James Kunstler -- Clusterfuck Nation
Oct. 16, 2006 -- I got an email from a reader in the banking sector who said that he
generally likes this blog but I that I was "way off" in last week's
observations about the US economy. I called him on the phone to
entertain his complaints in more detail. His main complaint was that I
failed to appreciate the fantastic resilience of American can-do
enterprise, and what it means in the larger economic scheme of things.
He said that massive amounts of capital were moving into investments
for alternative energy and into new technology associated with the
pursuit of alt.energy. These capital flows, he said, would keep the US
economy humming as far ahead as anyone can see.
He was a
thoughtful and articulate fellow, but I still disagree. I still view
the U.S. economy as chronically diseased. It must be in the nature of a
stock market melt-up, of the type we've seen the past month, to exert a
hypnotic effect on herd expectations -- generating any number of
rationalizations to make the melt-up seem a healthy and natural
occurance when it is actually something like an aggressive cancer
feeding on the organs of our society and sucking the life out of them.
There may be money flowing into alt.energy ventures, but that is no
guarantee that these ventures will produce significantly more petroleum
or viable substitutes for petroleum -- or anything that will permit us
to keep running WalMart, Disney World, and the interstate highway
system. We could sink a trillion dollars into research and development
for perpetual motion machines, too, but the venture would probably end
in tears.
It seems to me that as long as our overall goal is to keep a lot of cars running by other means,
at all costs, then we are going to be horribly disappointed, and our
investments will amount to a Chinese fire drill performed like a game
of musical chairs with overtones of Ponzi. Whatever else the future may
be about, it is unlikely to be a continuation of mass democratic happy
motoring in the service of mass consumption. So an investment campaign
to save that mode of human existence is a waste of investment. It is
just the financial facet of what may turn out to be an even more
comprehensive, and utterly futile, effort to save the entitlements and
previous investments connected with American suburbia.
A
recognition of this would at least allow us to get on with other things
and make better investments in a reality-based future.
Personally, I doubt that the putative investments in alt.energy and
related tech amount to more than a tiny fraction of the total capital
surging into the markets these days. The big oil companies are spending
more of their considerable profits buying back their own stock and
crafting farewell compensation packages for retiring executives than on
exploration and discovery. In one place they have put up some E & P
money, far eastern Russia, they just got their asses kicked by the host
government, so they won't even be sticking around there. Excuse me for
saying that Chevron's "Jack" experiment in the deep water Gulf of of
Mexico will prove to be a public relations stunt. The money going into
biodiesel, ethanol, and shale oil combined is probably less than the
capital being directed into the next generation of MP3 players.
To me, the Fall 2006 Euphoria only underscores how divorced the
financial sector is from real life. Day by day, thousands of grifters
are making huge digital dollar profits on abstract financial plays in a
global virtual casino. None of these plays has much to do with anything
of real and enduring value. They're just scoring points on
consolidations of ailing industries, on turns of the interest and
currency differentials wheel-of-fortune, abstruse shorting strategies,
and similar non-productive shenanigans. While these thousands of playas
party hearty, millions of non-playa middle-American shlubs are
underwater with their mortgage payments or real estate taxes, going
bankrupt from their child's emergency apendectomy, or desperately
seeking parking places where the re-po man won't find their Ford
Expedition on which they failed to make payments numbers thirty-eight
through forty-four after being laid off by the Uniwanker Corporation.
The sentiment now in the financial press is -- like that expressed
by my banker correspondent -- that the U.S. economy is indestructable.
It's like Jason, the protean stalker-slasher of countless Friday the Thirteenth
movie reels: an implacable monster on a mysterious mission. Nothing can
stop it or kill it. Not the tanking real estate sector, not military
misadventures in the Middle East, not a ball-and-chain of unimaginable
debt. Like Jason, the US economy is fueled now by sheer entropy -- the
force that drives everything toward death.