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George W. Bush was
onto something in the fall of 2008 when he remarked apropos of the Lehman
collapse: "...this sucker could go down."
It's my serene conviction, by the way, that this sucker actually is going
down, right now, even as I clatter away at the keys -- perhaps in slow
motion, so that not many other bystanders have noticed yet, and the few who have
noticed are mostly too crosseyed with nausea to
speak.
It's perhaps useful to define even what we mean when we say "this
sucker." Everybody knows what a sucker is, of course -- say, a
Midwestern public employees' union pension fund snookered into buying a fat
slice of equity tranche in a Goldman Sachs-engineered CDO. But
"this sucker" is something else: a rather large cargo of
commercial relations, entailed obligations, hopes, expectations, habits of daily life -- indeed millions of whole lives --
loaded onto the rather creaky vessel we call modern civilization. "This
sucker" was such an apt term coming from someone whose understanding of
civilization was like unto that of a boy who found a PlayStation under the
Christmas tree.
It's also perhaps useful to define what we mean by "going
down." To my mind it means an awful lot of money disappears and nobody
can pay for anything and an awful of things that have kept going on promises
to pay and to get paid will stop keeping going. I don't think that the idea
of money disappears -- that is, paper certificates representing claims
on future work -- but there will be a lot less of it to go around.
Eventually the idea of money could go, too, at least in its current
form as Federal Reserve notes. But mostly for some years it will just be a
lot of people, companies, and governments who are broke.
"Going down" will mean a society with no money and an
infrastructure for daily life that requires gobs of money to run, and a
populace too dazed, confused, and inflamed to do anything useful in the way
of organizing new infrastructures for daily life for their new circumstances.
In retrospect, the Great Depression of the 1930s will look like "The
Philadelphia Story" compared to what we wake up to ten years from now.
President Obama's speech at Cooper Union last week was a remarkable
performance. It managed to appear forceful and serious without containing any
really serious or forceful proposals to discipline a banking system that is
running a hostage-and-ransom racket on civilization. If this is finally what
the Obama Experience is all about than his detractors have been right all
along: he is a tool. Finance reform aside, there are still plenty of
laws left on the statute books that could be applied to the frauds and
rackets that ran absolutely amok on Wall Street the past few years. I would
still like to know why buying CDS "insurance" against your own
issue of bonds deliberately engineered to default is NOT a form of insider
trading, to put it as simply as possible.
The SEC action against Goldman Sachs is likely to open a Pandora's box of
troubles for that company, and perhaps all of the Too Big To Fail banks. But
even so, I believe this sucker is going down before 99.9 percent of it is
sorted out. Anyway, there was a lot about the SEC action that seemed curious,
to put it mildly, from the timing of it, to the brevity of the document, to
the strange fact that it emerged at all from an agency whose principal
activity the past few years has been the viewing of internet porn, and which
has otherwise behaved so indifferently in the face of numberless offenses to
common decency, not to mention the public interest, that it might as well
have been staffed by a thousand head of Holstein cows rather than licensed
attorneys and graduates of accredited colleges.
This sucker is going down because the train of bankruptcies underway has a
remorseless self-reinforcing power to provoke more and more bankruptcies at
every stop along the line as every promise to pay is welshed
on. The mortgages will not be paid and securities will not pay their
investors and the banks will choke on the bad paper promises in their vaults
and the pension funds will not pay their beneficiaries and the states and
counties and municipalities will go broke and not pay their employees and
creditors, and the federal government will not be able to "print"
new money in sufficient quantities fast enough to compensate for all the
money not being paid up-and-down the line... and one morning we will wake up
and discover that all those promises to pay were sham promises based on no
productive activity whatsoever... and that will be a sad day. Perhaps the Dow
Jones Industrial Average will hit 35,000 on that day.
Nothing can stop this chain of bankruptcy. It's already baked in the cake.
