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Between a Rock and a Squishy Place

     The rock is reality. The squishy place is the illusion that pervasive racketeering is an okay replacement for an economy. The essence of racketeering is the use of dishonest schemes to get money, often (but not always) employing coercion to make it work. Some rackets can function on the sheer cluelessness of the victim(s).

     Is it fair to suppose that money management is at the heart of the sort of advanced, complex economy that developed early in the 20th century? I think so. Money is the lifeblood of trade and of investment in productive activities that support trade. Of course, in order for money to have meaning, to function in such transactional relations, the people must be convinced that it legitimately represents its face value. Otherwise, money must be labeled “money” — that is, a medium of exchange suspected of false value. An economy that uses “money” — especially an economy of rackets — is an economy in a lot of trouble, and that is where ours is in December 2013.

     The trouble reached escape velocity in the fall of 2008 when a particular brand of racket among the Wall Street kit-bag of rackets got badly out-of-hand, namely the business of selling securitized bundled mortgages and their “innovative” derivative “products” to dupes unaware that they were booby-trapped for failure which would, perversely, hugely reward the seller of such trash paper. These were, in the immortal words of Senator Carl Levin (D-Mich), the “really shitty deal[s]” propagated by the likes of the Goldman Sachs crypto-bank — so-called collateralized debt obligations — pawned off on credulous pension fund managers and other “marks” around the world greedy for “yield.”

     It turned out that all the large banks trafficking in such booby-trapped contracts ended up choking on them when “the music stopped” — that is, when the derivative “swaps” payoffs at the heart of this particular racket began to fail, sending up a general alarm that all such “products” were primed to blow up the entire “banking” system. By the way, the quotation marks I so liberally resort to are necessary to denote that in such a matrix of rackets things are not what they appear to be but only what they pretend to be.

     The failure of Bear Stearns followed by the implosion of Lehman Brothers and the near-death experience of AIG alerted “civilians” outside Wall Street that the banks were linked in a web of fraud and insolvency and had to be “rescued” in order for the rest of America to keep its “way of life” going. The rescue remedy proved to be several new layers of fraud that have now matured into institutionalized rackets. The best known are the Siamese twins of “Quantitative Easing” and zero interest rate policy (ZIRP). The lesser-known racket was the 2009 rule change by the Financial Accounting Standards Board that allowed banks to make up whatever numbers they felt like in reporting the value of their holdings (“assets”).

      Hence, these dishonest, regularized operations can be labeled a hostage racket with coercion at their core. The coercion comes in the form of the threat that any let-up in the stream of QE “money” enjoyed by the banks in the form of carry-trade “loans” and “primary dealer” premium cream-offs will send the economy back to the stone age. Overlooked in this equation is the ongoing destruction of ordinary citizens (a.k.a. the “middle class”) who have already lost their grip on the emblematic “way of life” Wall Street is working so tirelessly to defend. Politicians are, of course, deeply implicated and indeed directly involved in all these rackets, since these hired handmaidens make and execute the laws protecting Wall Street’s looting operations.

     The catch to all this, lately, lies in the cognitive dissonance between the symptomatic euphoria of record stock market indexes versus the conviction of a few hardcore skeptical observers that the rackets are now so reckless and impudent as to be beyond any hope of control and on a trajectory to bring about hardships orders of magnitude above anything imagined in 2008.

     So-called “health care” is also a hostage racket, since sick people are hardly in a position to bargain for anything, but it is only a sub-system of the larger matrix of rackets that have made this such an unusually dishonest society. My guess is that ObamaCare is sure to make it worse, and pretty quickly too, since the rules for ObamaCare were written by the hireling lobbyists of the industries that benefit from the racketeering.

     The big mystery in all this remains: where are the people with some institutional power who might stand up and denounce all this perfidy? What has made us such a culture of cowards and cravens that the best we can do is produce a couple of comedians who speak truth to power in the form of jokes. Most of this is not that funny.

      By the way, one reason for the vulgar orgy of “consumerism” that, in recent years, has turned the Thanksgiving holiday into a sort of grotesque sporting event, is to mount a crude demonstration that our “money” is a viable medium of exchange. The dumbest people in the land are induced to swarm through the merchandise warehouse stores and fight to exchange their “money” for hard goods offered at false “bargains.” I wonder how much of it is a dress rehearsal for what happens in a hyper-inflation?

     Readers of my World Made By Hand novels may be interested to know that I finished the third volume on Saturday. It will be published by the Atlantic Monthly Press in September 2014, if the book selling industry still exists at that time.

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Tis the Season!

