A prediction by James Howard Kunstler

[medicvet]

In case there are those of you out there who don't know, this is the man who is an expert on Peak Oil, and has written "The Long Emergency", a book I highly recommend that everyone read. Here is something else he has written..a death knell for our economy, and it is supposed to take place within the next six months.

The Economy Has Six Months to Live
January 12th, 2010 / Author: usarmyguyretired
Jan 12th, 2010 | By James Howard Kunstler | Category: Economics, Featured
The economy has about six months to live. Especially the part that consists of swapping paper certificates. That’s the buzz I’ve gotten the first two weeks of 2010, and forgive me for not presenting a sheaf of charts and graphs to make the case. Just about everybody else yakking about these thing on the Web provides plenty of statistical analysis: Mish, The Automatic Earth, Chris Martenson, Zero Hedge, The Baseline Scenario… They’re all well worth visiting.

Bank bonus numbers are due out any day now. The revolt that I expected around the release of these numbers may come from a different place than I had imagined earlier — not from whatever remains of “normal” working people, but from the thought leaders and middling agents in administration (including the prosecutors) who, for one reason or another, have been diverting their attention, or watching and waiting, or making excuses for a couple of years now. When Frank Rich of The New York Times starts Calling for Robert Rubin’s Head, then maybe the great groaning tramp steamer of media opinion is turning in the water and charting a new course for the port of reality.

Anyway, the grotesque carnival of rackets and lies that the US economy has become — held together with the duct tape of stimulus cash, gamed accounting, mortgage subsidies, carry trades, TBTF bailouts, TARPS, TALFS, shell-game BLS reports, and MSNBC “green shoots” cheerleading — gives every sign of tipping into collapse at a moment’s notice. There are just too many obvious things that can go wrong, and that means there are many less obvious, hidden things that can go wrong, and isn’t it tragically foolish to tempt Murphy’s Law, since it operates so well without any help from us? The call is even going out lately for criminal prosecution of the current Treasury Secretary, Mr. Geithner, for Engineering AIG’S $14 Billion Credit Default Swap Payoff to Goldman Sachs as part of the AIG bailout. Okay then, why not Paulson, Bernanke, Blankfein…?

But the other rings of the circus are fully occupied by clowns and dancing bears, too. Even with sketchy-looking stock market prospects for 2010, it’s hard to explain why the world would run into US treasury bonds, especially a few months from now, after the initial rush-to-safety — that is, when you could just as easily buy Canadian or Swiss franc denominated short-term bills. And then what happens when the Federal Reserve has to eat all the uneaten treasuries, while it’s already choking to death on collateralized debt obligations and related worthless toxic trash securities? After all, the greenbacks we swap around are called Federal Reserve Notes.

Why would anybody think that the housing market is going to keep levitating? A big fat “pig” of adjustable rate mortgages (i.e. mortgages that will never be “serviced”) is about to move through the “python” of the housing scene, shoving millions more households into default and foreclosure. Meanwhile, local and regional banks are choking on real estate already in default that they are afraid to foreclose on and have been keeping off the market through 2009 in order to not send the price of houses down further and put even more households “under water” for houses worth much less than the face value of their mortgage. I doubt that the banks are doing this out of the goodness of their hearts, but whatever the motive, this racket of just sucking up bad loans can’t go on forever. At some point, a banking system has to be based on credibility, on loans actually being paid back, or it will break, and we are close to the breaking point.

The pathetic truth at the center of the housing fiasco is that prices have to come down further if any normal wage-earner will ever afford to buy a house again in America on anything like normal terms. Anyway, sooner or later the banking system is going to have to upchuck the “phantom inventory” of un-foreclosed-on houses, and sell them off for whatever they can get, or else a lot of banks are going to go out of business.

They may go down anyway, because the catastrophe of commercial real estate is following right on the heels of the fiasco in residential real estate. The vast oversupply of malls, strip malls, office parks, and other furnishings of the expiring “consumer” economy is about to become the biggest liability that any economy in world history has ever seen. Who will even want to buy these absurd properties cheaply, when they will never find any retail tenants for the badly-built structures, nor be able to keep up with the maintenance (think: leaking flat roofs), or retrofit them for anything? In a really sane world, a lot of these buildings would go straight to demolition-and-salvage — except that it costs money to do that, and who exactly right now will make a market for used cinder blocks and aluminum window sashes? I expect these places to become squats for the desperate homeless.

