Forget About "Recovery"

by Jim Kunstler

At the risk of confirming my critics' dumbest charge -- that I am a "doomer" -- the mandate of clarity requires me to ask: to what state of affairs do we expect to recover? If the answer is a return to an economy based on building ever more suburban sprawl, on credit card over-spending, on routine securitized debt shenanigans in banking, and on consistently lying to ourselves about what reality demands of us, then we are a mortally deluded nation. We're done with that, we're beyond that now, we've crossed the frontier and left that all behind, and we'd better get our heads straight about it.

I maintain that there are countless constructive tasks waiting to occupy us on a long national "to do" list for rebuilding a national economy, but they are way different than the ones currently preoccupying government and the mainstream media. The Obama White House, Congress, and The New York Times are hung up on exercises in futility -- "rescuing" banks and insurance companies that cannot be rescued (because they are hopelessly trapped in "black hole" credit default swaps contracts), and re-starting a "consumer" binge that was completely crazy in the first place, based, as it was, on a something-for-nothing standard-of-living.

Read on...

Peacenik has wondered in many of Peacenik's posts if there will be violence. If there will be justice. If there is a way out of this mess. This is a must read article by Kunstler. Very entertaining and not totally pessimistic. Enjoy.

Debt Rattle, November 26, 2008: From the top of the great Pyramid

Stoneleigh: Everyone has heard of pyramid, or Ponzi, schemes. In their simplest form they are short-lived deliberate frauds where a small number of existing members are paid from the buy-in of a larger number of newer members until the supply of newer members is exhausted, whereupon they collapse. Typically, the founders, and perhaps a few others who got in early and out before it was too late, end up making a lot of money at the expense of later entrants, who end up holding the empty bag. There are always many more losers than winners. What most do not realize, however, is that Ponzi dynamics are far more pervasive than people think. There are many human systems that ultimately rest on the buy-in of new entrants, and every one of them will ultimately meet the same fate, although it can take far longer for complex constructions than for simple pyramid frauds.

What allows a more complex pyramid to last for longer than a simple one is a supplementary source of funds to pay members, besides merely the buy-in of newer members. The more such sources there are, legitimate and otherwise, the more complex the pyramid can become and the longer it will last, as the apparent on-going success of early entrants will attract many more new ones. There's nothing like seeing one's friends and neighbours seemingly making a lot of easy money for a long time to eventually overcome the mental defenses of even the most skeptical.

Read on...

Peacenik remembers reading about the blow up of the Albanian Ponzi economy a few years ago. Peacenik wondered how they could be so stupid. Now the global economy has been exposed as a giant Ponzi scheme created by Wall Street, the corporate media, compliant politicians and stupid greedy citizens. The wealth and prosperity of the last 25 years has been an illusion. Peacenik lived it. Peacenik prospered from it. But now Peacenik and everyone else will suffer from it. 60 trillion dollars of "wealth" has turned out to be worthless. And now it is sucking all the wealth in the world into a black hole. The banks, pension plans, insurance companies, auto companies, are all insolvent. The only way forward seems to be to pretend that the black hole does not exist. Do not look in the black hole. Peacenik looked.