There is probably some wish on the part of those in charge, like Mr. Obama,
to try everything possible to postpone it. And there is likewise surely
a huge effort underway in the banking sector right now to cream off as much
cash as possible so that when this sucker does go down they will bethink
themselves better positioned to survive the consequences.
Personally, I believe that the damage was mostly done during the tenure
of poor dim George W. Bush, and his predecessor Bill Clinton. I suspect that
Mr. Obama learned at the height of 2008 election campaign -- during those
days of the Lehman collapse and the TARP -- just how completely the
government -- and the people of the USA -- were in fact hostage to the
banking system, and that it has been his unfortunate role to pretend that
there is some other fate to bargain for besides this sucker going down. It is
probably why he continues to smoke so much. He must be lighting one Marlboro
off the tip of another, one after another, in whatever inner sanctum he
repairs to when the midnight chimes toll around the White House. It's
sad to think of this graceful, still rather young man going down in history
as the chump-of-the-century, a reincarnation of Herbert Hoover on steroids,
with sugar on top.
Animosities brewing as they are among the white trash elements of the country,
I just hope this sucker doesn't resolve into an ugly bout of attempted ethnic
cleansing. Certainly Obama's racial make-up has inspired a revival of the Ku
Klux spirit around the Nascar ovals. I'm sincerely
worried that the misdeeds of people name Blankfein,
Rubin, and Madoff could provoke a
red-white-and-blue pogrom.
The big mystery for the moment is how come a few good men of stature
in important places have not stepped forward to say the right thing or do the
right deed. How come no US congressperson challenged the knavish behavior of
Republicans who condone malicious idiocy that they know to be false like the
so-called "birther" activity.
How come no putative "progressive" has called the Democrats on
their disingenuous failure to call illegal immigrants what they are. How
come no state attorney general has filed charges against TBTF bank misconduct
even if the US attorney general lies in state over at the US DOJ. How come no political figure of any stripe has called
for the resignation of Summers, Rubin, Gensler and
other Goldman Sachs "sleepers" infesting high levels of government. How come Dylan Ratigan
is the only visible figure in any major newsroom willing to identify the
precise nature of the meta-swindle.
When this sucker goes down, our primary task will be reorganizing American
life on a much more local and de-complexified
basis. It's a very big assignment and especially daunting against a possible
background of political disorder. The losses will be epic and the changes
severe, but it doesn't have to mean the end of recognizably American culture.
There will be very little money around, and it may end up being a certificate
backed by gold issued by a bank other than the Federal Reserve. Or maybe
we'll just be swapping stuff for the makings of dinner.
So
many forces are roiling around 'out there' now that it's hard to believe that
the authorities in government and banking can keep the illusion of normality
going a whole lot longer. The possible litigation against Goldman Sachs-style
frauds by a thousand aggrieved victims is enough to paralyze the system.
Meanwhile, trillions in credit default swaps are ticking away like dirty
bombs. Greece is going down, with Portugal, Spain, Ireland, and the UK
standing by to go next. Nobody can pay their bills. Before long, the old
folks won't get their checks. Then the poor folks. Lately, I wonder if there
will even be an election six months from now.
James Howard Kunstler
www.kunstler.com/
James Howard Kunstler’s
new novel of the post-oil future, World Made By Hand, is
available at all booksellers.
James Kunstler has worked
as a reporter and feature writer for a number of newspapers, and finally as a
staff writer for Rolling Stone Magazine. In 1975, he dropped out to write
books on a full-time basis.
His latest nonfiction book, "The Long
Emergency," describes the changes that American society faces in the 21st
century. Discerning an imminent future of protracted socioeconomic crisis, Kunstler foresees the progressive dilapidation of
subdivisions and strip malls, the depopulation of the American Southwest,
and, amid a world at war over oil, military invasions of the West Coast; when
the convulsion subsides, Americans will live in smaller places and eat
locally grown food.
You can purchase your own copy here
: The Long
Emergency .
You can get more from James Howard Kunstler -
including his artwork, information about his other novels, and his blog - at
his Web site : http://www.kunstler.com/
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