Peasant Revolt

Wherever you stand on Kunstler's dire predictions, ya gotta admit he paints a pretty picture:

Wait until summer gets underway and The New York Post gossip page resumes its coverage of hijinks in the Hamptons. The executives of Goldman Sachs, J.P. Morgan / Chase, and other dealers in fraudulent securities, plus the art world and show biz glitteratti who party together out there, might all find themselves the object of considerable grievance and resentment as the beaching season ramps up, and the limos roll around the charity lobster roasts, and the guests stray down the lawns, chardonays in hand, to plot divorce from their over-leveraged husbands.... God knows what seekers-of-vengence will be creepy-crawling the privet plantings along Gin Lane in the crepuscular gloom, searching for trophy wives to garrote.

Perhaps a bankrupt landscaping contractor from Lake Ronkonkoma, recently stiffed by a hedge fund manager over the installation of a half acre of pachysandra, will be arrested on the Wantagh Highway with blood on his sleeves and a high-C piano wire in his pocket.

Well, one can only hope, but the surveillance state and enhanced police powers, coupled with an utterly complaisant media that will swallow anything a mall-cop with a taser tells them, does not bode well for the rebellion. Besides, reg'lar folks may be too preoccupied with trying to hang on for dear life to worry about crashing the swells.

Here lies my third dissent from what I heard at the conference: since America is bankrupting itself so comprehensively at every level, the wished-for "funding" for the green rescue program will not be there in any case. Capital itself, as represented by Wall Street, is flying to pieces this year as its stock-in-trade of paper certificates loses legitimacy in the face of the overwhelming fact that the society behind that paper will be decreasingly capable of producing surplus wealth -- which is what capital is. The unwind of "positions" now underway among the big bankz is the process of previously anticipated capital accumulation vanishing down a black hole. It will be gone forever.

The first part of the paragraph should perhaps be untethered from the second. Any "green" economy that springs up in the wake of peak oil will most assuredly do it on the public teat. There may be the usual appearances of private-sector capitalization, but only gubmint largesse greases the sufficient wheels. Oil companies are content to cash their record profit checks, let refining and extraction infrastructure either dwindle away or lose EROEI, and bide their time until federal money in some form appears to motivate them to action.

So we'll pay for it, one way or the other, as we do right now. Even before the enhanced risk premiums that have led to wartime profiteering, there were always externalities subsumed by the public, in order to keep gas "cheap" as compared to the Euros with their public transportation and such.

The decoupling of global financial capital markets, while associated in some respects, seems to be an altogether different matter. That is simply a natural result of using imaginary money to bet on imaginary products; it's second- and third-order bookmaking. Nothing is actually produced but collections of guesses and percentage points. And it is only going to last so long as European and Chinese central banks continue to fund it out of rational self-interest.

But now they're pulling to cover their own side bets. The fat stock bumps here and there are erupting out of valleys; it's a buyer's market for federally bailed-out bags of crap like Bear Stearns. Hell, who wouldn't want to buy federally-secured stock at two bucks that was trading in the $70's just weeks ago? But obviously that won't hold, that's short-term speculators cashing in on a quick mark.

If the Chinese get sick of propping us up and lending us money to buy shit from them, or the major countries decide to ditch dollars for euros as reserve currency or oil trading, we are screwed royally. Or perhaps not; what such a situation would do is essentially force us into a position the British Empire found itself in nearly a century ago -- making a choice between guns and butter, having to live smarter and more modestly, realizing that everything comes from somewhere, that the only things generated out of thin air and happy thoughts are prayers and financial derivatives.

It might mean no more ginormous sorry-about-your-penis-mobiles, jacked-up guzzler toys carrying nothing to nowhere, which would be a real tragedy. And it might mean that an entire class of people who made a great deal of paper wealth by grifting each other and betting on it, would suddenly have to justify themselves. But we'll cope somehow, I'm sure.