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Fed Cred Dead!
Submitted by Howard Kunstler via Kunstler.com,
The economy is a two-headed monster. One head is the trade in real goods and real services. The other head is the financialized traffic in swindles and frauds that surrounds banking. There is some deception and overlap about which is which. For instance so-called health care might be perceived as a real service. In fact, it’s a hostage racket, designed to victimize “patients” at their weakest, with a “protection” premium that easily runs to $12,000-a-year for a married couple, even when they aren’t sick, and vulnerable. Just see what happens if you go to an emergency room with an injury that requires six stitches. Next stop: re-po land.
Most of the remaining on-the-ground economy consists of people merely driving their cars absurd distances, burning gasoline, between exquisitely-tuned giant warehouse store operations that were designed to destroy local Main Street trade - and accomplished that, by the way, to the applause of the local citizens whose towns were destroyed (“We want bargain shopping!”).
Now, of course, even WalMart is looking over its shoulder at the collapse of the complex arrangements that allowed it to metastasize across North America like some cancerous fungus. Globalism is winding down as the gargantuan matrix of Ponzi schemes based on owed money dissolves debt by debt. It isn’t long before nobody is a credit-worthy borrower, and no transaction in real goods can be risked unless cash hits the barrelhead — which turns out to be a very awkward way of doing business.
It’s especially like this these days in the so-called “emerging markets” — e.g. places in the world with large populations of willing factory slaves. The traffic in shipping-out containers full of flat screen TVs (or shipping-in the raw materials to make them) won’t work very well without letters-of-credit, which are promises between banks to make sure that the stuff on the receiving end gets paid for. That becomes difficult when national currencies drop 3.5 percent in value one day and then 4 percent another day, and so on. An eight-year-old can figure out how that math works.
My new theory of history applies well to the macro situation: people do what they do because it seems like a good idea at the time.
For instance, a few decades ago, the suburban / “consumer” arrangement of daily life seemed like a good idea. You buy cheap land twenty-seven miles outside what used to be a functioning (now obsolete) city. Build lots and lots of houses out of cheap, shitty materials such as strand-board and vinyl, pave a lot of new roads, line many of them with even shittier strip-mall buildings and Big Box “power centers,” and there you have a wonderful basis for an economy. That was more or less the Ronald Reagan Utopia.
Now it’s all aging badly, fraying, too costly to fix and, increasingly, not worth scraping off the land and replacing with a new cheap, shitty building. The younger generation doesn’t even want to live in that suburban dystopia. They run shrieking from it to Brooklyn, or even downtown Troy, New York, up the Hudson River Valley. Alas, this younger generation has also been broadly victimized by the college loan racket — reinforced by the revised bankruptcy laws that make it impossible to ever write-off this sort of debt. When will they get political about it? Their debt loads will disfigure their lives as surely as a tour of duty in Vietnam would have forty years ago. Perhaps Siri has not informed them about this.
Last week was the watershed for central banking and for the illusion that the current disposition of things has a future. The Federal Reserve blinked on its long-touted Fed funds interest rate hike and chairperson Janet Yellen was left standing naked in the hot glare of her own carbonizing credibility, a pitiful larval creature, still maundering about “the data,” and “the median growth projection,” and other previously-owned figments spun out of the great PhD wonk machine in the Eccles Building.
The Federal Reserve itself is the victim du jour of its own grandiose fatuous fecklessness, in particular the idea that it could play a national economy like a three-button flugelhorn. What seemed like a good idea at the time when Alan Greenspan and then Ben Bernanke stepped into the pilot house now just looks like the fraud of frauds: enabling corporations to borrow ever more money from the future to pretend that their balance sheets are sound. That scam is has nowhere left to go, except into the black hole that has been waiting for it. All the Fed really has left is to destroy the value of the dollar (to save it! Just like Vietnam!).
This ought to be an interesting week in the financial markets as the players have had a long, anxious weekend to absorb the death of Fed cred. And October, too. Expect dramatic re-pricing. Sometime a few months down the line, financial markets will present a “relief rally.” Don’t get suckered on that one.
Meanwhile, what remains on the other head of this two-headed economy besides driving to-and-from the Walmart? Pornography? The tattoo industry? Meth and narcotics? Prostitution? Professional sports on the flat screen? Kim and Kanye? Grand theft auto? Do you really think Donald Trump can fix this?
