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Page added on December 12, 2016
Kunstler: Trumpxuberance… Until It’s Not
“Markets shrugged off the Brexit vote in a couple of days. They shrugged off Donald Trump’s election in a single day. They shrugged off the Italian referendum result in a couple of hours. Heck, in this mood they would shrug off an alien invasion of planet Earth.”
— Albert Edwards, Société Générale
At this time of year, only the hardest, coldest heart can fail to show good will to fellow man. That said, the silvery orb of Donald Trump’s post-election honeymoon may set sooner than expected as Ms. Yellin prepares to hoist her interest rate petard this week. Even a modest up-bump in the Fed Funds Rate is liable to prang the orgy of corporate share buybacks fueling the eight-year bull market that many formerly sane observers think is a permanent feature of the human condition. The bond market bull also seemed to last a lifetime and that’s gone south now, too.
Poor Trump’s mammoth ego has led him by the snout into a deadfall trap. The Trumpublican voters and cheerleaders expect another Morning in America miracle. Sorry, been there, done that, that was then, this is now. Conditions were quite different in 1981. For one thing, a brutal decade after the 1970 all-time US oil production peak, the Alaska North Slope fields came into full flow, along with the North Sea and Siberian fields.
The Alaska bonanza did not boost US production back to 1970 levels, but it did take the leverage away from OPEC, and it stuffed the elevated price-per-barrel back down to levels that an industrial economy could tolerate. The rest of the Reagan miracle was accomplished with debt. The case was similar for Mrs. Thatcher over in the UK. She was not an economic magician, just the beneficiary of a brief oil boom that made Britain a net energy exporter for two decades, providing an illusion of permanent prosperity and cover for the financialization of the economy. Now, with the North Sea oil playing out, all that’s left is the banking necromancy in Threadneedle Street.
Reagan also came in at the height of Fed Chair Paul Volker’s war on inflation, when the interest rate on the ten-year US treasury bond topped at 15 percent in September of 1981. Imagine paying 18 percent interest rates on your mortgage! How was that a good thing? Well, it wasn’t, not at all, it was a very bad thing for a while — but for Lucky Ronnie Reagan it meant interest rates had nowhere to go but down. And because bond prices correlate opposite to rates, the value of bonds had nowhere to go but up, which they did for 30-odd years until right now. And all that time, the world bond market couldn’t get enough of them — also till now, when big holders like China and Saudi Arabia are puking them back out.
When Reagan stepped in the national debt was only (only!) about half a trillion dollars. It will be over $20 trillion when Trump hangs his golden logo on the White House portico. Oh, by the way, consider that a trillion dollars is a thousand billion dollars and a billion dollars is a thousand million dollars. Just so you know. Reagan had room for plenty of government finance monkey business. Trump has no room. Bush One, Clinton, Bush Two and Obama dug the deadfall debt trap for poor Donald and the election shoved him right into it. He thinks he’s on an upper floor of his enchanted tower; he’s actually down in a pit.
Trump thinks he’s going to rebuild highways and bridges for another century of Happy Motoring — to make America like it was in 1962 forever. Fuggeddabowdit. The bond market is poised for collapse as I write, and Trump’s money people (that is, the Goldman Sachs gang he has assembled) are talking about issuing fifty and 100 year “Build America” bonds. Their nostrils must be rimed with the frost of Medellin.
They’re certainly not going to accomplish this trick by raising taxes. On who? Corporations? Ha! The One Percent? Double-Ha! Everyone else? Pitchforks and torches!
American oil companies can no longer make a buck doing their thing. Exxon-Mobil’s U.S. production business lost $477 million in the third quarter, the seventh straight quarter in the red. Why? Because it costs a lot more to get the stuff out of the ground than it did ten years ago, and that high cost is bankrupting oil companies and industrial economies. That is the stealth action of Peak Oil that so many people pretend is not happening. It will ultimately destroy the banking system.
The disappointment issuing from this dire set of circumstances is apt to be epic as Trump flounders and the furious tweets of futility waft out of the hole he’s trapped in. Christmas will be over, and with it the hopes of a retail reprieve. Gasoline may remain cheap, but the little people won’t be able to buy the cars to run it in. Or buy much of anything else. Not even tattoos. We’ll soon discover the temperamental difference between Donald J. Trump and Franklin Delano Roosevelt.
20 Comments on "Kunstler: Trumpxuberance… Until It’s Not"
Jerome Purtzer on Mon, 12th Dec 2016 3:00 pm
You seem to forget that The Donald is preparing his fifth and final triumph-the biggest bankruptcy in history. He has had just a little practice in dumping the junk and burning rubber out of town. He is preparing Mars for the new Trump Palace, Golf course and casino.
Sissyfuss on Mon, 12th Dec 2016 3:14 pm
Trump is the right man for the job if that job is to oversee the final solution.
penury on Mon, 12th Dec 2016 3:32 pm
I am glad to see that the Hillary supporters cannot face the reality of defeat. Everyone needs a learning experience occasionally
Davy on Mon, 12th Dec 2016 3:50 pm
Anyone with a slogan like “Make America Great Again” is setting himself up for failure at least at that shallow level. Trump may succeed in small doses elsewhere. People who bitch about Trump act like there is someone who can succeed.
A successful leader now days would put the country into an organized retreat. We can relate this to what the Germans did to the Russian on the eastern front in WWII when the tide of battle had turned and the Germans were on the retreat. The Germans continued to win tactical victories as they were losing the war. We are a lost cause but that does not mean we can’t put up a hell of a fight. No leader will embrace retreat so no leader will succeed. It is as simple as that.
