to the employment laws... who wants to put up with the amount of crap piled on any new business venture?
Of course the calcified businesses of taxpayer supported corporate welfare queens just go on and on and on misallocating resources and draining vitality out of the economy.
Until real structural change comes, our economy will consist of nothing more than a system to pass around deck chairs on the Titantic... whether it's through direct transfer payments, EBT cards, corporate welfare, the military industrial complex or a million other ways of propping up the current dysfunctional system of staged and pretended economic activity.
He's talking about the collapse of Complex Systems. It involves the increasing degree of complexity in sociaety (and specialization of jobs/knowledge). As recently as 125 years ago a lot of Americans had some basic knowledge about things like growing food, digging wells, building small houses. Now everything is leveraged up and people know the bare minimum they need to get by. No conspiracy required.
Recent study of the collapse of societies going back several thousand years listed Resource Depletion and Wealth Gap as main determinants of collapse. So...water loss in California versus 0.01% wealth gains from QE. Take your pick, but discussing it doesn't mean you're panicking or wear a tin-foil hat.
SHUT UP! You conspiracy theorist. :-)
What an amazinly stupid thing to say! Echo of Main Stream Media (you know, domestic psyops) and the hallmark of paid troll. Posts such as Hb's here, seem clearly designed to prevent people from reading actual content.
This market is demonstrating how it can put its own head between its own legs and kiss its own ass
It's time to put a new layer of tar paper on the shack. The sectors of the economy that need reform the worst want it the least and I'm including government at the top of the list. Too many people rely on our present magical thinking for it to be changed, so I hope everybody is ready to ride the storm out......
We all know that if there is a "crisis" it is because they create it. If there is a "solution presented" it is the same people who created the crises. The system is just a series of manipulations and lies. That is what must always be remembered. http://www.thetruthaboutthelaw.com/they-promote-every-side-to-constantly...
Praise the Lord -
Too many people with Shit for brains who need an Enema!
Let's get it over with
put it back in your pants. your hand is going to rot off if you keep writing like that.
Not too common a subject. Few people are talking about the real unsustainable growth.... people. Many species follow a population boom bust cycle. But only people can create temporary wealth by borrowing from the future to feed themselves now.
I had a fascinating conversation with a good friend this weekend. She knows how I live (mostly off-grid) and is concerned for her grand kids futures. The bottom line of the conversation was that society is rapidly shifting away from centralized just in time production and meg labor specialization in some things and returning to home grown locally produced needed things. There is really no point in going to college ( with the possible exception of some specialized professions) and investment in a young person's future should shift, and it will, from investing in college and later (much later after the student loans are paid off) in retirement towards investing in current shelter and food/water/energy production.
The unsustainable lie of handing over our critical needs to a specialist (food/water/energy as centrally produced commodities) and surplus production been handed to wall street (making your money work dontcha know) for a future retirement is coming to a head.
So tired of hearing that the banks are FUBAR. No, the bank balance sheets are in the best shape in years. A different matter for bank EMPLOYEES, however. How many of the 90K bank branches in the U.S. will CLOSE in the next 10 years? 30K? 70K?
The bankers will be fine. They'll simply graft the savings from firing half a million people onto their income statements.
Jim Rickards is the fastest talker on the planet.
About falling over/off a cliff on opening a door; reminds me of the film Kidnapped when a young lad David Balfour travels to see his uncle Ebeneezer who points to his bedroom on the top floor of the castle which opened to a 500 foot drop.
Yes decentralization is the ONLY way forward. Shop local, buy local, trade services local,have your own local currency as a means of exchange, proper local representation etc etc
Everything TPP ISN'T ( Hey Ho! )
At some point everyone has to realise we can't have infinite growth in a world with finite resources.
The only thing that seems infinite here is debt and that's not a resource
FRN USD “aka fiat funny money”… not accepted here.
What will be funny as hell, for example is it costing $1,000.00+ FRN USD to raise a chick to a good laying hen, and $100+ FRN USD per day to keep her laying resulting in some very expensive eggs! If you think “no way” consider how eggs are insanely expensive today compared to pre-Federal Reserve prices which were approximately 40 cents per dozen retail.
“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” - Henry Ford.
A revolution has not happened via intellectual, moral, or ethical outrage, however it may happen through the course of events after “Just Us” finds that they can not buy food without significant quantities of real physical gold.
