May 17, 2010

Bailout, Bubble, Bunker


On Sunday the NYT had a story about the demented Las Vegas real estate market, where even as a necropolis of unsold empty residential husks already sprawls out into the desert, builders are apparently rushing to build even more (and even more putatively “luxurious”), claiming there will be a real estate boom any day now. No word on where the buyers or the water’s supposed to come from.
Even the NYT writer kept to a skeptical, rolling-his-eyes tone as he quoted obvious shysters talking their book at a party which was obviously meant to do nothing but drum up lots of free advertising for their little exercise in trying to reflate the suburban bubble. But dubious tone or not, the shills achieved their goal, a Sunday feature in the Times.
Meanwhile Naked Capitalism linked this piece describing the resumption of RMBS bundling. So even as we learn the details of an endless line of fraudulent securitizations from the likes of Magnetar and Goldman, the new models are coming out. This comes after the elite media kept assuring everyone that securitization was dead. This is that same toxic waste polluting the banks’ balance sheets which to this day, so far as I can see, remains the elites’ justification for the Bailout. The problem is supposed to be to find a Yucca Mountain for the waste we’ve already generated (since the only reality-based waste disposal, writing it off, has been ruled out by the ideology and practice of kleptocracy). But the elites claimed it was a given that there wouldn’t be more new waste generated. (In that they sounded actually more sane than they are where it comes to actual nukes, where we continue to generate massive amounts of indestructible poison even as we’re utterly unable to find a disposal site for the waste which already exists.)
The advent of new “products” might signify that they think the political coast is finally clear. But it’s even more of a testament to how much public money they’ve looted through the Bailout and continue to loot.
Think about it. They continue to award themselves record “bonuses”, and meanwhile free money via the Fed’s QE has enabled such a lucrative carry trade and other speculations that Goldman, JPM, Citi, and BofA all reported perfect quarters of so-called “profitability”. And yet even with this, there’s so much loot flowing in they still can’t find a way to gamble all of it. While the proposed Hollywood exchange makes for amusing nonsense, I doubt that would suffice to assimilate all the surplus cash. It looks like their only choice is to rev up MBS again.
I guess it’s not a coincidence that this comes at the same time as NYT subdivision advertisements masquerading as news articles. Both are parts of the bubble reflation machine, the only thing by which the elites can hope to continue propping up their Tower of Babel.
And if the phony “recovery” production can hold the stage for awhile, they might be able to sucker more people back into the consumer brainwashing. It’s all too clear that all too few left in the first place. If anything, many among the perishing “middle class” are reacting by digging in and doubling down on all the most wasteful, impractical, destructive elements of the suburban consumer pathology. We could call them a cohort of consumerism teabaggers.
Picture a couple in their 60s who spent their lives running on the treadmill and doing relatively well by their own standards. They lived a normal suburban existence, made good upper-middle class money, fixated in theory on their lawn even though they didn’t really take good care of it. They built up a sizeable retirement fund, most or all of it in stocks. They pretended to themselves to pay attention of current events, and even made a point of “voting”, but their comprehension remained shallow, and they really cared more about tabloid crap.
So then came the crash of 2008, following years of rising oil prices and other tensions to the point that even they admitted they had a sense of impending disaster. Now that disaster has hit them personally – their retirement fund, so long cultivated and with such expectations reposed in it, has been decimated. They’re in shock. They have no explanation for what’s happened. They might know some people who could explain it and give advice on practical ways to change what they’re doing, but they don’t ask. Maybe it’s even a point of truculent pride not to ask.
That truculence seems confirmed over the next two years. Miracle of miracles! The Bailout worked! It’s a recovery, and stocks are booming again. Well, maybe they don’t think it’s literally a miracle, but to them it might as well be. For all they know the government miracled a recovery and miracled the Dow back to what they think is health. The stocks are back up, and the retirement fund is rich again.
So what lesson do they learn from this? In a sense it is miraculous – they’re actually getting a second chance. We don’t often get a do-over after having made such a catastrophic mistake over so many years. So do they get that money out of stocks and use it for something practical like strategically situated farmland, or to invest in a venture with a post-oil future, or even in gold (though I have doubts about that, but it’s much better than stocks), or in anything which offers a more promising expectation of return once the terminal collapse comes, as it will in the not-distant future? Or, to look at it somewhat differently, in anything which is better geared to preparing for the Second Great Depression into which everyone outside the elites is now descending, slowly but surely? Do they seize their unlooked for opportunity? Do they at least tear up the stupid lawn and get a real vegetable garden going?
Not at all. Not only do they leave the money in the same idiotic funds that just tanked a little while ago, thereby proving themselves dumber than a toddler who knows not to touch a hot stove a second time. Not only do they refuse to recognize the end of “suburbia” in its physical and economic viability, that they’re holding a hand there which already lost. They’re actually doubling down on it. They’re choosing now to redo that long talked about but long neglected “lawn”. They’re cutting down oak trees (never mind that the woman always whines about how hot it gets in the house during summer, and how killing the trees means it’ll now be several degrees hotter; she’s an American “consumer” which means destroy first and then be sincerely shocked and outraged when there are actually consequences of stupid destruction), they’re going to have large ornamental stones ripped out with some kind of tractor, the whole threadbare existing lawn ripped up, and have some thick lush sod lawn put down. Who knows how much that’s going to cost, or what the point is supposed to be. They’d say “that’s needed to be done for years”, but could never give a coherent answer to why it needs to be done; “needs” to be done according to whom. In the end it’s just the old brainwashing, and facing the destruction of their unsustainable way of life, their response isn’t to think, to learn a lesson, to seek real solutions and change their lives.
The response is to hunker in the bunker, dig in and double down in the dead end. It’s like the lawn is a fetish of empire, and if they can just keep that talisman glowing in their feverish eyes, the future will remain safe.
I suppose if everyone who felt this way just stuck to their lawns with this attitude, the result would be ugly and destructive enough, but would not bring the end of American freedom itself. Unfortunately many will not just redo their lawns. They’ll take that same reactionary mindset into the political realm, and do so with great aggression. That’s where fascism arises. The mindset I described, and of which I just gave an anecdote, of trying to dig the hole deeper rather than try to climb out, because climbing out would require admitting that digging the hole was a mistake and a dead end in the first place, is endemic to a group which had achieved a relatively high level of economic and political power and is now rapidly losing ground. That does create a revolutionary situation, but unfortunately the historical record shows that the most common upheaval it produces is not radical change, but a violent, reactionary attempt to stall the liquidation process, which of course never works, but which does, for a little while, offer a psychological release.
That’s what’s happening with all aspects of reaction, from lawns to right-wing extremism gaining ground. Can true freedom activism offer an alternative, which would not only work toward real solutions but provide psychological sustenance in the very act? We have no chance if we fail to do so.


