I employ this somewhat clunky metaphor
to point out that the U.S. Government is no more solvent than the
financial zombies it is keeping on walking-dead support. And so this
serial mummery of weekend bailout schemes is as much of a fraud and a
swindle as the algorithm-derived-securities shenanigans that induced
the disease of bank zombification in the first place. The main question
it raises is whether, eventually, the creation of evermore zombified U.S.
dollars will exceed the amount of previously-created U.S. dollars now
vanishing into oblivion through compressive debt deflation.
My guess, given the usual time-lag factor, is that the
super-inflation snap-back will occur six to eighteen months from now.
And the main result of all this will be our inability to buy the
imported oil that comprises two-thirds of the oil we require to keep
WalMart and Walt Disney World running. At some point, then, in the
early months of the Obama administration, we'll learn that "change" is
not a set of mere lifestyle choices but a wrenching transition away
from all our familiar and comfortable habits into a stark and rigorous
new economic landscape.
The credit economy is dead and the dead credit residue of that
dead economy is going where dead things go. It came into the world as
"money" and it is going out of this world as a death-dealing disease,
and we're not going to get over this disease until we stop generating
additional zombie money out of no productive activity whatsoever. The
campaign to sustain the unsustainable is, besides war, the greatest
pitfall this society can stumble into. It represents a squandering of
our remaining scant resources and can only produce the kind of extreme
political disappointment that wrecks nations and leads to major
conflicts between them. I don't know how much Mr. Obama buys into the
current adopt-a-zombie program -- his Treasury designee Timothy
Geithner was apparently in on this weekend's Citicorp deal -- but the
President would be wise to steer clear of whatever the walking dead in
the Bush corner are still up to.
All the activities based on getting something-for-nothing are dead
or dying now, in particular buying houses and cars on credit and so it
should not be a surprise that the two major victims are the housing and
car industries. Notice, by the way, that these are the two major
ingredients of an economy based on building suburban sprawl. That's
over, too. We're done building it and the stuff we've already built is
destined to loose both money value and usefulness as the wrenching
transition goes forward.
All this obviously begs the question:
what kind of economy are we going to live in if the old one is toast?
Well, it's also pretty obvious that it will have to be based on
activities productively aimed at keeping human beings alive in an
ecology that has a future. Once you grasp this, you will see that there
is no reason to despair and more than enough for all of us to do, so we
can recover from the zombie nation disease and get on with the next
chapter of American history -- and I sure hope that Mr. Obama will get
with the new program.
To be specific about this new economy,
we're going to have to make things again, and raise things out of the
earth, locally, and trade these things for money of some kind that we
earn through our own productive activities. Don't make the mistake of
thinking this is optional. The only other option is to go through a
violent sociopolitical convulsion. We ought to know from prior examples
in world history that this is not a desirable experience. So, to avoid
that, we really have to put our shoulders to the wheel and get to work
on things that matter, and do it at a scale that is consistent with
what the world really has to offer right now, especially in terms of
available energy.
In my view -- and I know this is controversial -- a much larger
proportion of the U.S. population will have to be employed in growing the
food we eat. There are many ways of arranging this, some more fair than
others, and I hope the better angels of our nature steer us in the
direction of fairness and justice. The prospects of a devalued dollar
imply that we very shortly will not be able to get the all the
oil-and-gas based "inputs" that have made petro-agriculture possible
the past century. The consequences of this are so unthinkable that we
have not been thinking about it. And, of course, the further
implications of current land-use allocation, and the property ownership
issues entailed, suggests formidable difficulties in re-arranging the
farming sector. The sooner we face all this, the better.