Personally, I think that happens immediately after the US Neo-Conservatives (aka Neo-Nazis) and their vassal nations start and lose WW III.
Perhaps then we can establish a frugal government and a sound money system where corruption and malfeasance carry the death sentence, most of the CFR’s and alphabet soup agencies are at the bottom of the Potomac River, term limits are enforced, no revolving doors, no taxpayer funded charity “vote buying” programs, no Obummercare, everyone over the age of 10 trained to shoot and maintain a firearm (people are much nicer to each other when all are armed), etc...
Imagine what a tough, lean and focused America with a sound money system could accomplish!
Well we tried the lying scumbag way. It sucks now and has for a long time.
So maybe just maybe we should think about doing it the other way. A coin with a real fixed value seems to me the best way to go. Magical monatery theory is simply theft on the grandest scale.
These governments have lost thier minds. All of them need a leash. Take this magic money away and every single government shrinks by a huge amount. Scam after scam all dependant on fiat. Mic 75% smaller. GM gone. Medical industry completly changed. The biggest change might be the politcal landscape. The pension system wow?
That said. A meritocracy would be a real breath of freash air. Blow away most of this stinking corruption and the world would be a far better place. Real inovation would sprout up all over the planet. Yes the potential is there.
All this technology at our finger tips. Its a shame its all been weaponized. Its not the tool but how its used. This magical money is the force buying all the people willing to sell out. It needs to be stopped. The sooners the better.
Greetings from the distained flyover country where we produce and consume our local products and services and we shop Main St. because they are our neighbors and friends.
We'll have to read about the SHTF round these parts because we'll never notice the difference.
Except that we won't be sending any food out anymore.
Sorry, but that's just the way it goes.
The coasters will be coming to take your food. Or at least try. They may have varying levels of success. (Don't get too cocky, many farmers have starved in rich grain-producing regions when the central government was powerful enough to take away all the harvest. Ukraine's Holodomor is just one example.)
I was just kidding.
Once everyone is sitting comfortably around the campfire with a warm cup of cocoa, we'll send out a relief effort because that's who we are.
I won't worry too much about coasters or FedGovt. lackys because beyond having food and staples, we have lots of guns and people who know how to use em.
We'll see them long before they can see us. Our local Emergency Response Team Leader is also a patriot and a prepper as well as many in the State. That's why we put them there. They aren't some no nothing political hacks.
We'll be fine, thanks.
Enjoy your city while you can.
No more Walmart. Count me in.
How many chickens does a 2% drop in global equity markets equal?
Answer: A ZeroHedge Cackle.
"Can anyone stabilize this bitch? "
Of course.
When you find yourself in a deep hole with no clear way out, the first thing you should do is STOP DIGGING.
All that is needed is to stop doing the things that have made the economic structure unworkable.
Regulation, fiat currency, and Central Bank activism aren't the solution to the problem. They ARE the problem.
How do I know it is regulation, rather than the free market?
The 'Free Market' is just another name for people. People adapt to changing stimuli...ergo when one thing isn't working they try another.
Government doesn't do that. It doesn't respond to stimuli. It responds to policy.
Policy is set by the most influential people. The most influential people are entrenched interests. They are intrenched as a replacement for open-market competetiveness.
Shut down the government, and the problem will appear to fix itself, as individuals stop doing things the way they've been doing them and try new things until they find what works.
Yep. Human nature has been carjacked by the free money gang. Like magic the worst choices live by fiat. Science, basic logic, reason all trumped by fiat.
Gresham had a law about that.
"The bottom line is that, in the broadest sense, the world can no longer count on getting more stuff, except waste, garbage, political unrest, and the other various effects of entropy."
Physically impossible.
Without new production, there is no new garbage.
Said another way, "You can't get something from nothing."
Or alternatively, "Energy can be neither created nor be destroyed, but it transforms from one form to another. Hence the total energy of any system remains constant."
7.3 billion and climbing. Oil will deplete in 38 years based on current consumption. That isn't factoring in China consuming more and more each year. We're fucked. Good riddance to the human species. Bunch of stupid evil sloths.
http://www.worldometers.info/
A sizeable asteroid could hit the earth, and Kunstler would link the cause back to us running out of oil.