Gary’s Note: America will never get out from under all its debt, at any level: household, corporate or government. James Howard Kunstler explains what this means in real terms for all of us…and it’s not pleasant. He’s not one given to conspiracy, but even Jim thinks it may be time to take some drastic defensive action. Read on.
Whiskey & Gunpowder By James Howard Kunstler August 11, 2009 Saratoga Springs, New York, U.S.A.
The Fog of Numbers
“There’s something happenin’ here. What it is ain’t exactly clear...”
— Buffalo Springfield
One of main reasons behind the vast confusion now reigning in the USA, our failure to construct a coherent consensus about what is happening to us (or what to do about it), is our foolish obsession with econometrics — viewing the world solely through the “lens” of mathematical models. We think that just because we can measure things in numbers, we can make sense of them.
For decades we measured the health of our economy (and therefore of our society) by the number of “housing starts” recorded month-to-month. For decades, this translated into the number of suburban tract houses being built in the asteroid belts of our towns and cities. When housing starts were up, the simple-minded declared that things were good; when down, bad. What this view failed to consider was that all these suburban houses added up to a living arrangement with no future. That’s what we were so busy actually doing. Which is why I refer to this monumentally unwise investment as the greatest misallocation of resources in the history of the world.
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Even this interpretation — severe as it is — does not encompass the sheer damage done by the act itself, on-the-ground and to our social and cultural relations. Suburbia destroyed the magnificent American landscape as effectively as it destroyed the social development of children, the worth of public space, the quality of civic life, and each person’s ability to really care about the place they called home.
It’s especially ironic that given our preoccupation with numbers, we have arrived at the point where numbers just can’t be comprehended anymore. This week, outstanding world derivatives were declared to have reached the 1 quadrillion mark. Commentators lately — e.g. NPR’s “Planet Money” broadcast — have struggled to explain to listeners exactly what a trillion is in images such as the number of dollar bills stacked up to the planet Venus or the number of seconds that add up to three ice ages plus two warmings. A quadrillion is just off the charts, out of this world, not really subject to reality-based interpretation. You might as well say “infinity.” We have flown up our own collective numeric bunghole.
The number problems we face are now hopeless. America will never be able to cover its current outstanding debt. We’re effectively finished at all three levels: household, corporate, and government. Who, for instance, can really comprehend what to do about the number problems infesting Fannie Mae and the mortgages associated with her? There’s really only one way out of this predicament: to get ready for a much lower standard of living and much different daily living arrangements. We can’t wrap our minds around this, so the exercise du jour is to play games with numbers to persuade ourselves that we don’t have to face reality. We’re entertaining ourselves with shell games, musical chairs, Chinese fire drills, Ponzi schemes, and Polish blanket tricks (where, to make your blanket longer, you cut twelve inches off the top and sew it onto the bottom).
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Now that Newsweek Magazine — along with the mendacious cretins at CNBC — have declared the “recession” officially over, it’s a sure thing that we are entering the zone of greatest danger. Some foul odor rides the late summer wind, as of a rough beast slouching toward the US Treasury. The stock markets have gathered in the critical mass of suckers needed to flush all remaining hope out of the system. The foreign holders of US promissory notes are sharpening their long knives in the humid darkness. The suburban householders are watching sharks swim in their driveways. The REIT executives are getting ready to gargle with Gillette blue blades. The Goldman Sachs bonus babies are trying to imagine the good life in Paraguay or the archepelego of Tristan da Cunha.
While extremely allergic to paranoid memes and conspiracy theories, I begin to wonder about the impressive volume of World Wide Web chatter about an upcoming bank holiday — meaning that the US government might find itself constrained to shut down the banking system for a period of time to deal with a rapidly developing emergency that might prompt the public to make a run on reserves. God knows, there are enough black swans crowding the skies these days to blot out the sun. I hesitate to suggest that readers who are able to should consider stealthily withdrawing a month’s worth of walking-around money from their accounts.
Regards, James Howard Kunstler
So debt kills, maybe not as fast as living in Baltimore does, but it still kills.
And Jim may hesitate to suggest a steady withdrawal of cash from the bank, but I won’t. In fact, I wonder why you haven’t hidden all your money from the bankers and politicians yet. Get crackin’!
"Wouldn’t you rather the market allow you to make informed choices and for competition to bring down the cost of care and improve the quality?"
Give me a break. I'll take incompetent government over greedy capitalists to manage my health options any day. The free market doesn't work for health care because none of the marketers care whether anyone gets health care services or not. It's no sweat to them whether people can't afford their products and die. At least the fools we elect are afraid of not getting reelected and can respond to pressure to change things.
I do enjoy your amusing missives interspersed with zillions of offers to sell me services and products that you, personally, would probably not purchase.
You read Whiskey & Gunpowder, so you are obviously bright. So I’m at a loss to understand why you’d send such sad nonsense for me to read.
You trust the ruthless bastards and egomaniacs that vie for your vote to make sure that you get all the best care in the world?
You don’t trust people to offer quality care when their livelihoods depend on it. Right…because those providing a product or service for a profit have every incentive to make sure their product or service is shitty so that customers will take their business elsewhere.
That’s the beauty of the market. It rewards those who provide better goods and services at lower costs. In fact, the only time it doesn’t is when the morons in government protect horrible providers…or take over the business themselves and become a de facto monopoly with absolutely no incentive to provide anything but crap.
Here is a response to the fellow who pines for gov.org health care, slightly edited from something I originally sent along to Glocklist recently:
Perhaps my biggest concern about the whole "health care crisis" is the false set of choices presented on the subject. Basically, we are presented with the status quo or Obama's blatant Marxist approach. But are these the only possible approaches in all the wide Universe?