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About James Howard Kunstler

View all posts by James Howard Kunstler
James Howard Kunstler is the author of many books including (non-fiction) The Geography of Nowhere, The City in Mind: Notes on the Urban Condition, Home from Nowhere, The Long Emergency, and Too Much Magic: Wishful Thinking, Technology and the Fate of the Nation. His novels include World Made By Hand, The Witch of Hebron, Maggie Darling — A Modern Romance, The Halloween Ball, an Embarrassment of Riches, and many others. He has published three novellas with Water Street Press: Manhattan Gothic, A Christmas Orphan, and The Flight of Mehetabel.

265 Responses to “Between a Rock and a Squishy Place” Subscribe

  1. K-Dog December 8, 2013 at 4:57 pm #

    I tried to post an old Robert Reich video (2005) but without the success that music videos seem to have on the blog a little while ago. Roberts video remains highly relevant. The truth has a funny way of doing that.

    The video suggests that outrage over growing inequality may have reached a point where reform may happen and reunite us as a single nation as it should be.

    But sadly now in 2014 I can’t agree. Media is too highly manipulated for the public to really understand what is going on in America. Endless repetition of sound bites has made fools of all. Further smartphones and other forms of technology have driven up barriers to communications between different groups while enhancing communication within groups, exacerbating differences. Technology has isolated everyone into small circles of friends.

    America badly needs a new populism but it shall not be. A pervasive failure to act and be aware of what is happening in America is now upon us. The failure to develop the awareness needed to end the economy of pervasive racketeering will continue unabated. Too many elites benefit from the Wall Street kit-bag of rackets and they have too much power to allow for any reform.

    Blue states now represent the political positions once held by red states and red states represent a new fascism of ignorance and privilege.

    What has made us such a culture of cowards and cravens that the best we can do is produce a couple of comedians who speak truth to power in the form of jokes. Most of this is not that funny.

    Money and power has done it and it’s not funny. The middle class and poor have lost all influence because years of explosive wealth and growth of the class of mega rich has allowed their selfishness, greed and insane denial of reality to dominate all political activity and thought. The result has suppressed every progressive impulse.

    It suits the suits to deny reality and ignore those who are not so well off. Once education intelligence and drive allowed for some social mobility and some concern. No more, now being well connected is what matters far more and pervasive selfishness is the religion of the land.

    What is interesting in Robert Reich’s video is near the end he appeals to the Democratic Party to find the voice of reason, a new progressivism such as what prevailed in the first half of the twentieth century. But the election of 2008 killed that hope when we got a blue president with a scarlet heart and who is red under the skin.

    • K-Dog December 8, 2013 at 4:59 pm #

      Forgot an apostrophe.

      Roberts video remains highly relevant.

    • Janos Skorenzy December 8, 2013 at 7:11 pm #

      Is he the dwarf from Labor? The most radical program for redistribution in American History was by the Kingfish Huey Long. But he wasn’t a Marxist so his socialism isn’t Kosher or International enough.

    • chuckyzfr1 February 16, 2014 at 11:26 am #

      A great reply to a great post. I’m in the unusual position of having direct exposure to both ends of the socio-economic scale, and it constantly amazes me that the current system continues to chug along seemingly unchanged despite the massive shakedowns since ’08….

  2. Janos Skorenzy December 8, 2013 at 5:05 pm #

    http://www.counter-currents.com/2013/12/nelson-mandela-another-false-god/#comment-42507

    Good comment by one who knows. Black Rule in South Africa is largely dominance by the Xhosa Tribe. Apparently they were the first Blacks in and absorbed many of the Bushmen – which is why Mandela looked like he did.

  3. BackRowHeckler December 8, 2013 at 5:09 pm #

    Oh Ya, I fully expect sometime soon the Bible to be banned in the US as a document ‘espousing hate’ because it doesn’t back up 100% ‘Gay Marriage’. That’s about the time they’ll be passing out copies of the Koran and requiring you to read it, or else!

    Check out events today in the Central African Republic. Tens of thousands of desperate people are lining up at the airport desperate to get out. French troops are rushing in. There’s a Rwanda type genocide brewing up, predictably, Muslims from the north slaughtering Christians from the south. I’m wondering why the major networks, focused on Africa right now, are not covering it. It’s not far from SAfrica really. Maybe Oprah and Obama can drop in on there way to funeral and smooth things out.

    –BRH

    • Janos Skorenzy December 8, 2013 at 7:09 pm #

      Time for another crusade perhaps. But not in the Middle East because that’s what Israel wants. Attack Islam in Black Africa. For a thousand years Islam has been attacking Blacks. Why don’t the Liberals care about that? Why do I suddenly care about Blacks?