Ghung on Mon, 12th Dec 2016 3:54 pm
penury said; “I am glad to see that the Hillary supporters cannot face the reality of defeat. Everyone needs a learning experience occasionally…”
Hillary supporters? Not Kunstler. And what about those who can’t support any of this? Who refused to ‘choose between two evils’? As I said ten years ago, my plan to watch the madness play out from the cheap seats is about all I could come up with. Seems to be working out so far as the debt-/grid-weenie populace continues to choose one fuckup after another. They are either trapped or don’t know better. Meanwhile, the Cloggie/Davy/Mak/Ap show must go on. Now send in the clowns, eh?
JuanP on Mon, 12th Dec 2016 4:09 pm
I agree with what Kunstler says in this article. I have little doubt that we are headed towards a major economic crisis. But do not despair; next year we will have 80 million more people on our planet and all that added ingenuity and intelligence will save us.
Cloggie on Mon, 12th Dec 2016 4:57 pm
Hillary supporters? Not Kunstler.
Not openly, but between the lines, yes.
Seems to be working out so far as the debt-/grid-weenie populace continues to choose one fuckup after another.
Wonder why an amateur miniature pickle farmer, living on the purse of his misses, has the nerve to denounce the rest of the world as “grid-weenies”.
https://www.youtube.com/watch?v=o8IvxDBVNMk
R1verat on Mon, 12th Dec 2016 5:09 pm
One could argue that the Donald road show is just another step toward collapse. We have witnessed the dumbing down of Amerika, thus the election of a grossly underqualified individual. However with that said, doesn’t really matter who is prez. The whole shit house is fixin to burndown with climate change.
Ghung on Mon, 12th Dec 2016 5:18 pm
R1verat; “One could argue that the Donald road show is just another step toward collapse.”
… and another symptom/proof of ongoing collapse, as if we needed that.
BTW: I have permanently invalidated anything the gridweenie (just above R1verat) says, since he has neither a sane or honest bone in its body.
makati1 on Mon, 12th Dec 2016 5:37 pm
Very good article! JHK hit it right in the bulls-eye. There is no way but down for America.
Meanwhile, the higher dollar has given me about a 5% exchange raise this year. I convert every dollar to Philippine pesos as fast as possible to keep my money out of the hands of the banksters and the government. I suggest all of you do the same, low bank balance, act.
Go Speed Racer on Mon, 12th Dec 2016 6:56 pm
Trump visited the Sothern Baptists Ministers Convention.
They asked him, do you believe in God?
Trump said ”Yes, Praise God’.
The ministers were all happy.
But, they didn’t realize Trump was referring
to himself.
Davy on Mon, 12th Dec 2016 7:00 pm
“They are either trapped or don’t know better. Meanwhile, the Cloggie/Davy/Mak/Ap show must go on. Now send in the clowns”.
Your so modest Ghung. Your a showman too and quite good at it. You just think you are different. You know, washed hands and all. Why not join the human race and acknowledge you are part of the problem too.
penury on Mon, 12th Dec 2016 7:00 pm
I am not a Trump supporter but anyone supporting Hillary really needs medical help. I agree that Trump has no experience but contrast that with Hillary whom has lots of experience, everyone should study her experience. Look at the obscene gyrations in an attempt to invalidate an election, If this is successful you can be certain that this will be the last election conducted from this point forward all leaders(?) will be appointed by the experts (in their own estimation). I am certain that your dislike of Trump and lack of knowledge concerning either candidate will allow you to invalidate the last part of liberty thast you had left.
Go Speed Racer on Mon, 12th Dec 2016 7:02 pm
What will take us all out, is the methane
buildup in the atmosphere. Trump’s
campaign was so full of shit,
the methane output from that
alone pushed us past the tipping point,
and turn the Earrh into Venus.
Davy on Mon, 12th Dec 2016 7:08 pm
True Pen, Hillary represents the worst of what America has become. Trump is just a result. The idiots running this country lost this election. Trump should never of had a chance but he won because of gross incompetence. No wonder so much of the world hates the US. Just read Hillary’s story that is an American story and experience acid reflux. Horrible and pathetic and they are still at it trying to invalidate the election. This country will fall apart once SHTF if we don’t get our Shit together.
Go Speed Racer on Tue, 13th Dec 2016 3:24 am
The big problem with Hillary trying to win the electrical college vote, is if Hillary still wins and beats Trump, all the toothless overweight tattoo’d rednecks in undershirts, will start protesting by shooting their shotguns into the air. Could get to be a worry.
Cloggie on Tue, 13th Dec 2016 5:13 am
Wisconsin recount: Trump enlarges lead with +131.
http://www.spiegel.de/politik/ausland/usa-donald-trump-bleibt-sieger-in-wisconsin-a-1125621.html
ROFL.
https://www.youtube.com/watch?v=zi-wYOsYy-Y
#JillStoned
penury on Tue, 13th Dec 2016 5:55 pm
GSR, Candidates do not win elections by winning the Electoral College vote, they win the ECV by winning elections, You know of course that the only two states which went heavy for Hillary were CA and NY some of us would prefer not to have all of our POTUSs picked by those two states. Even if the people there think that every other voter is a red necked cretin deplorable some of us even take baths in a couple of months a year and not always on Sat.
Cloggie on Tue, 13th Dec 2016 6:08 pm
Even if the people there think that every other voter is a red necked cretin deplorable some of us even take baths in a couple of months a year and not always on Sat.
Speak for yourself, penury.
george on Wed, 14th Dec 2016 7:04 am
kunstler keeps blowing his chance to be secretary of energy .