Then there are the bankrupt states, led by the biggest, of course — California and New York — but with plenty more right behind, whirling around the same drain (probably forty-nine of them with the exception of that fiscal Nirvana, North Dakota!). Even if they manage to con bailouts from the bailout-weary federal government, the states are still going to have to winnow down the ranks of their public employees (throwing more middle-class households into foreclosure and penury), while they hugely reduce public services, especially to the poor, the unwell, and the unable. That alone will redound into very visible realms of daily life from public safety (rising crime) to the decay of roads and bridges.

Perhaps the most troubling buzz in the air this first month of 2010 are rumors of coming food shortages due to widespread crop failures around the world in the harvest seasons of 2009 (Emergency Food Supply, Food Crisis for Dummies, 2010 Wall Street Predictions). If the US Department of Agriculture hasn’t flat-out lied about crop numbers in 2009, the signs are that their statistical reports are at least inconsistent with real grain storage numbers and commodities prices. And why would the USDA tell the truth if every other federal agency is reporting gamed numbers? Given the crisis in capital and lending, one also has to wonder how farmers will be able to borrow money to get their crops in this year.

Finally there’s the global energy scene. The price of oil starts this week over $83 a barrel. That puts it about $1.50 from the price “danger zone” where it begins to kill economic activity in the USA. Things and procedures just start to cost too much. Gasoline. Deisel fuel (and, by the way, that means another problem for food production going into the 2010 planting season). One especially eerie situation the past few weeks has been the de-coupling of moves upward in oil from moves in the value of the dollar. Lately, oil has been going up whether or not the dollar has gone up or down. Two weeks ago the dollar went below 1.42 against the Euro and today it’s above 1.45, and oil has been rising steadily from the mid $70 range all the while. 2010 may be the year that we conclusively realize that world oil demand exceeds world oil supply — and that global oil production cannot hold above 85 million barrels-a-day no matter what we do.

These are the things that trouble my mind at three o’clock in the morning when the wind rises and things bang around spookily. Gird your loins out there for a savage season or two.

Regards,
James Howard Kunstler

January 12, 2010

http://usarmyguyretired.com/wordpress/

[lycanox]

Could you please shorten this article and not post them entirely so it does not violate any copyright rules.

[Raptor Witness]

Banking itself is a shell game, so that's nothing new. The problem is when there's no pea under one of the shells. Right now the pea has been restored artificially, but that takes resources, which are limited.

The middle class will lose this artificial pea first. That's the real danger, because without it, the majority of banks really will go bust.

When someone asks you what causes and fixes Great Depressions. The correct answer is simply .... happy bankers with plenty of peas.

[Traveler]

Hope you guys have bought your tents already and that they are nice ones because you are going to need them.

Camp beds are nice too if you want to be off the ground.

[perdition79]

Originally Posted by Traveler

Hope you guys have bought your tents already and that they are nice ones because you are going to need them.

Camp beds are nice too if you want to be off the ground.

I have two yurts ready to go. Don't think I'll need them though. America is a nation of comforts, and once the people are stripped of those comforts, all bets are off.

[Jake99]

I have been saying these same things for decades and I keep wondering when you people will wake up and help me legally and Constitutionally drive the banksters out of the temple of God and into the lake of fire where they were supposed to be thrown 2,000 years ago. It is mathematically impossible to make the system that is in place now work properly which along with introducing me who you refer to as Jesus is the entire theme of the Bible. What does it take to get you people to help me drive the corruption out of world government? I am an efficiency expert and the jobs I would have you do are almost the opposite of the ones you currently do which would rid the world of evil and fill it with joy until the end of time. Choose wisely.

[medicvet]

Originally Posted by perdition79

I have two yurts ready to go. Don't think I'll need them though. America is a nation of comforts, and once the people are stripped of those comforts, all bets are off.

That is what Haiti is in dire need of right now. Lots and lots of Yurts. Something like that may cross cultural borders but would be so freakin practical.

[sonovah]

This article is more hogwarsh....

[PanamaGuy]

Interesting reading to say the least......