  4. BackRowHeckler December 8, 2013 at 5:28 pm #

    Wait a minute. No worries. The UN is considering taking a vote to form a committee to look into atrocities and mass murder in CAR. A report should be issued within 2 years.

    –BRH

  5. Lord Blaby of Lawson December 8, 2013 at 6:09 pm #

    It’s difficult to watch this whitewash on the history channel. There’s nothing about life on the streets, and farms, of South Africa now. It’s all blood and gore from life in South Africa under Apartheid (an Apartheid that’s never ended but rather reversed), the implication being that now things are just fine and dandy because it’s democratic violence. See, violence is justified if it’s democratic.

    F. W. de Klerk should be given credit, not for what the hypocritical moralist activists believe he did, but because he destroyed South Africa’s nuclear capability. Can you imagine fully-functional nuclear capability in the hands of the corrupt and violent ANC leadership? F. W. de Klerk prevented a future nuclear holocaust, but the activists won’t laud him for that.

  6. rube-i-con December 8, 2013 at 7:18 pm #

    i like it how any dissent here whatsoever always brings out the weakass lie that somehow everyone is asoka, or theres a coordinated effort to be racist.

    bloody weak….”janos, you’re asoka, welles, you’re asoka, welles, you changed ur name to rube-i-con”

    if someone wants to be what you think is racist, let them. better to talk things out than gun ‘em out.

    péace peaceniks

    • K-Dog December 8, 2013 at 8:26 pm #

      “always brings out the weakass lie”

      Not always, only from me. Because in the old days I could see where trolls like you were coming from. The Department of Defence Network if anyone wants to know. And you did say way back then you could make my life difficult if I continued commenting about time stamps and who was who. You certainly did that for a while but of course now knowing that such harassment is ineffective against me bringing public attention to yourself would be foolish because that’s what any further harassment of me will bring, public attention.

      To clarify your dissemblation. I contend that Janos and Asoka are different; that you are Asoka which you admitted to about a month or so ago. Both you and Vlad slip at times and give yourself away. Each in your own ways. I won’t be saying how. Truth has never been something you cared about but you should really keep track of what you’ve admitted to in the past so your lies don’t contradict yourself later and bust your own ass.

      Never said anything about Wells being Asoka at all though I always thought so. You just did it for me, thanks. Both claimed to be living in South America. Anybody else claiming that these days? I never pointed out that Wells always closed with the same insulting ‘peace peaceniks’ as you do. Why point out the obvious. But since you just admitted that Wells and Asoka are one in the same, why not. I knew it to be true but Wells pre-dated my investigation of the time stamps and at that time I was not sure who the dogs pooping in CFN were and wasn’t saying anything about what was going on then. But now I know.

      I have a hard time believing anybody living in a South American Country where Spanish or Portuguese is the national tongue would be spending 24 / 7 trolling at CFN. I don’t think I’m alone in that supposition though I can see the advantage of claiming that as a location because you wouldn’t be running into serious time zone contradiction issues like somebody else here does.

      The trouble with lies is that they are all weakass because it takes an enormous effort to keep them contradiction free. The more lies the greater the chance of making a mistake and giving yourself away. Truth does not have that problem.

      And if someone wants to be what I think is racist I think they should be banned. The trouble with that is that banned trolls have an uncanny ability to come back here.

      Why you bothered to bait me like this is something I’m not going to bother spending time wondering about. I only stopped in to see if anyone had anything intelligent to say about the last comment I made. You boys should really be confining yourselves to strict surveillance and staying away from government interference with the democratic process. What’s little there is left of it.

      I think it is now 29 degrees F where you are. Your high today was 31 degrees and your low tonight will be 28. Have a nice evening.

      • Janos Skorenzy December 8, 2013 at 9:57 pm #

        If I’m not Asoka (though you’ve called me that several times), who am I? Am I everyman? Am I you in the dead of the night when you can’t sleep and know that Blacks are in fact less than Whites?

        It was 2 below F last night. It’s 9 right now. Global Warming is really kicking in.

        • K-Dog December 8, 2013 at 11:25 pm #

          It is 24 degrees where you are. Colder than on the east coast.

          • Janos Skorenzy December 9, 2013 at 12:15 am #

            No it isn’t. You obviously don’t know where I am. You used to but it must have gotten pushed out by some new mania borne theory. You are highly unstable.