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Fed Cred is Dead to the tune of Freddie's Dead
https://www.bing.com/videos/search?q=freddie%27s+dead+curtis+mayfield&qpvt=freddie%27s+dead+curtis+mayfield&FORM=VDRE
Zed's dead.
For those of us not living in the powerplant the FED never had any "cred."
pods
Expecting Trump to fix this is like expecting the leader of Lilliput to cure Gulliver's pancreatic tumor.
/look it up.
The only purpose of Economists for hire, is to put spin on criminal behaviors.
Look on the bright side...
Snowden believes in Aliens.
(hopefully they're the Sigourney Weaver brand)
Howard, love your style. Now, go out on a limb and tell us when you think the proverbial sh*t hits the proverbial fan??? How long can the PIPs (Psychopaths In Power) keep up this great lie???
;-D
Some say 2008 some even say 1913 and others will throw the book at you, who knows, i'm having some massaman and a red wine, maybe tomorrow wil bring a new day, maybe not.
I very very sincerely and truly hope it happens on Lord Obama's watch...
;-D
Yeah, they mostly hunt at night. Mostly.
Can't fix shit till the EPA is dissolved as well as the interstate commerce clause. When the State's can control how their resources are pulled out of the ground and processed. When the Fed's stops trying to micro manage interstate commerce via a perverted interpretation of the Interstate commerce clause. That is when we can turn this around. Till then we are f'ed in the "A".
Nope, your solution is a subsidiary one.
Fraction reserve banking removes the need for constant "growth" and suddenly all other things become manageable.
Well, except the government couldn't expand through deficit spending.
pods
Agreed but I see the Dissolving of the EPA more likely than the Federal Reserve.
ya
Best headline since Variety's famous one about rural residents disliking the "Ma and Pa Kettle" movies: "Hix Nix Stix Pix."
Obammy will save us!
Right?
Recovery Summer 6.0... or is it 7.0? I've lost count.
Kunstler: Always the optimist.
His tune will change once the free shit army is deprived of what is rightfully theirs.
Then he will again see why people moved to the suburbs to begin with.
People left the cities for a reason. That reason will again become known.
pods
Agreed, his city/suburb world view is simplistic beyond comprehension. Also, nobody, Trump included, is going to fix any of this until it collapses under it's own weight...most likely when it becomes obvious there's nothing left to give the "free shit army".
JHK doesn't live in a city, he lives in a sleepy town in upstate NY, where I can assure you, it is quite white. Saratoga Springs NY.
The libs don't practice what they preach... why is he such a blood enemy of tattoo parlors anyway?
And the guy is obsessed with big box stores. They get his wrath in practically every post. Did this dude's wife get ass-raped in WalMart or something?
No Kunstler hates Walmart mostly because your country got ass-raped by Walmart selling out your jobs to China.
You mean that his world view is childish beyond comprehension.
He might as well be talking about Santa Claus, given the gulf between his perception and reality.
I'm going to guess that he's the only two time Obummer voter that has guest post status here.
Maybe Tyler owes him money or something?
the end is near
For who? This zombie (the Fed) keeps walking...
The end is rear.
"Do you really think Donald Trump can fix this?"
Sadly, neither Trump nor anyone else can fix it. We're too far into the current trajectory to change anything before impact.
And I'm an optimist.
Donald Trump can fix himself a peanut butter and jelly samwich.
This guy must be a real blast at parties.
He's the guy haranguing the cripple in the wheelchair, blocking his exit.
Can we have an article about the UK Prime Minister face fucking a dead pig please :)
Priceless buddy.
This sums it up best.
https://www.youtube.com/watch?t=10&v=FBpQJ98rR4o
"Janet Yellen was left standing naked in the hot glare of her own carbonizing credibility, a pitiful larval creature, still maundering about “the data,” and “the median growth projection,” and other previously-owned figments spun out of the great PhD wonk machine in the Eccles Building."
Bravo!!!
Yellen is just the fall guy,what do you expect both Bush and Obama have abdicated responsibility to the Fed and Treasury,and Congress thats only passed one budget in the last 5 years also shares responsibility.Your politicians gave this outfit its mandate dont ever forget that.
omg
People do what they do because they are STUPID
oh riley
I can't wait for the DEDFED BOUNCE!
"China slowdown" DIDN'T JUST HAPPEN! It used to be a "transitory" factor.
Housing market is NOT "depressed" !
Put Yellen behind bars for decimating the savers and retired after a 15 min trial !
. . .but Dr. Yellen, gold is down .5% today, so we are still in control.
Yellen: Ah, good; because, as we only say in private, gold is everything.
