It appears that the American economy — capital management division — has found the long-wished-for magic alternative energy source: horseshit. It is fueling the conversation all over the Web and over the senile mainstream media megaphones. [Let me explain.]
So says James Howard Kunstler (Kunstler.com) in edited excerpts from his original article entitled All Bulled Up With No Place To Go.
[The following is presented by Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com and www.munKNEE.com and the FREE Market Intelligence Report newsletter (sample here – register here). The excerpts may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.]
Kunstler goes on to say in further edited excerpts: Hat Tip to Arnold B. who sent it to me saying, “Kuntsler is always a little over the top and this is no exception. Funny and valid though.”
The story making the rounds these days is that:
- the USA’s industrial economy is on the rise again;
- the housing market has “recovered;”
- the “central corridor” of the nation (Texas to Minnesota) is the second coming of Japan in the 1960s;
- we have more oil than we know what to do with;
- the nation has bred a super-race of intrepid entrepreneurial risk-takers like unto no other society in history; and finally that
- whatever else we are or are not, America is the cleanest shirt in the laundry basket of Mother Earth.
This is all horseshit of course, being smoked in the New York Fed’s crack pipe.
Apparently, the Federal Reserve is not just hosing down the markets with liquidity (i.e. money for nothing), but has also turned its headquarters in lower Manhattan into the world’s biggest stationary crack pipe. Meanwhile, more than a few professional observers of the financial scene say there can’t be any bubble because that’s the only thing everybody talks about and bubbles only form when nobody notices them. That’s just not true. Plenty of people were hollering and finger-pointing about the housing bubble years before it blew up the banking system, including yours truly in a book published in 2005 (The Long Emergency).
The reason there is so much anxious chatter about the current bubble is because the bubble is there for all to see, and when it pops it is sure to leave a lot more rubble on the ground than the last time — for instance, the wreckage of trust in all paper investments, which would be quite an historic financial innovation.
Since the interventions and manipulations of markets and interest rates are perfectly obvious, one would have to conclude from the current sentiment that faith in the crookedness of finance has completely solidified. The markets have now discounted their own dishonesty.
Here’s what’s actually going on:
1. The Federal Reserve can only pretend to have any option besides force-feeding “money” into Wall Street as if it were a Strasbourg Goose with Crohn’s disease.
What passes through goose is a vile toxic substance called malinvestment, which turns the energies of society into activities that produce nothing of value, like hedge fund employee bonuses, NSA operations, Tesla car promotion, Frank Gehry condo towers, drone strikes against Afghani wedding parties, Obama photo ops, inflated auction prices of oil paintings, and Barney’s new Jay-Z holiday fashion collection.
2. The Fed makes regular noises about ending the force-feeding program (a.k.a. “quantitative easing” or “bond purchases”)…[but this] so-called “forward guidance” [is nothing but] propaganda to give it the appearance of seriousness and rectitude…[In actuality, it] is more like what goes on in a Jerry Lewis movie of the 1960s — a kind of antic mugging. Lately it’s referred to as “taper talk” in reference to the threat of tapering the Fed’s purchases of US Treasury bonds and other debt paper, which runs at around $85 billion a month.
3. Sometime soon, the Fed may announce a tiny taper of say $10 billion a month [but all] this head-fake taper will [do is] cause the interest rates on the ten-year-bond to shoot up north of 3 percent and threaten to bankrupt the government which is too broke to pay interest that high on the loans it takes.
The markets will have a whack attack over the tiny taper. The Fed will freak out at the odor of deflationary depression and go back to full-tilt force-feeding of the sick goose.
The outcome [of the above] will be some combination of:
- a complete loss of faith in paper currency and the “assets” denominated in it,
- a complete loss of trust between banks that they are solvent enough to do business with each other, and
- a conclusive implosion of Wall Street and all the institutions in and around it, extending to the executive branch of the federal government.
The sorry little appendage to all that, US economy, will be left in the cold and dark, whimpering for its mommy.
[Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.]
*http://kunstler.com/clusterfuck-nation/all-bulled-up-with-no-place-to-go/ (KUNSTLER © 2013. All Rights Reserved.)
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