What Does It Mean?
In the
word-cloud of current events, the phrase "parasitic financial system"
billows up to a degree that suggests even so-called thinking persons
begin to understand what's happening: that banking shenanigans are
sucking the life out of advanced societies. That's why Matt Taibbi's
metaphor of Goldman Sachs as "a Vampire Squid jamming its blood funnel
into anything that smells like money" remains so potent years after it
was minted.
Of course the pervasive accounting fraud and
routine swindling that drive the banking "industry" are abetted by the
phantom government "policy" of the Federal Reserve, an institution that
99.999 percent of the American public could not explain under threat of
water-boarding. The bottom line is political and economic leadership
that can only pretend the economy works, and the destiny of such
pretense is the death of legitimacy - meaning the public's faith in the
system. Sooner or later either the public will revolt against such a
system, or the system will just implode and leave the public floundering
in a period of dreadful chaos.
Nobody capable of
thinking through these rather abstruse matters believes Fed Chairman Ben
Bernanke anymore, and his demeanor in public is of a depressed person
who has lost belief in himself and what he does. He announced last
week's policy salvo - the long-awaited QE-3 - with absolutely no
conviction. The Fed will spend $40 billion a month in money created out
of thin air to buy non-performing mortgages from banks eager to dump
them and interest rates on new mortgages will fall to record low levels.
This will supposedly "stimulate" the housing market.
Virtually nobody else out there in blog-and-pundit land will tell you
what this so-called "housing market" is, so I will. It basically refers
to suburban sprawl, which I have previously defined in two ways: 1) the
greatest misallocation of resources in the history of the world, and 2) a
living arrangement with no future. The first proposition is obviously a
function of the second. Interestingly, one of the first effects of Ben
Bernanke's QE3 salvo was the inflation of oil prices to nearly
$100-a-barrel, with a flow-through effect of gasoline above $4 at the
pump, which only shortens the horizon of the suburban sprawl paradigm.
Like the zombie banks choking on bad mortgages, sprawl is dead but
doesn't know it.
Unfortunately, the suburban sprawl
system was interchangeable with the wormy old political chestnut known
as the American Dream. Consider that the hysterical extremism ruling
Republican politics derives from terror over the death of that flimsy
dream - a home of our own, behind the strip mall! They can't believe
it's over, that it's lost its value, that they're stuck with the losses,
and they're looking for someone to blame for it. All the rest of their
blather is just the noise of dissociated anxiety - the religious idiocy,
the exceptionalism fairy tale, the family values touted by closet
cases, the military chauvinism.
Among the many tragic
ramifications of the dynamic is that the final blowout of
sprawl-building which ran roughly from the early 1990s to 2007 - and
peaked, you may notice, with the final blowout of cheap oil ($11 a
barrel in 1999) - became one of two intertwined activities that propped
up the US economy. The other was, of course, the expansion of the
financial "industry" to about 40 percent of all economic activity,
largely based on fraud in mortgage issuance and the repackaging of that
debt in booby-trapped bundles of MBS, CDOs, and other instruments that
have been destroying banks, governments, retirement funds, and
individual investment accounts like a long-running hemorrhagic fever.
The results of that orgy can be seen now an over-supply of suburban
buildings of all kinds (houses, strip malls, box stores) that will
continue to lose value, and a banking system disabled by ruined balance
sheets.
There's no remedy for this except acknowledging
losses on the grand scale, writing them off, making the necessary
lifestyle adjustments to the write-offs, and making a fresh start with
an economy based on something other than suburban sprawl building and
banking fraud. American politics can't accept this. Neither party
understands the contraction underway throughout the industrial world and
the very different future it portends.
Despite the
pervasive fraud and incessant central bank interventions, there are
routine operations of money that must go on for societies to remain
stable. Checks or transactions have to be cleared, payments must be
made, letters of credit must be issued to permit the exchange of goods
and commodities between nations, bonds must be rolled over, markets must
allow truthful asset price and interest rate discovery, currencies must
hold their value. The terrible stresses being applied by central banks
to avoid acknowledging systemic losses threaten to paralyze these
routine operations of money. Too many things can go wrong now.
The fault lines for the moment are crackling along the margins, in
foreign lands such as Egypt, Libya, Syria, Yemen. There is not a whole
lot keeping this infection from spreading into Saudi Arabia. The Saud
royal family leadership has passed from one king over eighty years old
to another. Nobody knows what will shake out between Israel and Iran.
One way or another, an awful lot of the world's oil supply is at stake
in that part of the world, and if that gets stoppered or blown up all
the central bank machinations ever dreamed up will not avail to save
Europe, North America, China, and Japan.
My guess is that
the euphoria over QE3 has already passed. The Fed actions of last week
will mean nothing except the steady erosion of dollar value, higher food
and fuel costs for all us muppets, and increased mistrust between
crippled banks, further crippling bank activity, including the routine
operations that make civilized life possible.
Therefore, uncivilized life is not out of the question.
http://kunstler.com/blog/2012/09/what-does-it-mean.html
http://kunstler.com/blog/2012/09/what-does-it-mean.html
