Sunday, March 12, 2017

"Great Expectations (Not)"

"Great Expectations (Not)"
by James Howard Kunstler

"Halloween’s coming super-early this year and it will be a shocking surprise to those currently busy looking for Russians behind every potted plant in Washington DC. First, accept the premise that your country has lost its mind.

This is what happens when societies (and individuals) can’t face the true quandaries of a particular moment in their history. All of their attention gets channeled into fantasy: spooks, sexual freakery, conspiracies, persecution narratives, savior fairy tales. It’s been quite a cavalcade of unreality for the past six months, with great entertainment value for connoisseurs of the bizarre- until you’re reminded that the fate of the nation is at stake.

The questions Americans might more profitably ask ourselves: can we continue living the way we do? And by what means? These matters of home economics have been sequestered in some forgotten storage unit of the collective mind for at least a year while a clock ticks in the time-bomb that sits on the national welcome mat. That bomb is made of financial plutonium and it’s getting ready to blow. When it does, all the distracting spookery and freakery will vaporize and the shell-shocked citizens will have a clear view of the bleak, toxic, devastated landscape they actually inhabit.

March 15 is when the temporary suspension of the national debt ceiling- engineered in a 2015 deal between Barack Obama and then House Speaker John Boehner- finally expires, meaning the government loses its authority to continue borrowing money. The chance that Congress can pass a bill raising the debt ceiling to enable further borrowing is about the same as the chance that Xi Jinping will send every American household a dim sum breakfast next Sunday morning by FedEx. The US treasury will then be left with around $200 billion in walking-around money, at a burn rate of about $90 billion a month, meaning that around June sometime the country won’t be able to pay invoices, issue salaries, send out entitlement checks, or do anything, really. It means pure government paralysis. It means no infrastructure spending jamboree, no “great” wall, no military shopping spree, none of the Great Expectations sewn into the golden fleece of Trumptopia. (The $200 billion figure cited is incorrect, according to David Stockman: "That's right. As of the Daily Treasury Statement (DTS) for March 7, the cash balance was down to just $88 billion- meaning that $347 billion of cash has flown out the door since October 24. And I find that on March 8 alone the Treasury consumed another $22 billion of cash- bringing the balance down to $66 billion!" Accordingly, adjusting the timeline by the balance/burn rate brings us to the beginning of April, not June. - CP)

Meanwhile, over the next few weeks, Janet Yellen and her crew of economic astrologasters at the Federal Reserve will have to put up or shut up vis-à-vis raising the interest rate on the basic overnight lending rate. The Las Vegas odds of it being raised currently stand at around 95 percent. So, they will be running that play around the time that the debt ceiling issue materializes into a live-action event. Of course, the Fed could welsh on its carefully-scripted previous hints and utterances and do nothing. But that option would probably extinguish the last remaining shreds of the Fed’s credibility, since they’ve been jive-talking about raising rates since they began “tapering” the QE bond-buying spree in the spring of 2013, i.e., a long time ago. The Fed’s credibility is synonymous with the dollar’s credibility. Look out below.

If those 95 percent odds are correct, the end of all that lovely cheap money will be the death of the Trumphoria stock market zoom as all algo hell breaks loose in Wall Street’s server farms and the trend is no longer anyone’s friend. Enter, stage left, the unintended consequences and diminishing returns of computer technology ripping apart the financial expectations of every banking official from Shanghai to 20th Street and Constitution Avenue. The American public will be left out in the parking lot with its head spinning.

So, enjoy the last few weeks of artificial Russia hysteria and LBGTQ bathroom neurosis. You’ll have other things to think about as the daffodils come peeping through the garden loam- like what to use for money to buy stuff if, perchance, the ATM machines go to lockdown, and anyway, after three days of that there won’t even be anything to buy (or steal) at the local supermarket, given the fragility of our supply chains. I know this sounds a little extreme, like Zombie Apocalypse, but you won’t actually see any zombies around. They were just part of the perpetual freak show of the mind that is being shoved aside for the starker theatrics of reality.”

So now we know what, how, and why, and have a fairly confident presumptive time line.
Prepare yourselves, before April...


  1. Haven't these types of debt ceiling deals been done before with little to no meaning? Why should a Barry-Boner deal be any different? Already Mnunchin is pushing for raising the debt ceiling. So what gives? I smell a Wall Street scam in play to get investors to move money around which only makes money for the Street.

  2. They have been done before LetsPlay, but not under these conditions of $20 trillion national debt, and the long list of other problems, and with no legal authority to borrow money we're heading straight into a perfect storm of fiscal catastrophe, once the government grinds to a halt all the other dominoes of the banking system will start dropping too, bank closings, probably a bank holiday shutting down the entire system, with predictable social consequences- what happens when the all too real 3 day supply chain breaks down, the stores are empty, no ATMs, no supplies, no EBT food stamps in the cities and everywhere for weeks or months? That's a factual consideration, not a fantasy. What would/could we do? Add the $1.5 QUADRILLION derivatives monster into the mix once the defaults begin, and they will, crushing even the biggest banks, not just here but world wide, and it's simply game over for the global banking system, and who knows how long it will take to replace it? Or the government for that matter? They've hidden reality for too long, but now it's time to pay the piper, and we can't. I'm no doom and gloomer, always believed in solving a problem, that there had to be a way somehow if it could only be found, but this... no, it's nearly incomprehensible and out of our control. Life as we've known it is over soon, my friend, maybe literally for a lot of people, the price of our greed, arrogance and willful ignorance...