James Howard Kunstler
27 Nov 2007
Author of The Long Emergency
" ... At the risk of sounding even more extreme, I would be hard put to
believe any reports that "consumer" spending in the days following
Thanksgiving will match the hopes and wishes of economic officialdom.
My own hunch is that average Americans are so maxed out on debt
that they don't know whether to shit or go blind. Perhaps lot of
them are willing to take a last step into fatal insolvency in order
to put a plasma TV screen under the Christmas tree and appear as
heroes to their families. If that's the case, it would only imply
a greater bloodbath in credit card default thundering through the
system in February and March, which would only deepen the carnage
in collateralized debt instruments further up the food chain.
That stuff probably has a long way to unwind, even as the "train"
of losses hits the immovable obstacle of reality and the "boxcars"
of consequence fly off the rails. The slow-motion train wreck could
sweep away an awful lot of familiar things in its path -- banks,
companies, government-sponsored enterprises, whole industries, whole
economies, nations, up to and including the prospects for civilized
existence, if severe hardship leads to war, which it often does.
To some extent, the speed and severity of the financial train wreck
will occur in a mutually reinforcing relation to what happens in
the oil markets. The rise in price is only the mildest symptom of
growing instability for the system that allocates the world's most
critical resource. Even in the face of "demand destruction," weird
changes are occurring in the way that the oil producers do business.
The decline in export rates and the new spirit of "oil nationalism"
will take center stage now, even if the US economy seizes up. These
phenomena will represent a new cycle in world affairs: the global
contest for remaining fossil fuel resources. ... "
believe any reports that "consumer" spending in the days following
Thanksgiving will match the hopes and wishes of economic officialdom.
My own hunch is that average Americans are so maxed out on debt
that they don't know whether to shit or go blind. Perhaps lot of
them are willing to take a last step into fatal insolvency in order
to put a plasma TV screen under the Christmas tree and appear as
heroes to their families. If that's the case, it would only imply
a greater bloodbath in credit card default thundering through the
system in February and March, which would only deepen the carnage
in collateralized debt instruments further up the food chain.
That stuff probably has a long way to unwind, even as the "train"
of losses hits the immovable obstacle of reality and the "boxcars"
of consequence fly off the rails. The slow-motion train wreck could
sweep away an awful lot of familiar things in its path -- banks,
companies, government-sponsored enterprises, whole industries, whole
economies, nations, up to and including the prospects for civilized
existence, if severe hardship leads to war, which it often does.
To some extent, the speed and severity of the financial train wreck
will occur in a mutually reinforcing relation to what happens in
the oil markets. The rise in price is only the mildest symptom of
growing instability for the system that allocates the world's most
critical resource. Even in the face of "demand destruction," weird
changes are occurring in the way that the oil producers do business.
The decline in export rates and the new spirit of "oil nationalism"
will take center stage now, even if the US economy seizes up. These
phenomena will represent a new cycle in world affairs: the global
contest for remaining fossil fuel resources. ... "
~ Read on... ~
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