[Traveler]

Originally Posted by Jake99

I have been saying these same things for decades and I keep wondering when you people will wake up and help me legally and Constitutionally drive the banksters out of the temple of God and into the lake of fire where they were supposed to be thrown 2,000 years ago. It is mathematically impossible to make the system that is in place now work properly which along with introducing me who you refer to as Jesus is the entire theme of the Bible. What does it take to get you people to help me drive the corruption out of world government? I am an efficiency expert and the jobs I would have you do are almost the opposite of the ones you currently do which would rid the world of evil and fill it with joy until the end of time. Choose wisely.

Don't worry Jake, the enforcers will be doing the job for you.

[medicvet]

Originally Posted by lycanox

Could you please shorten this article and not post them entirely so it does not violate any copyright rules.

I'm sorry, I usually only go for the first few paragraphs, but I thought everything he had to say is very important. Kunstler is a man ahead of his time, and he can see what way the tide is turning, and really should be paid attention to and taken seriously. If I was going to make a top ten list of books that needed to be read in order to see what is going on in the world, "The Long Emergency" would be right on that list somewhere.

[Sirius]

How to Deal With the Coming Economic Crisis

Q: What should people do to prepare themselves? What investments should they hold?



A: Canned goods, head for the hills?

[Abyssal_Worm]

Originally Posted by Sirius

How to Deal With the Coming Economic Crisis

My response to the question:

Build relationships of trust with your neighbors, you will need them and they will need you.

Learn to make do with what you have readily available, Wal-Mart may not be open for business during a crisis and you will need to improvise solutions during calamity.

If possible, grow a small garden to supplement your food purchases. This can help stretch your budget and give you the flexibility you need to either purchase food for storage or gather supplies you will need in the future...or to simply help pay current bills.

Encourage others to get themselves physically fit. Should a crisis occur and people need to evacuate, walking may be the only option. If people cannot walk two miles without a smoke break, then they have a serious problem.

Read. Street smarts are good, but sometimes it is very handy to supplement that with book knowledge. Many skills can be gained or improved by reading about the experiences others are willing to share.

Investments? Gold is often suggested, but it would be rather difficult to buy food should we enter a barter economy with a bar or even a coin of gold. Silver is the way to go for precious metals. As for the "market" always remember that the best time to buy stocks is when they are "low" and to sell when they are "high." We have seen numerous threads on AO stating that the whole system is about to come crashing down, but it does not happen. Sure we see some serious market correction, but it always bounces back. If we were going to come crashing down, we should have done it late in 2008 and again in March of 2009. People can be fearful of the market all they want, but right now it is a prime time to pick up stocks that are extremely weak and will likely rebound down the road. In fifteen years when people are worried about how they are going to retire, others will sit back and be grateful they invested during the rough patch we have been witnessing.

[Jake99]

Originally Posted by medicvet

I'm sorry, I usually only go for the first few paragraphs, but I thought everything he had to say is very important. Kunstler is a man ahead of his time, and he can see what way the tide is turning, and really should be paid attention to and taken seriously. If I was going to make a top ten list of books that needed to be read in order to see what is going on in the world, "The Long Emergency" would be right on that list somewhere.

I do not dissagree with what is wrong with the system, any intelligent person should be able to see what is wrong, nothing works properly, everything is broken and nothing is automated as it should be, I faced the exact same issues and resolved them easily. This author is just a book writer not a leader he has no plan of action to fix anything. I actually have an instant fix that resolves all problems at the same time permanently which is the same thing I promised and delivered on in numeous ahead of this time projects I designed and had installed. I am so ahead of my time that the largest bakeries in the USA allowed me with no degree in anything to modify, maintain and manage their manufacturing operations and I did that to near perfection 24/7 for 20+ years.

I have been telling you people about the Long Emergency since I first read the Bible and the newpaper in ther 1960's. It is only Satan who rules America and the sheeple just keep walking off a cliff in the fog thinking the free market full of liars, cheaters and theives will somehow magically correct itself.

[PanamaGuy]

Jake, for what its worth, I do enjoy your postings.....

[Jake99]

Originally Posted by PanamaGuy

Jake, for what its worth, I do enjoy your postings.....

It is worth allot to me but what would be better is if you helped to promote what I am trying to accomplish. The bankers want to keep selling $100 bills made out of trees and ink and backed by nothing for $100 plus interest. I want to charge nothing for issuing electronic money in the form of credits and I will back it with the promise that the only way to get it would be through authorised and supervised union work efforts or standardized benefits.

