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In the
twilight of the Bush days, in the twilight of the twilight season, a
consensus has formed that we are headed into a long, dark passage leading we
know not where. Even CNBC's Lawrence Kudlow has
been reduced to searching for stray "mustard seeds" of hope on
hands and knees in a bleak and tortured financial landscape. Half the
enterprises in the land are lined up for some kind of relief bailout and a
blizzard of pink slips has cut economic visibility to zero.
The broad American public voted for
"change" but they thought that meant a "changing of the
guard." Out with the feckless Bush;
in with the charismatic Obama... and may this American life now continue just
as it ever was. The change actually coming will be much more than they
bargained for, namely our transition from a wealthy society to a hardship
society. The sharp break is a product of our years-long failure to reckon
with the energy realities of our time. We're still confused about that, but
it's hard, otherwise, to ignore the massive disappearance of capital, asset
values, livelihoods, domiciles, comforts, and necessities.
The price of oil is suddenly down
to an astounding $40-odd per barrel. Those of us studying the Peak Oil story
have said that the "bumpy plateau" years of peak production would
be expressed in tremendous price volatility, and for exactly the reasons now
evident -- that the high-price phase would mangle advanced economies, that
they would fall back in paralysis, then respond anew to oil price collapses
by straggling up again, only to be crushed again when a resumption in demand
for oil drove the price back up.
What was not so generally
anticipated was the wholesale destruction of global finance in the first
phase of this period. This has now occurred so comprehensively that we know
the banking business will never be the same again. It has also accelerated
other plot-lines in the story. One affects the global oil industry itself: a lack of capital to go forward
with the new oil projects that were designed to mitigate the present
depletions in old oil fields. The result of this quandary is as likely to be
oil shortages in 2009 as much as an extremely sharp snap-back in oil prices. The
oil markets themselves are changing in the face of financial disruption. Between
pirates lurking off the Horn of Africa, and a shortage in letters-of-credit
that enable the shipping of anything for delivery between nations, the
allocation system is impaired. This affects poorer nations the most, and when
they don't get their oil shipments, conditions in these nations get worse. People
lose incomes. Ethnic strife ramps up. All this will make it harder to move
oil from the places where it is produced to the importing countries.
So much artificially-generated pixel
"money" is being pumped into the system now that it will eventually
overtake the quantity of capital currently vanishing in the form of exposed
securities swindles, unwinding bad debt, and imploded worthless counter-party
contracts. The pixel money will express itself as super or hyper inflation,
lagging from 6 to 18 months from the time it was actually introduced in the
form of bailouts. For the moment, money is moving into the presumed safety of
US Treasury paper. Personally, the safety of this is not something I would
presume. But in the current deflationary stage its
hard to find any other place to park cash, and when asset values are crashing
everywhere, cash is king. Gold is physically unavailable in the form that
non-millionaires usually buy it in, ounce and half-ounce coins.
President-elect Obama has announced his
intention to kick off a massive "stimulation" program when he hits
the White House "running" in January. Early indications are that it
will be directed at things like highway repair. If so, we will be investing
long-term in infrastructure that we probably won't be using the same way in
ten years. But I doubt there is any way around it. The American public can't
conceive of living any other way except in a car-centered
society. Anyway, some parts of our highway-bridge-and-tunnel system are
already so decrepit that they pose a menace right now, and the clamor to direct "stimulation" there is already
very strong -- backed by all the fraternities of engineers.
Stimulus aimed at perpetuating mass
motoring will be a tragic waste of our dwindling resources. We'd be better
off aiming it at fixing the railroads (especially electrifying them),
refitting our harbors with piers and warehouses in
preparation to move more stuff by boats, and in repairing the electric grid. Unfortunately,
our tendency will be to try to rescue the totemic touchstones of everyday
life, things familiar and comfortable, regardless of whether they have a
future or not.
The ominous forces gathering out there
will defeat these efforts and everyday life will reorganize itself some other
way consistent with the single greatest trend: the force of contraction. Every sign we see is
pointing in that direction, from the inability of the earth's ecology to
support more human beings, to the dwindling of mineral and energy resources,
to the destruction of farmland, to mischief in the climate. We just don't
know how badly things will fall apart in the meantime,
or how kind (or cruelly) people will act in the process.
Mr. Obama would be most successful if he
could persuade the public how much more severe the required changes are than
they currently realize, and inspire them to get with program of retrofitting
American life to comply with these realities.
James Howard Kunstler
www.kunstler.com/
My
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/
Information
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