Mon Oct 27th, 2008 at 03:09:25 AM EST
In his October 20, 2008 essay, James Howard Kunstler gazes into his crystal ball and tries to answer the question: What now? Not surprisingly, he sees a devastating economic reboot.
So, that's what I think we will get: an interval of deflationary depression followed by a destructive wave of inflation that will wipe out both constructed debt and constructed savings, scraping the financial landscape clean. There's no question that stage one is underway. But we can be sure the giant wave of money recklessly loaned into existence in just a few weeks time will wash back through the global economy leaving a swath of destruction.
And then what? The societies of the world will be faced with the task of rebuilding systems of fruitful activity, i.e., real economies based on productive behavior rather than the smoke-and-mirrors of Frankenstein-finance con games.
Kunstler thinks people will quickly soon catch on and become an "angry peasant mob" demanding some sort of justice be dealt to the economic Frankensteins who jump started the collapse.
Personally, I think he's a little optimistic about that happening. However, he writes:
Perhaps, in some countries (maybe the USA, if we're lucky), this will take the more orderly form of systematic prosecutions, bringing to justice persons who perpetrated swindles involving the alphabet soup of investment "products" that have gone bad in so many accounts (and ruined so many individuals, institutions, and governments).
He suggests if there isn't accountability through justice, then there is the risk of violent revolution.
Apart from orderly prosecutions (which can certainly turn harsh and cruel), there is the possibility of sociopolitical upheaval -- revolution, violence, civil war, war between nations, the whole menu of monkey-human mischief that afflicts mankind.
The collapse fits within Kunstler's future view, which is the collapse of American society as it is known today. In his 2008 forecast, Kunstler wrote:
One thing the public doesn't get about the housing debacle is that it is not just the low point in a regular cycle -- it is the end of the suburban phase of US history...
Unfortunately the whole point of the housing bubble was not really to put X-million people in so many vinyl and chipboard boxes, but rather to ramp up a suburban sprawl-building industry as a replacement for America's dwindling manufacturing economy.
And to put a finer point on what Kunstler is predicting, he wrote in his September 8, 2008 essay, "Last Ditch" that "the housing market is not coming back. Ever. In the form that we knew it. The suburban project is over. That version of the American Dream is over."
And in his current essay, he predicts:
Under the best circumstances we will reorganize our society and economy at a lower level of energy use (and probably a lower scale of governance, too). The catch is, it will have to be a whole lot lower. I think we'll be very lucky fifty years from now to have a few hours a day of electricity to do things with.
The energy story and its hand-maiden, the climate change situation, are both lurking out there beyond the immediate spectacle of the financial fiasco. Both these things imply pretty strongly that the economic relations currently unraveling will not be rebuilt -- not the way they were before, or even close to it.
Kunstler suggests, once again, that "the best outcome will be societies that can practice small-scale "process-intensive" organic agriculture and equally small-scale process-intensive modes of manufacture in the context of very local sociopolitical networks."
He thinks Obama would make a better president to deal with the mess than McCain, but "the best a President Obama can do is offer some reassurance to a public that is totally unprepared for the convulsion now upon us." In Kunstler view, Obama basically can do nothing to stop what he sees as about to happen. He concludes:
The change that has been in the air all year -- that Mr. Obama has talked so much about -- is coming in a bigger dose than anyone expected. I hope we're ready to get with the program.