[CJAM457]

He gives you a lot to think about with the econemy being the way it is right now...

[Shadow Watcher]

Originally Posted by Abyssal_Worm

My response to the question:

Build relationships of trust with your neighbors, you will need them and they will need you.

Learn to make do with what you have readily available, Wal-Mart may not be open for business during a crisis and you will need to improvise solutions during calamity.

If possible, grow a small garden to supplement your food purchases. This can help stretch your budget and give you the flexibility you need to either purchase food for storage or gather supplies you will need in the future...or to simply help pay current bills.

Encourage others to get themselves physically fit. Should a crisis occur and people need to evacuate, walking may be the only option. If people cannot walk two miles without a smoke break, then they have a serious problem.

Read. Street smarts are good, but sometimes it is very handy to supplement that with book knowledge. Many skills can be gained or improved by reading about the experiences others are willing to share.

Investments? Gold is often suggested, but it would be rather difficult to buy food should we enter a barter economy with a bar or even a coin of gold. Silver is the way to go for precious metals. As for the "market" always remember that the best time to buy stocks is when they are "low" and to sell when they are "high." We have seen numerous threads on AO stating that the whole system is about to come crashing down, but it does not happen. Sure we see some serious market correction, but it always bounces back. If we were going to come crashing down, we should have done it late in 2008 and again in March of 2009. People can be fearful of the market all they want, but right now it is a prime time to pick up stocks that are extremely weak and will likely rebound down the road. In fifteen years when people are worried about how they are going to retire, others will sit back and be grateful they invested during the rough patch we have been witnessing.

Has some really good points. One that i most like is the buying of stocks. For us to crawl out of an economic slump people need to invest and spend now more then ever. Buy the houses and invest in companies(albeit companies with good moral standings) I wouldnt be surprised if the media being a doomsayer made this whole economic crisis worse then it should have been

[New Wine]

Thanks for posting the article Med. These are the things that a lot of us saw coming last year. Seems like we're about ready to reap the whirlwind of change.

[Jake99]

Originally Posted by New Wine

Thanks for posting the article Med. These are the things that a lot of us saw coming last year. Seems like we're about ready to reap the whirlwind of change.

Mankind has not changed anything in all its years and I want to change everything in an instant so the governing and operating system never needs to be changed again. My plan is 8 light years away from the plans of the politicians. As a child I understood how corrupt and inefficient the free market system was just by reading the Bible and watching the news. That was forty years ago and I have been warring with the US government in numerous courts and demonstrating the ways of Christ in fortune 100 bakeries and work places ever since. My wake is the one of extreme leadership and success that improved by the day for decades until there was systematically no stone left unturned and non on top of another. You have been led by people who I do not find qualified or experienced in sound leadership or success and I would not pay a dime for their services in the future.

If you reap the whirlwind of change that I recommend and direct you will live like kings and queens for the rest of time. That is what I promised and delivered in the many places I have been the leader and I have never failed to produce what I say I can. I want to automate most of your leaders out of the system, the meek shall inherit the Earth not the liars, cheaters and thieves who sit on the thrones of this wicked world.

I have a paid union job for every person that will ever live and it will be possible to live forever in a body that does not deterioate or die.

[medicvet]

Jake, as the saviour, shouldn't you be in Haiti helping out the poor earthquake victims right now? just sayin...

[Jake99]

Originally Posted by medicvet

Jake, as the saviour, shouldn't you be in Haiti helping out the poor earthquake victims right now? just sayin...

I do not have to go anywhere to save people you have to elevate me above you and let me govern the planet for that to happen. In my system those people would have been evacuated within hours, not days and would already be in their new homes in some other country. The clean up crews and rebuilding projects would already be in progress and anyone who lost a limb would have a new one by now. There will be no lines on the maps or soldiers in my system and we help anyone in need within moments of your request for help of any kind. You leaders work for Satan and I work for God their is a HUGE difference, we are 8 light years apart in how we use manpower and materials.

[DaKat]

Originally Posted by medicvet

In case there are those of you out there who don't know, this is the man who is an expert on Peak Oil,

He'd be better off STICKING to what he knows. And since 'peak oil' has NET been proven, he really doesn't know anything, apparently.