Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on August 15, 2016
Kunstler: Burning Down the House
here’s a new feature to the Anything-Goes-and-Nothing-Matters economy: Nothing-Adds-Up. The magicians who pretend to measure the growth of GDP (Gross Domestic Product — the monetary value of all the finished goods and services) came up with a second quarter “adjusted” figure of 1.2 percent. That would have to be construed by anyone acquainted with basic econ stats as perfectly dismal. And yet the Bureau of Labor Statistics put out a sparkly Nonfarm Payroll Report of 255,000 for July, way above the forecast 180,000.
There were so many ways to game the jobs number — between people forced to work more than one shit job and the notorious “birth/death model” used to just make up any old number for political purposes — that no one can take this information seriously. Anyway, the GDP number was instantly forgotten and the jobs number launched the stock markets to previously uncharted record altitude.
It’s that time of the year for the hedge fund boys, with their testosterone flowing, to start burning down their house rentals in the Hamptons. And it’s also the time of year for an ever more stressed financial system to go down in flames. And, of course, it’s a presidential election season. Even for one allergic to conspiracy theories, it’s not farfetched to imagine a coordinated effort by central banks — under government direction — to generate Money-Out-Of-Thin-Air (QE) for the purpose of allowing “liquidity” flows to end up in US equity and bond markets in order to paint a false picture of “recovery” so as to insure the election of Hillary Clinton. I think that is exactly behind the recent money-printing activities by the Japanese and European Central Banks, and the Bank of England.
Why would it end up in US markets? For bonds, because the Euro and Japanese bond sovereign yields are in sub-zero territory and the BOE just cut its prime rate lower than the US Federal Reserve’s prime rate; and for stocks, because the value of the other three currencies is sliding down and the dollar has been rising — so, dump your falling currency for the rising dollar and jam it into rising US stocks. It’ll work until it doesn’t.
Why do this for Hillary? Because she represents the continuity of all the current rackets being used to prop up belief in the foundering business model of western civilization. If she doesn’t get into the White House there may be no backstopping of the insolvent banks and bankrupt governments and a TILT message will appear in the sky. That TILT message is likely to appear anyway because, remember, the authorities are only pretending that they can manage events. In fact, all of their “management” strategies and shenanigans only insure the further distortion of the basic operating system, which is already so far out of whack from twenty years of previous management efforts that nothing in banking and markets really works anymore.
Companies don’t make money, despite rising share prices. No one in his right mind buys bonds with negative yields — that promise to pay back less over time — so governments have to pretend to buy them. (In fact, they don’t so much “buy” them as simply extinguish them by playing three-card-monte with national treasuries.) And, of course, the masses of people in all these nations — including the patsy USA — sink ever deeper into penury every month.
The release of tension is being felt in the ground game of politics where outsider candidates here and abroad are rising on a tide of rage and resentment. The fecklessness and stupidity of the elites has been epic, sacrificing everything to maintain the illusion of normality. Nothing is normal and “the people” are finally onto it. Sadly, it looks as if both politics and finance are veering toward crack-up simultaneously. The daisy-chained Too-Big-To-Fail banks are already choking on the suicide bolus of derivatives. The equity markets are one algo accident away from cratering. The bond markets are a sick joke. And Hillary may win the booby prize of presiding over the smoldering wreckage of it all. When it happens, she will have no idea what to do.
20 Comments on "Kunstler: Burning Down the House"
Sissyfuss on Mon, 15th Aug 2016 11:42 am
Thank god Bill will be behind her every step of the way. Bill? Bill? Monica?
penury on Mon, 15th Aug 2016 11:48 am
Another good article by JHK, however any article is good that mentions my name.
yoshua on Mon, 15th Aug 2016 12:05 pm
If the central banks stopped supporting the governments, the banks and the market and just allowed the market to find a equilibrium, then what would happen ?
