The wishes of the "green shoots and mustard
seed" crowd really hinge on whether the various organs of the suburban
economy can be jump-started back to life -- the production
home-builders, the granite countertop outfitters, the mall and
strip-mall gang, the national chain discount retailers, all the people
who make Happy Motoring possible from the factory to the showroom, and,
of course, the banks who shovel money into these enterprises.
All these organs of our now-former economy are gravely impaired, and a realistic appraisal of them would have to conclude that they've entered the zone of congestive failure. The choice we face really comes down to this: do we put our dwindling resources and "hopes" into resuscitating those dying systems, or do we move forward to the next chapter of American life, cut our losses, and make new arrangements more consistent with the realities on offer from the universe? To take it a step further, can we remain one nation, a common culture, without such a conscious re-purposing of our collective spirit?
The bizarre spectacle being played out right now by President Obama and his team only adds layers of mystery and mystification to this big question. On the one hand, you have Mr. Obama giving a graceful, thoughtful speech on a very difficult issue (abortion) at a very tough venue (the country's leading Catholic university), and presenting an excellent case for common ground. It was a bold deed, unshirking, even brave considering what have come to be the standard modes of pander or evasion in presidential politics. I suspect that Mr. Obama did it as much to demonstrate his willingness to face tough questions in general as to address abortion per se.
All this is to say why it is so dispiriting to see Mr. Obama's White House mount a campaign to sustain the unsustainable in the economic realm. Everything they've done for four months involving money management and enterprise policy -- from backstopping hopeless banks, to gaming the bankruptcies of the big car companies, to the bungled efforts to prop up artificially-high house prices -- amounts to a gigantic exercise in futility. Worse, it gives off odors of dishonesty or stupidity, since the ominous tendings of our system are so starkly self-evident.
Not least of the problems entailed in all this are the scary political consequences. It's one thing for a business such as a bank to fail; its another thing for the public to lose confidence in banking, or their own currency, or the credibility of all the people who work in banking, or the authority of those charged to regulate these activities, or the courts and their officers who are supposed to adjudicate misconduct in them. When faith in all these things starts to go, all bets are off for even larger social constructs like democracy, justice, and the destiny of a federal republic.
The Obama White House has very quickly painted itself into a corner on these things. The so-called bank "stress test" couldn't have backfired more completely. Rather than bolster confidence in our money system and the people who run it, it only made the system appear more obviously corrupt. It made the Treasury Department (and the White House by extension) look idiotic for concocting it. Worse, the game of allowing the banks to audit themselves, and cook their books under newly jiggered accounting rules, only made them look less sound and trustworthy, and their executives more venal and mendacious. The stress test scam also virtually guaranteed that the banks will not get another dime out of congress -- even while it is common knowledge that they will desperately need quadrillions more dimes in the months ahead.
Who knows what the point of this ludicrous exercise was? Observers in all corners of the media saw through it, and the public has only been made more cynical, and is now so furious over related stunts like AIG using taxpayer money to pay back swaps bets to Goldman Sachs that there is a whiff of revolution in the American air for the first time, really, since 1861. A lot of reasonable people see a good chance that our society will sink into disorder if these trends continue, and these fears could beat a path into radical politics, even the frightful prospect of coup d'etat -- not something that I advocate, by the way.
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.
We're not going to rescue the banks. The collateral for their loans is no good and it will only lose more value. All those tract houses on the cul-de-sacs of America and scattered on the out-parcels of our tragically subdivided farming landscape will only lose value, one way or another, in the years ahead. Right now they're simply losing inflated cash value -- and that has been bad enough to sink the banks. In the months and years ahead, they'll lose their sheer usefulness as the distances once mitigated by cheap gasoline loom larger again, and the jobs vanish and incomes with them, and the supermarket shelves cease to groan with eighty-seven different varieties of flavored coffee creamers, and one-by-one the national chain stores shutter, and the theme parks, and the Nascar ovals, and the malls, and the colossal superfluous cretin-cargo of consumer nonsense that we've been daydreaming in gets blown away in a hurricane of change that we were not ready to believe in.
My 2008 novel of the post-oil future, World Made By Hand, is available in paperback at all booksellers.