Tuesday, July 28, 2009

Rude Awakening - Wobble Time

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Rude Awakening

The Rude Awakening

Manhattan, New York

Tuesday, July 28, 2009


* National energy policy in the era of Goldman/government shenanigans,

* A conspicuous absence of common sense in the general debate,

* In lieu of fisticuffs; a well-reasoned argument, and plenty more...


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Joel Bowman, reporting from New York City...

Had we been in a real dive bar, and not the gentlemanly, intellectually reverent settings of the (in)famous Whiskey & Gunpowder Panel Discussion, some form of fisticuffs would certainly have been on the cards.

James Howard Kunstler, Doug Casey and Patrick Cox were among those firing the shots in this year's debate in Vancouver, much to the delight of the 500 or so attendees who made it from the actual whiskey tasting to the main stage event. So much did we enjoy Mr. Kunstler's take on the unraveling "Long Emergency," that we thought it important to include a few of his views in today's Rude.

Please enjoy the following column as James heaps disrespect on those desperately in need of some and asks why common sense solutions to our problems are so conspicuously absent from the national discourse. Details below...

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Wobble Time
By James Howard Kunstler

The cat let out of the bag last week — a frazzled, flaming, rabid, death-dealing cat — was the news that Goldman Sachs announced impressive second-quarter profits, and set aside $18 billion or so for employee bonuses averaging $600,000 per head (though, of course, not evenly distributed among them). There probably are not fifty- three people in the USA who can explain how this development figures in with last fall's bailout gift from the US treasury, or the $13 billion GS received on the backside of US gift payments to the failed AIG insurance company, plus the reams of necrotic securitized debt paper rotting in the back of the GS vaults. This is a company playing with the fire of world history.

It brings back the question, which has loomed dimly at the margins of America's collective consciousness, as to whether we can get through the long emergency ahead without going through a wringer of domestic political convulsion. At this rate, sooner or later, anything identified with wealth could become a target for the wrath of the unemployed and foreclosed. The first rock that flies through an East Hampton window, or the first firebomb tossed into the lobby of Goldman Sachs Manhattan headquarters could ignite a chain of events that shoves all economic policy out of the political arena and quickly divides everyone at the center of power into armies out for blood.

What the nation — including President Obama — can't seem to get through its head is that the USA has entered a period of epochal economic contraction. Instead of growth, as measured in conventional econometrics, we can only expect (in the best case) transformation to a different economy within the limits of real contraction. The president has got to stop promising renewed growth. While this would affect the perceived "standard-of-living" as measured in things like shopping mall sales and vehicle miles driven, it would not necessarily mean diminished "quality-of-life." It would mean different ways-of-life for a lot of people — for instance, young adults who had expected lifetime employment as corporate executives but who, instead, find themselves ten years from now working at farming. We have an awful lot to get real about.

A genuine reorganization of the US economy seems beyond the ken not just of all US politicians but of the entire US news media and business leadership. A wonderful example a couple of weeks back was the idiotic press conference by General Motors marketing chief, Bob Lutz, who thinks he can revive the American Dream with electric cars. (By the way, this is pretty much the same thinking I encountered at the Aspen Environmental Forum among the Green celebrities.)

From a purely practical standpoint, the electric car is absurd. If they were produced on a mass basis, they would crash the electric grid — assuming that the masses could afford to buy them, which assumes a lot. We simply don't have the electric generating capacity to run even one-quarter of the current car fleet on volts, and building the necessary nuclear or coal-fired power plants in five years is also an absurdity. (Don't expect wind, solar, biomass, or anything else to pick up the slack.) If electric cars were produced as just a niche product for the elite (e.g. Goldman Sachs employees), they would soon provoke the resentment of the non-elite left to the mercy of the oil markets.

Anyway, America's motoring dilemma has gone beyond the issue of how we power the cars — and even beyond the insanity of blindly maintaining our extreme car dependency per se. The continuation of Happy Motoring now hinges on two other big quandaries: 1. the likelihood that there will be far less capital available for car loans, and 2.) the likelihood that there will be far less government money for road maintenance. The problem of Peak Oil — and the prospect of price-jackings and shortages — is just the cherry on top.

By the way, for practical purposes Bob Lutz of GM is an employee of the US taxpayers now, since the US owns 60 percent of the "new" General Motors, so he must be considered a spokesman for national policy. Since a transformation of the US car fleet to electric vehicles is absurd, what would be an appropriate response to profound economic contraction? How about walkable communities connected by public transit? Why is that not a focus of the "new" General Motors? In 1941 the company made the transformation from cars to armaments in a matter of months; why can't it produce the rolling stock for a renewed passenger rail system? Or trams? Is this not enough of a crisis? The answer is that there is no leadership in this direction. If President Obama declared this to be a policy objective, and stuck to it for more than one business day, he could drag the sleepwalking American public in this direction, and the rest of national leadership in government, business, and media with it.

This kind of thing is what prompts casual observers to wonder if the president is a cynical shill for business as usual, or a victim of the worst conventional thinking with no real vision, or just another clueless sleepwalking bozo with a charming veneer.

In circles that pass for "progressive" these days, the natives are getting restless. Their agitation seems pretty inchoate for the moment — still resting on vague, poorly-defined wishes for "change." These vague promptings need to be focused on specific action that is realistic within the context of comprehensive contraction and transformation. A big piece of this would be the recognition that our suburban sprawl economy is dying, and that we now have to bend our efforts to reorganizing American life on the most fundamental physical terms. We have to inhabit the landscape differently, move around it differently, generate food out of it differently, and make things on it again. Whatever remaining real capital there is in the system can't be squandered on cash bonuses for Wall Street employees.

Ed. Note: For more of Mr. Kunstler's inexhaustible work, including art, articles and links to his books, be sure to check out his webpage here.

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[Rude Endnote: Markets in Asia and Europe posted relatively underwhelming overnight results for the most part after Wall Street managed small gains yesterday.

London's FTSE fell 0.8% to lead the European measures lower while Germany's DAX and France's CAC dipped 0.5 and 0.4% respectively.

Over in Asia, Japan's Nikkei 225 finished within one one-hundredth of a percent of where it started the day...so not much to be gleaned from that. Hong Kong's Hang Seng, however, managed to mount a 1.85% rally while the Aussie All Ordinaries added 0.7%.

In the commodity pits, crude retreated marginally from the $68 per barrel mark. Gold slid almost ten bucks over the last 24 hours on dollar strength. An ounce of the shiny stuff goes for around $945 as of this writing.

We'll be back with more Rude views on the morrow.

Until then...


Joel Bowman

The Rude Awakening

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