Kunstler: Bad Collateral

… The president is playing with fire on all this. The old economy is not going to recover, and so far he has not used his rhetorical talents to articulate what the next economy is likely to be about. It is reasonable to wonder whether he even really has a clear sense of it — and, based on the fatuous utterances of his economic mandarins like Larry Summers and Austan Goolsby, this team is really behind the curve.

There are plenty of things you can state about the economy past and future with some confidence right now:

— Cheap energy is over and our wishes for alt.energy are currently inconsistent with reality, meaning we have to live differently.

— We have to downscale and re-localize our major economic activities: food production, commerce and manufacturing, banking, schooling, etc.

— We can’t hope to have a stable money system unless we allow a workout of unpayable debt to proceed.

— Even if we can do this, universal easy credit is a thing of the past. From now on, we have to save for the things we want and run our businesses and households on accounts receivable.

— Major demographic shifts are inevitable as it becomes necessary to let go of suburbia and reactivate our derelict towns and smaller cities (and allow our giant metroplexes to contract).

— We have to face the truth that our major social contracts cannot be met, namely the continuation of social security as we know it and probably all pension arrangements. We’ll probably have to change household arrangements to make up for these losses.

— Health care will have to go through a revolution more comprehensive than just changing how we pay for it. Like everything else, it will have to downscale, re-localize, and become more rigorous.

Kunstler.com