Mid-Year Digest | James Howard Kunstler
James Howard Kunstler -- World News Trust
June 24, 2013
Wondering why the money world got its knickers in a twist last week?
The answer is simple: the global economy is breaking apart and its constituent major players are doing face-plants on the downhill slope of a no-longer-cheap-oil way of life. Lets look at them case by case.
The USA slogs deeper into paralysis and decay in a collective mental fog of disbelief that its own exceptionalism cant overcome the laws of thermodynamics. This general malaise precipitates into a range of specific quandaries. The so-called economy depends on financialization, since it is no longer based on manufacturing things of value. The financialization depends on housing, that is, a particular kind of housing: suburban sprawl housing (and its commercial accessories, the strip malls, the box stores, the burger shacks, etc.). Gasoline is now too expensive to run the suburban living arrangement. It will remain marginally unaffordable. Even if the price of oil goes down, it will be because citizens of the USA will not have enough money to buy it. Lesson: the suburban project is over, along with the economy it drove in on.
But so is the mega-city project, the giant metroplex of skyscrapers. So, dont suppose that we can transform the production house-building industry into an apartment-building industry. The end of cheap oil also means we cant run cities at the 20th century scale. That includes the scale of the buildings as well as the aggregate scale of the whole urban organism. Nobody gets this. For one thing, there will be far fewer jobs in anything connected to financialization because that industry is imploding. The recent action around the Federal Reserve illustrates this. When chairman Bernankes lips quivered last week, the financial markets had a grand mal seizure. He floated the notion that his organization might taper their purchases of U.S. government issued debt and mortgage-backed securities the latter being mostly bundled debt originated by government-sponsored entities and agencies. Thats the money that supports the suburban sprawl industry.
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