My guess is that the oil price, the stock market and the banks would crash through the floor. The governments would be taken over by militaries and they would start shooting rioting populations in our cities.
onlooker on Mon, 15th Aug 2016 12:24 pm
Well said by Kunstler. The stock market is a total illusory fiction with no connection to reality. Basically a gambling den for the fools and the super rich. Economies are weakening at an accelerating rate. Economic collapse is getting close now. The world needs this collapse to slow down the assault on the Earth and its precious resources. Then maybe they’re will be enough functioning Earth for the survivors
Northwest Resident on Mon, 15th Aug 2016 1:55 pm
“Inflationism has seen real wages for much of the workforce stagnate or worse over the past decade. Inflationism and his accomplice malinvestment are the culprits behind pathetic productivity trends and declining living standards. Worse yet, Inflationism and his many cohorts are fomenting disturbing social, political and geopolitical turmoil. And reminiscent of the Weimar hyperinflation, central bankers somehow remain oblivious that their operations are of primary responsibility. If people don’t these days trust central bankers, politicians, Wall Street, and governments and institutions more generally, just wait until the Bubble bursts.”
http://creditbubblebulletin.blogspot.com/2016/08/weekly-commentary-inflation.html
“Looking beyond the near-term, my view is that a “permanently high plateau” is unlikely, and we will instead see a violent unwinding of recent speculative extremes over the completion of the current market cycle, even if central banks ease aggressively, as they did throughout the 2000-2002 and 2007-2009 collapses. Corporate income growth and profit margins have already begun to narrow from their extremes, and the default cycle has already turned higher. The completion of this cycle won’t arrive because central banks suddenly become enlightened enough to abandon their recklessness. It will arrive precisely because they have sustained yield-seeking speculation for too long already; because they have amplified the vulnerability of the debt and equity markets to normal economic fluctuations; and because the consequences of this fragility are now fully baked in the cake.”
http://www.hussmanfunds.com/wmc/wmc160815.htm
What both of these excellent analysts leave out is the base underlying cause of excessive debt and central bank manipulations. AKA: “Reality Disconnect”. And that underlying cause has everything to do with resource depletion combined with excessive pollution.
The big question, as always, is how much longer can they (PTB) keep the charade going. Intense pressures are building under the economic and geopolitical surfaces. Reality is exerting enormous gravitational pull on the interconnected global banking and finance system. One of these days, the entire global economy will succumb to that gravitational pull and plummet back to earth like a rickety space station that lost its orbit, burning as it falls through the atmosphere and raining chunks of debris across the landscape.
In other words, total devastation. Deny at your own peril.
Cloggie on Mon, 15th Aug 2016 3:23 pm
Post 1945 modernity is coming to a close.
The end of the West is near.
Let it collapse.
And pave the way for a new geopolitical constellation.
The old Bretton-Woods dollar-centric system will soon be gone.
And so will all these globalist institutions like UN, IMF, WB, NATO, etc.
A global financial reset is next.
Debts are going to be wiped out, pensions and handouts will be a thing of the past.
One World sentiment, cosmopolitanism and multiculturalism will be replaced with ethno-centrism.
Sharp shift to the political right.
Free trade will be replaced with mercantilism.
Northwest Resident on Mon, 15th Aug 2016 4:17 pm
“Debts are going to be wiped out, pensions and handouts will be a thing of the past.”
The road from here to there would be littered with unimaginable numbers of bodies and devastated lives. But I tend to agree, that is where this is logically headed.
makati1 on Mon, 15th Aug 2016 4:54 pm
Sissyfuss, thanks for the chuckle. It’s nice to start a new day with a smile.
If she is elected, she may be already out of it mentally by the time of the crash and never realize what is happening. I would be more concerned about who she has as VP because they are likely to be running the show in a few years. That ASSUMES that Trump is not the Prez, and at this point I would not place a bet either way.
Cloud9 on Mon, 15th Aug 2016 4:59 pm
It is going to be interesting to see how this plays out on the local level. At this stage of the game, I don’t expect to survive it.
