The Clusterfuck Nation Chronicle
Commentary on the Flux of Events
The cool snap in the late summer air is nature's reminder for us to get serious again. Events now compel our attention. It ought to be obvious, for instance, that continuing interest rate cuts by the Federal Reserve will not stop the various stock markets from whirling around the drain. With price-to-earnings ratios still historically high at 27:1, you can bet that there is plenty of flubber to work out, and that the P/E ratio on the downside will most likely overshoot the historic average of 14.5:1 to something like 10:1 before the carnage is over.
The boom economy of the 1990s had some dirty secrets.
The boom was financial not economic. That is, most of the perceived gains were on paper, not in the creation of real wealth or things of enduring value.
Many of the "creative" securities and financial instruments devised to take advantage of interest differentials and high-velocity currency movements will prove to be intrinsically valueless. And they will take down large institutions, currencies, even governments, when their lack of value becomes manifest.
In the United States, the economy was about the creation of suburban sprawl, that is, massive investment in a living arrangement, and its furnishings, with poor prospects of utility in the long term. In other words, we built ourselves a national theme park, not a civilized human ecology.
Not only did American families and individuals take on unprecedented and unsustainable amounts of debt, but the entire lending system in the United States was degraded in order to maximize "consumer banking" traffic. In short, we have institutionalized massive extensions of credit to people in no position to pay back their loans, many of them unsecured.
Computerization, indeed the whole computer sector of the economy actually did nothing to improve so-called economic productivity.
So far, nearly $4 trillion of capital value has been wiped out in the telecom sector worldwide, and more than $1 trillion of bank loans and junk bonds are in jeopardy.
Meanwhile, in the Middle East, the level of conflict slowly and steadily escalated over the summer as the recognition dawned on even politically progressive Israelis that the Palestinians are basically not interested in peace, but rather are determined to get rid of Israel by any means necessary. The US has tried to sustain the fiction that we can tell the Israelis what to do. But the Israelis, too, will defend themselves by any means necessary, whether we like it or not.
The assassination in August of Abu Ali Mustafa, General Secretary of the Popular Front for the Liberation of Palestine was intended to send two signals: One to Yasir Arafat, to let him know that a rocket with the initials Y.A. could also find its way into his window. Second to Syrian president Bashar Al-Assad to stay the fuck out of the conflict. Assad had hoped to use Abu Ali Mustafa to organize all the disparate terrorist groups in the Israeli / Palestine region and then place them under control of the Syrian high command. He had also scheduled a visit by Arafat to Syria on Sept 16 to sign a treaty of Syrian support for the Palestinians. We will now see if that takes place.
In any case, the Rosh Hashanah and Yom Kippur holidays are almost upon us and these are traditionally times when Muslim fanatics choose to make mischief in the Middle East.
By the way, the main reason we follow these events is not out of ethnic chauvinism, but because we believe that the Middle East will be a key event in the coming disruption of global oil markets.