  1. “Can true freedom activism offer an alternative, which would not only work toward real solutions but provide psychological sustenance in the very act? We have no chance if we fail to do so.”

    I think it can offer an alternative. An example would be how jazzed up you got me the other day when you so perfectly articulated my thinking with, “But the indirect methods of relocalization, seeking sustainability in our personal and local community lives, offer rich prospects for indirect resistance. Everything from getting our money out of the big banks, to becoming more locally self-reliant for our food and other necessities, trying to become as off-grid as possible, literally and figuratively, and like I said consuming less, period. (That’s the real key to the position.)”

    I read that, Russ, and I was like, “Yeah, that’s me. That’s what I am all about. I’ve been walking towards that and didn’t even really get it until I read Russ’ words here.”

    How do we get people into that? I think we agree that picking up a rifle and shoving off for Washington is a waste of time and energy, but disengaging from the grid, from “the machine,” now that offers real hope. I stated earlier how I feel that most of our fellow citizens are too far gone (brainwashed) to snap out of it unless and until there is a true collapse/catastrophe event. So, how do we get them to snap out of it before then? Is it possible? Time is running out. With my neighbors it is all about the big-screen, the big car, the big house, the latest toys and junk and more and more debt. How do we bring them back? I think that is the very crux of the problem. Tough nut to crack.

    Comment by Bloodgroove — May 17, 2010 @ 3:56 pm

  2. Yeah, it’s tough alright.

    I’d say trying to convince people who are still in full brainwash mode is a waste of energy (though I can see how people might feel compelled in the case of close family or someone like that).

    Probably such a movement will have to be mostly self-selecting at first, putting the ideas out there and attracting those already inclined to agree.