  7. rube-i-con December 8, 2013 at 8:53 pm #

    as janos knows, you make yourself out to be much more important than is the case.

    it’s very telling that you and your cohorts in imaginings simply fabricate all kinds of webs of intrigue and then draw absurd ‘conclusions’ from them.

    the truth is so much simpler.

    this is so laffable. i like your reasoning: you can’t live in a country that speakes another language and comment here because, you know, you would have to be an operative to do that. hahaha. plus, there are the dreaded time zone contradictions. haha, all caps.

    janos, our cover has been blown.

    now that welles and asoka are known to be one and the same, oh my GOSH….

    peace peaceniks

  8. rube-i-con December 8, 2013 at 8:57 pm #

    And if someone wants to be what I think is racist I think they should be banned

    yep, that really squares with your love of ‘democracy’ you try to tout in your post, HAHA, it just gets better and better.

    you know, i don’t like what you SAY, so i think i’ll BAN you. because we need to ensure democracy rules the day.

    peace peaceniks

    • K-Dog December 8, 2013 at 11:21 pm #

      Racism is not democracy. Rascism is hate ignorance and the denial of another’s rights. The opposite of democracy. K-Dogs never been banned here. You and Janos both have.

      • Janos Skorenzy December 9, 2013 at 12:13 am #

        Teacher’s pet thinks that makes him morally superior. Brown noser!

        I have asked you endlessly to discuss racism. You ignored me but now blurt out some grade school dogma. Shame.

      • Looongerbeard December 9, 2013 at 5:43 am #

        Amen to that!

        I can’t even bring myself to dialog with the racist fools.

        Probably better to ignore them, although I know that’s difficult when they persist. Like disgusting flies to a rotten carcass , eager to launch their maggot offspring!

  9. K-Dog December 8, 2013 at 11:32 pm #

    I won’t be responding to Vlad or Asoka any more tonight. It is unfortunate that nobody cares to respond to my 4:57 comment in which I came up with an answer to JHK’s question that he posed (perhaps rhetorically) in his article this week. I will be looking forward to his next post and what the normal people have to say about it tomorrow before they disappear. Normal people being people who are not paid to be here.

    • Looongerbeard December 9, 2013 at 5:49 am #

      I thought you made some good points in the 4:57 post. It made me want to see the R.Reich video that you referred to. Can you at least put the url up for that?

      Good plan to ignore the racist troll fools!

  10. rube-i-con December 9, 2013 at 6:58 am #

    Racism is not democracy. Rascism is hate ignorance and the denial of another’s rights. The opposite of democracy.

    despite my timezone & other difficulties, such as the fact that people in this country speak portuguese, i’ll state the following:

    one of the most important rights in the bill of rights, you know, democracy, as you like to say, is the right to free speech. specifically, i believe there are quotes by some founding fathers or supreme court justices to the effect that that right is meant more to ensure that what you don’t like to hear gets a hearing anyway. before you ban it and burn the books.

    we’ve seen your kind in nazi germany and now in the US, the people who take huckleberry finn and rip out whole sections cuz it doesn’t fit your sissy ass ideal of acceptable speech. while the ‘other side’, so to speak, engages in it as part of their mongrelized culture. you cheer the downfall of a great culture and civilization.

    you’ve been well indoctrinated not to allow certain thoughts in your own head. i congratulate your mental masters.

    peace peaceniks

  11. progress4what December 11, 2013 at 6:32 pm #

    OK – If you follow the news at all, you have to have seen this.

    I first saw it yesterday on Mashable, and read some of the very first comments. Several comments said, “This is obviously PhotoShopped and Mashable sucks and I will never visit Mashable again.”

    At any rate, and regardless of your politics – you need to find some humor in here, somewhere or another!

    http://www.thewire.com/politics/2013/12/analysis-michelle-obama-really-not-fond-denmarks-gucci-helle/355980/

  12. progress4what December 11, 2013 at 6:51 pm #

    And I should clarify by saying that I first saw the -story- on Mashable, not the particular series of photos with the hilarious commentary – that The Wire ran subsequently, and to which I linked.

    One thing that this should COMPLETELY put to rest is the idea that our :POTUS is a raging gay, and that Michelle is his beard.

    Because, I’ll tell you people, Pres. Obama’s interactions with Ms. Helle are definitely those of a heterosexual – perhaps even a Tailhound or an Horn-dog.*

    And believe me, I know tailhounds and horndogs, having been one for more than 4 decades so far. Just ask my wife.

    *That’s a nod to you, K-dog – and intended as something of a compliment, or at least intended as a gesture of good humor.

  13. progress4what December 11, 2013 at 6:54 pm #

    oops – dropped an accidental colon in there

    POTUS was intended, the colon in front made it :POTUS

    No disrespect was intended.

    And a simple mistake does not make me an enemy of the State.

    Except among the paranoid. the :paranoid? :Paranoid??

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