Ask Siri. Love it.
android rulez, u can have ur suri, no back button joke, firefox
The Donald has a lot of experience with bankruptcy so if he becomes president he should do a good job.
FED and CREDIBILITY, is an oxymorons.
They is?
People may want the Fed to raise rates, just to get this shit show started - but it isn't going to happen.
The Fed is not going to raise rates. They'll keep this carnival going until it collapses under it's own weight - no need to do the goyim's work for them.
If the plebs are too dumb to figure that out...so much the better.
Ball's in our court people, not theirs.
Pretty funny to listen to some useless talking head complain about how useless everyone else's job is and how much better the world will be once their dreams collapse into ruin.
I suppose pounding out snarky diatribes on a keyboard represents the true path to wealth creation for empires everywhere.
My own "new theory of history" says that societies are healthiest when everybody is too busy to listen to carping voices on the sidelines.
Maybe Donald Trump has something to show us after all.
Maybe those young people are not going to get 'political' about it. Maybe they don't give a shit about "fixing" this mess.
Don't assume they want or care about the same things you do. You agonize about how they will never be able to buy homes, participate in this economy, with all that student loan debt. And that WOULD be a problem, if they actually wanted those things.
And you really NEED them to want those things, don't you? How will you be able to access all that equity in your home, if no younger couples want to buy it? And what happens to your pensions, your investments, if those young folks don't go out and buy all the crap YOU did when you were their age? You've got a flat-screen in almost every room...your son watches video on his IPhone, and has an old monitor in his room for games. YOU have granite countertops and digital stainless appliances that require replacement every 3 years. Your son doesn't give a rat's ass WHAT kind of shit the landlord wants to put in there, as long as it works.
The next generation will NOT be propping up this shitpile for our sakes. Every now and then we see a big shift in the overall mood of a people, usually after some traumatic event that causes them to question many of the assumptions they made about how the world works.
I believe there is a huge financial crisis coming, soon. And I really think we could see a backlash to a lot of the excesses we see today, in our national and private lives. Imagine a global 'cult' of ascetic-living, less-is-more humans. The current 'cult' of consumption took hold pretty hard and fast, didn't it? The pendulum can swing the other way too.
And people can make a real religion out of such ideas, in the sense that they get very enthusiastic and evangelical about it.
In truth, once basic needs and comforts are met, anything more becomes a matter of taste and choice. People can and do change in what they want and consider important. What if everything was made to last? And made easily repairable by the owner, in perpetuity? What if cars didn't come out in new models every year, or ever? You bought a basic car, and were free to personalize it as you wished, and why not? It will last forever. What if, instead of throwing your worn-out sneakers and buying new, you took your well-made and comfortable shoes to the shoemaker for new soles or whatever as needed? Or left your washed-out milk bottles outside for early morning refills?
Imagine if THAT became the dominant mentality? If planned obsolescence were viewed as no better than late-term abortions? If stability were seen as necessary for innovation, and 'disruption' for its own sake akin to terrorism?
You could still have technology, still use a cell phone, or get cable and internet. In fact, you could probably get better service since you weren't always buying new cars, or appliances, or shoes. Isn't the money spent replacing that which does not (or should not) need to be replaced a ridiculous waste of money and resources?
I hope that next generation does shun our path. There are better ways to set this shit up, and I hope they find one.
Good philosophy Bemused but don't forget the exceptions. I'm over 60 and I consider my 97 Corolla to be just broken in. I was once a mad consumer but people can change. Hope can exist in fractions amongst us.
I too, have seen the light. Too many around me still cling to old notions though.
But no transition is ever that fast or painless. Many consumerists will kick up a fuss, but eventually the tide will overcome them.
Maybe young males don't care about their kitchen counters, but the young females I know want all of the usual crap.
I'd have to say that the live-like-a-serf meme is being fully taught at our nation's colleges and universities.
Of course that rule does not apply to the rising aristocracy, upon whose estates they will labor at subsistance levels of compensation and worship at the new holy church of Gaia.
Away with all collectivist thinking and let each individual choose their own path without scoring it on the basis of its contribution to goals set by the tyrannical advocates of the hive mind.
"Do you really think Donald Trump can fix this?"
I know neither Hillary or Jeb will fix it.
Another tribesman who blames Reagan for the failure of every shitty policy he and his ilk created, introduced and championed for the last 100 years....
Because "liberals" are "blameless" and have perfected the art of professional victimology and laying blame on anyone but themselves