Cloggie on Mon, 15th Aug 2016 5:11 pm
“I would be more concerned about who she has as VP”
https://en.wikipedia.org/wiki/Tim_Kaine
Party apparatchik, empty suit.
Apneaman on Mon, 15th Aug 2016 5:22 pm
“Worse than Hurricane Katrina”: Coffins float down street as devastating Louisiana floods uproot caskets from graveyard
http://www.mirror.co.uk/news/world-news/worse-hurricane-katrina-coffins-float-8637663
Northwest Resident on Mon, 15th Aug 2016 5:24 pm
Laying the groundwork for the market collapse to come.
http://www.zerohedge.com/news/2016-08-15/feds-williams-calls-overhaul-monetary-and-fiscal-policy-there-problem
Go Speed Racer on Mon, 15th Aug 2016 6:31 pm
Awwwww, Sleep Apnea, that was gross.
Hey. Could we put an outboard motor
on the back of one of those coffins?
Just improvising a new ride?
;O)
Plantagenet on Mon, 15th Aug 2016 8:03 pm
Maybe Obsma and Hillary can’t really fix the economy but as long as they can fix the numbers so they look good most people won’t notice
ghung on Mon, 15th Aug 2016 8:37 pm
NWR said; “Reality Disconnect”. And that underlying cause has everything to do with resource depletion combined with excessive pollution.”
Yeah, NWR, the top few percent have no clue as to how leveraged most of the rest of their society is; no clue as to how quickly things can unwind. Their hubris prevents it. Too busy protecting their wealth to worry about pitchforks and AR-15s, and resource depletion, etc. simply isn’t on their radar.
makati1 on Tue, 16th Aug 2016 1:25 am
“A cloud of madness is descending on America, and most of us are completely unprepared for the chaos that will be unleashed during the months ahead. … There are going to be people that have vast quantities of food and supplies stored up that are still going to blow their brains out when they see what happens to this country because they don’t have any hope … If unrest and violence are spiking this dramatically in places like Milwaukee and Chicago now, what are things going to be like when economic conditions start getting really, really bad in this nation?
During the months and years ahead, we are all going to see things that we never thought we would see happen in America.”
http://theeconomiccollapseblog.com/archives/america-you-will-go-insane-because-of-what-your-eyes-will-see
The 60s riots were a picnic compared to what is coming now.
MikeX11.2 on Wed, 17th Aug 2016 12:12 pm
Too many conspiracy theories in one article, with no proof.
Just take inflation.
Inflation erodes purchasing power? Well, most of America is spending all if it’s income weekly, so most of America has no inflation problem. It spends it’s wages at current market prices.
But, the rich, in 1900 had an inflation problem. Except that had you put your money into Government Treasuries you’d have beat inflation by a modest amount, but, the value of your savings would have been preserved.
Third, aside from government figures there are private price tracking web sites. They do not support an lnflation rate about 2% currently.
Sometimes, you’ve got to go back to Econ 101 and take a refresher course. Econ from 1901 is out of date.
MikeX11.2 on Wed, 17th Aug 2016 12:15 pm
The thing that’s happened in the black community is the iphone. Police violence against unarmed black men can now be documented, nationally. And video is proof.
What it’s doing is highlighting a problem most of us didn’t know existed, so it’s new to us.
It’s not new, it’s awareness is new.
Sissyfuss on Wed, 17th Aug 2016 1:14 pm
Agree MikeX. The poleese can’t say they were in danger when the video shows the “perp” running away rapidly while the “threatened” officer caps 8 rounds into his back. Of course said officer will be found innocent because it’s a tough job.
PracticalMaina on Fri, 19th Aug 2016 10:04 am
sissyfuss, yes a tough job, that is safer than being POTUS, or logging or fishing or farming or construction…Ive done three of those, I had no idea I was so BA.