The Clusterfuck Nation Chronicle
Commentary on the Flux of Events
by Jim Kunstler
June 27, 2005
The east coast is a steambath, the Dow Jones is tanking, oil has crossed the $60 barrier, and Don Rumsfeld says the Iraq insurgency could run for twelve years.
Taking these things in reverse order -- why twelve years? Why not forever? Actually, twelve years might as well be forever. What Rummy seems to be saying to the US public is: better be prepared to keep Fort Apache going indefinitely. The part he left out was. . . "if you want to keep making that eighty-mile round trip commute from Cherokee County to Peachtree Street."
Even that simple equation assumes a lot. For instance, that Mr. Suburban Atlanta Commuter will still have that job in the office tower on Peachtree. Or that he can continue to make a monthly payment of $3200 on a 4000-square-foot house in Hickory Flat. Or that the Fox TV News fans will maintain their enthusiasm for a war of attrition lacking in cineplex quality battles, while their property taxes are being jacked out of sight to cover the rising cost of maintaining senior parking privileges in the centralized school districts.
The public indeed may be losing its appetite for the Iraq project, but not for Nascar racing, fried chicken buckets, car trips to Six Flags, and round-the-clock air conditioning. What shock of recognition will flash across the TV screens when the connection is finally made that keeping all these things going is why we're in Iraq? War is the answer. Sooner or later even the folks making those jitney trips to East Hampton are going to get it.
Oil's remorseless up-ratcheting past $60 is as much a symptom of a weak dollar as a strained global energy allocation system, and the dollar is weakening because the way of life it represents is becoming more and more unreal. The harsh truth is that we've reached the limit of our ability to expand our suburban sprawl economy and there is no alternative US economy in the background ready to take its place. The world can't fail to notice this weakness. The inability to generate even fake wealth, in the form of ever more WalMarts, will take its toll on the consensus that the American Dream has enduring value.
The stock market contraction ought to reflect this reality -- apart from desperate attempts by US government proxies to levitate share prices -- and it is hard to imagine a rally in the face of $60 oil. I'm inclined to predict a gruesome journey down for the Dow Jones into the 4000 range by the end of the year. Until now the dollars created by the Federal Reserve's supernaturally loose credit policy have sought shelter in the "hard assets" of houses? A meltdown of the stock markets will translate into vanishing leverage in all other areas of finance, especially in real estate (as well as a swath of destruction through hedge funds, retirement accounts and, eventually, the entire creaking superstructure of the hallucinated mortgage industry). A few Americans are actually going to get the message that this is not a good time to buy an overpriced raised ranch house. A lot of real estate geniuses are going to witness their own ruin with wonder and nausea.
The striking aspect in all this is that the US appears to be reaching a breaking point in the absence of any precipitating disaster. Apart from the daily meat-grinder in Iraq, the geo-political scene is temporarily placid. The potential for disaster is huge, of course. Five pounds of Semtex in a crucial spot could crater the global economy. Sooner or later something will blow. But the US slide is commencing without a big shove. Phase change is a curious condition. Things just slip. Lahar rules.
June 20, 2005
Iraq is not Vietnam, all right, because there is no way the US can pull out now without severe consequences, namely the loss of our access to all the oil in the Middle East -- where two-thirds of the world's remaining oil is.
In Vietnam, there was the primal fear that if we cut-and-run all of Indochina would "go communist," whatever that meant. What actually happened after we cut-and-ran in 1975 was Pol Pot and the killing fields of Cambodia, a military dictatorship in Burma, and Vietnam becoming the friendliest tourist country for westerners (including Americans) in all of Asia.
It is actually hard to tell whether the strategy to "democratize" Iraq is a childish pretense or a cynical cover story. There may be some grownups in the White House, Pentagon, and State Department who believe that a functioning, democratically-elected Iraq government would be such a mind-blower for the people of other nations in the region that all the jihadistas of, say, Saudi Arabia, Syria, Yemen, Iran, and Afghanistan would enter a mystical transport and wake up as Jeffersonian democrats.
The Iraq adventure so far seems to indicate that wishing can only accomplish so much. For instance, despite desperate US offensives in Karabilah and Anbar province this weekend, Iraqi hostiles managed to blow up fifty of their fellow Iraqis in Baghdad. The New York Times had an interesting way of capturing the mood: "Life along the street running past the restaurant quickly returned to normal. Older men 80 yards away resumed curbside games of checkers before men had finished sweeping away chunks of flesh." In America these days, a wish is sometimes just another horror movie at the cineplex.
My own is theory is that the war is a desperate attempt by a nation desperate over its energy supplies to retain a foothold, and therefore an economic claim, on the region where the oil is. Iraq was supposed to be our police station in a strategically vital bad neighborhood. The salient questions are: 1.) assuming we can't stay there forever, how long might we hope to stick around there? And 2.) at that point somewhat short of forever, will we lose our ability to even buy Middle East oil?
The conventional belief is that oil is fungible, meaning that once it enters the universal market pool, it finds its own way to customers, determined by who will pay the most for delivery. This idea was based on the assumption that there would always be a swing producer -- some entity that could always open up the valves and goose up the world supply, keeping global prices within a reasonable range. The global production peak -- Peak Oil in shorthand -- seems to have obviated that mechanism. It's especially problematic that even Saudi Arabia and the Middle East generally appear to have peaked (see Twilight in the Desert by Matthew Simmons). From now on, access to oil may be determined by other things.
It was Amercia's hope that by turning Iraqis and other Middle Eastern people into democrats, they would magically become much friendlier and that our military presence would be happily tolerated -- and that eventually all the Middle East would become so democratic, friendly, and stable that our presence there would be regarded as a Godsend. Whoops, wrong God. For starters.
The world may no longer have a swing producer of oil, but this period can probably be viewed as a swing period of history. By that I mean a period when we hoped that there was a quick and easy way to keep the oil flowing westward and found out that it wasn't so. The time is now coming when the American public won't tolerate a dozen US casualties a week, nevermind fifty Iraqis. But Americans won't tolerate $5 a gallon gasoline, either. We'll now see how the public will reconcile these intolerances.
We enter this week with oil nearing $60 a barrel. Global finance, hedging, interest rates, and the continued zest of America's last remaining industry, real estate, will all hinge on the price of oil and on America's prospects for getting it at any price. President Bush last week shifted the responsibility for an energy policy to congress, because the ideas coming out of the White House have been so transparently lame (the hydrogen economy).
My guess is that we are about to see the first act of the Hooverization of George W. Bush
kunstler.com |