As the fiesta of "globalism" (Tom Friedman-style) draws to a
close -- another consequence of currency problems -- we'll have to
figure out how to make things in this country again. We will not be
manufacturing things at the scale, or in the manner, we were used to
in, say, 1962. We'll have to do it far more modestly, using much more
meager amounts of energy than we did in the past. My guess is that we
will get the electricity for doing this mostly from water. It may
actually be too late -- from a remaining capital resources
point-of-view -- to ramp up a new phase of the nuclear power industry
(and there are plenty of arguments from the practical and economic to
the ethical against it). But we have to hold a public discussion about
it, if only to clear the air and get on with other things, namely the
new activites of alt.energy. But I would hasten to warn readers
(again!) that we'll probably have to do these things more modestly too
(don't count on giant wind "farms"), and that we are liable to be
disappointed by what they can actually provide for us (don't expect to
run WalMart on wind, solar, algae-fuels, etc).
In any case, we're not going back to a "consumer" economy. We're
heading into a hard work economy in which people derive their pleasures
and gratification more traditionally -- mainly through the company of
their fellow human beings (which is saying a lot, for those of you who
have forgotten what that's about). Our current investments in
"education" -- i.e. training people to become marketing executives for
chain stores -- will delude Americans for a while about what kind of
work is really available. But before long, the younger adults will
realize that there are enormous opportunities for them in a new and
very different economy. We will still have commerce -- even if it's not
the K-Mart blue-light-special variety -- and the coming generation will
have to rebuild all the local, multi-layered networks of commercial
inter-dependency that were destroyed by the rise of the chain stores.
In short, get ready for local business. It will surely be
part-and-parcel of our local food-growing and manufacturing activities.
I hate to keep harping on this -- but since nobody else is really
talking about it, at least in the organs of public discussion, the job
is left to me -- we have to get cracking on the revival of the railroad
system in this country, if we expect to remain a united country. This
is such a no-brainer that the absence of any talk about it is a prime
symptom of the zombie disease that has eaten away our brains. Automobiles (the way
we use them) and airplanes are utterly dependent on liquid hydrocarbon
fuels, and you can be certain we'll have trouble getting them. You can
run trains by other means -- electricity being state-of-the-art in
those parts of the world that do it most successfully. I know that
California just voted to create a high-speed rail link between Los
Angeles and San Francisco. It's an optimistic sign, but it shows more
than a little techno-grandiose over-reach. High speed rail would
require a mega-expensive re-do of the tracks. We need to scale our
ambitions for this more realistically. California (and every other
region of America) would benefit much more from normal-speed trains
running every hour on the hour on tracks that already exist
than from a mega-expensive, grandiose sci-fi program that might not get
built for ten years. The dregs of the Big Three automakers can and
should be reorganized to produce the rolling stock for a revived
railroad system.
Even amidst the financial carnage underway right now, the public
is enjoying a respite from high-priced gasoline, but it is due to be
short-lived. As I've already said, we are in danger not just of oil
prices going way back up again, but of losing access to our supplies
from the exporting countries. In other words, we're just as likely to
face shortages as high prices, and soon. Oil shortages are certain to
produce a political freak-out here unless we get our heads screwed on
right -- and this means that Mr. Obama had better prepare quickly for a
comprehensive action plan in the face of such an emergency (which has
to include a robust public information initiative).
In the meantime, Mr. Obama must dissociate himself from all
activities aimed at the care-and-feeding of zombies. Mr. Obama is
correct that there is one president and one government at a time, and
since this is the case in reality, he must avoid being contaminated by
the choices they make as their clock ticks out. Obviously, world
markets might be more disturbed if Mr. Obama were to step up and
actively contradict everything that is being done to cultivate zombies
right now. He is in a very delicate position. But being a man of
intelligence and sensibility, he may successfully navigate this rough
passage.
That this melt-down is building straight into the Christmas
holidays is one of those accidents of history that leaves one reeling
in wonder and nausea. The cable networks better be prepared to bombard
the public with round-the-clock showings of It's A Wonderful Life, because they're going to need all the moral support they can get as zombies stalk through the silent night, holy night.
____________________________________
My new novel of the post-oil future, World Made By Hand, is available at all booksellers.