For starters, does it even make sense to ensure a person's health in the same fashion we insure automobiles? Keeping in mind that the average replacement cost for an automobile is the vast majority of the time well south of $20K, whereas medical expenses can easily surpass this by an order of magnitude? Consider that the main reason the industry has even grown to where it is today was in large measure as a way of legally avoiding higher income taxes while offering something more in terms of compensation to the employee in lieu of direct pay (I *may* be wrong in this assessment, but it is something I read a while back and it seems to make a lot of sense).
Going deeper, what has all of this insurance paperwork bought us? I read fairly recently that about 19% of all medical expense goes to administrative overhead for all of the paperwork and so forth. *ONE FIFTH* of all your medical expense, right there.
What is more, the current system absolutely invites fraud, waste and abuse. I don't recall any estimate as to how much of it flows down to you and I, but it would be foolish to think it a small or trivial amount.
So figure perhaps 30%-50% (or maybe more) of every dollar you spend on health care going for either useless overhead or covering the cost of the outright fraud inherent in the system.
And if that doesn't get your blood pressure up to very high levels, contemplate this: Libertarian writer L. Neil Smith once postulated that government takes 7/8 of everything you earn. Obviously, the 40-45% that goes to taxes, fees, etc. of various ilks (and pretty much wherever you are, as well. A state that has low income taxes might jack you on property taxes, for example. In the end, they get you coming and going) can be easily verified. But what he went further to point out is how much extra we lose through the stealth tax of inflation (pray remind me when I become God-Emperor of this miserable planet to make the mere suggestion of fiat money punishable by on the spot execution) and the various parasitic losses associated with complying with myriad obscure regulations (safety laws, environmental regs, etc.) that drive up significantly the costs of everyday items we purchase.
I should point out also that our current tax rates exceed that of a mediaeval serf, who only had to pay perhaps a mere 1/3 of his total productivity... (not that I want to trade places just yet, but merely to illustrate the point...)
So the *real* question is this: would there be a "health care crisis" if people made EIGHT TIMES what they make now and health care cost HALF what it does now, and they simply paid for services in cash as they needed them? Would there really?
Open your eyes, dear child, open your eyes.
And here’s one that made it just in time for publication…
To see how a cash-based healthcare delivery system works, look no further than veterinary medicine. As practitioners and small business owners, our income has always been dependent on the discretionary income of our clients. Each pet comes attached to an owner, and the owner is the one with the checkbook. Very few owners have the foresight to purchase pet health insurance.
As a result, we have to be sure that the fees we establish can be supported by the community we serve. As employers, we have to be sure we charge adequate fees to pay the wages required to hire good employees. As small business owners, we must charge fees that cover our overhead and return a reasonable profit, or we cease to be a business. I don't want to bore you with the factors we use to determine those fees; suffice to say they are many.
I have also seen the other side. I previously worked in human medicine and dentistry and spent 8 years working for the largest health insurance entity in the US. I prefer veterinary medicine. We must charge a fair fee, we must communicate the value to the pet and owner and we must give exceptional customer service or the client will not permit us to do the work. We do not have to deal with waiting for third-party reimbursement, and our malpractice burden is much lower than our human counterparts. Our practice is able to hire top-notch employees, pay them above-market wages, provide full medical and dental benefits and a pension plan. We have also made a reasonable profit for ourselves, and have a comfortable lifestyle. We have fully funded our children’s' private school education and college, and we anticipate a comfortable self-funded retirement.
And this one…
I most often read W & G with a smirk on my face and I am usually entertained and enlightened - whether I agree with the opinions or not. I have only subscribed for a few months and upon opening, wonder "What are the guys up to today?" But after reading the Parting Shot and your chicken shit "I'm maintaining a tight and careful silence on this" what you really are is a ball-less - NO, A HAIRLESS BALL-LESS - wimp!
I also find Nancy Pelosi absolutely repulsive, but I wouldn't be such an imbecile as to lump all women in with her. Just as all men wouldn't want to be lumped in with morons such as BHO or his airbag sidekick. Talk about caveman mentality - what kind of men are you attracting? Ones that can't find a woman in this entire country and whom are reveling in commiseration with you, that's who! WHAT DOES THIS TELL YOU?
No wonder you cannot find a mate in this country. A man who is so insecure in his attractiveness that he tries to cover up HIS INSECURITIES by denigrating the opposite sex - but he doesn't even have the hairy balls to do it himself. He has "useful idiots" do it for him. It reminds me of my days in middle school - insecure young kids who put down others - and you later discover that they were INSANELY INSECURE themselves. It's SO TEENAGE GIRLISH OF YOU !!!!!! Talk about the pot calling the kettle black...........
To find a wonderful woman who is truly worth your life, (let alone your babies) you really need to get beyond this Wizard of Oz complex "Ignore the man behind the screen". Once you respect women who have intellectually sound opinions, they will be attracted to you. No worthwhile woman would date, let alone marry or have babies with, a man with no respect for women. So you are digging your own hole, get it? The more you denigrate women, the more repulsive you become to intellectual self-respecting women; they realize it's your own insecurities talking and WHO NEEDS THAT ISSUE?
Until you change, you will never find a woman ON THIS PLANET that will satisfy you - intellectually, politically, or physically - until you are ready to respect them for who they are - not for who some other woman is. And if you do find somebody who likes you like you are now, then they are also insecure and think they can't get anything better - AND YOU WOULD INDEED BE A PERFECT (albeit insecure) PAIR!!!!!!!!
So get out of the pee and puke pile on the bar floor that you have made for yourself and get a grip. You have insulted a large portion of your audience, intended or not, and it's too bad......You were fun and intellectually interesting until I realized how pathetic you were. I just cancelled.
Regards, Gary Gibson Managing Editor, Whiskey & Gunpowder
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