    Then, once enough people can find ways of organizing in various modes, but all the forms of organization loosely coalescing around the relocalization and passive resistance ideals, and these actions reach a tipping point where the public at large can see that “here’s a group of smart, resolute people determined to take back control of their lives from a corrupt system that no longer works”, perhaps at that point the exemplary existence becomes an attraction in itself, rendering the ideas also more attractive, so that now they start constructively impinging on the consciousness of many who hadn’t previously thought along those lines.

    I guess that’s one possible outcome. But it depends upon people in various localities coming together, drawing up plans of action, and then working hard to carry them out.

    So far there’s been a slow, steady growth of awareness and action. So I think we’re broadly on the right track. Now we have to figure out what the next step should be, and then how to take that step.

    I’m still thinking about it.

    Comment by Russ — May 18, 2010 @ 1:48 am

  3. The world has always been run on insane delusions enriching the few at the expense of the many. Because the many are largely idiots, correcting this problem is impossible, and most political cures prove worse (often dramatically worse) than the disease. Viable solutions are always available to courageos individuals. Collect some friends and buy your farm. Just don’t take a mortgage and try to run it at a profit. Being personally too old for farming, I will stick to daytrading and keep trying to eek out a living, going to bed flat every night. In today’s world, everything has a price and nothing much has value. Good luck with the cows.

    Comment by jake chase — May 19, 2010 @ 12:11 pm

    • Well, certainly nothing could be worse than this disease. Or to put it a different way, any risk is worth running, since all the signs are that the path we’re currently on is headed toward a place as bad as history has ever seen.

      Sort of on a different topic (well, not really), what do you think of this quote, Jake?

      “There is a special reason why you, the future leaders of the United States Army, need to be philosphically armed today. You are the army of the last semi-free country left on earth, yet you are accused of being a tool of imperialism – and ‘imperialism’ is the name given to the foreign policy of this country, which has never engaged in military conquest and has never profited from the two world wars, which she did not initiate, but entered and won. Something called the ‘military-industrial complex’ – which is a myth or worse – is being blamed for all of this country’s troubles. Bloody college hoodlums scream demands that ROTC units be banned from college campuses. Our defense budget is being attacked, denounced and undercut…”

      It goes on in that vein. I was especially wondering about the parts about never engaging in conquest (I assume by definition those like the Indians who let themselves be conquered are subhuman and thus don’t count) and “not profiting” from the world wars.

      Comment by Russ — May 19, 2010 @ 2:05 pm

      • Tell me this is not a speach by Obama to the graduating class at West Point. Of course, it could also be Johnson, Nixon, Ford, Carter, Reagan, Bush I, Clinton or Bush II.

        Comment by jake chase — May 19, 2010 @ 2:17 pm

      • True, in spirit it could have been any of those. And you’re right, it was a graduation address at West Point.

        But that’s none other than Ayn Rand in 1974, printed under the title “Philosophy: Who Needs It”. That’s why I was wondering what you thought of it.

        Comment by Russ — May 19, 2010 @ 2:24 pm

  4. Russ, you got me. I should have picked up on ‘philosophically armed’. Did you know that Rand opposed the draft and the Vietnam war too? Funny that she would have been invited to WP. Perhaps she was getting senile by ’74.

    I think the value of Rand (and Hayek too) does not depend upon the slavish adoption of every word either ever said. Rather, they provided important warnings, generally ignored by so called intellectuals, that slavery would overtake freedom while marching under a banner of altruism sponsored by elitist condescention. This is pretty much what has happened. Think about Johnson destroying a generation to fight Communinism in a meaningless third world backwater, Nixon surrendering America to a handful of Arab sheiks to enrich banking and energy interests, Reagan establishing world peace by bankrupting the Soviet Union while his sponsors looted the S&Ls, Clinton and Greenspan congratulating themselves on the prosperity they created by destroying the value of money and undermining American labor with the WTO and free trade. We are now in our seventh year of establishing democracy in Iraq in order to quadruple the price of oil and (they hope) provide a new engine of inflation that will validate the impossible burden of corporate and individual and governmental debt.

    It is not unexpected that Rand had a blind spot about Communism. What few seem to understand is that the real evil is collectivism, and that our free enterprise version is potentially just as toxic. Does any of this make sense to you?

    Comment by jake chase — May 19, 2010 @ 6:49 pm

    • Sure it makes sense. My opposition to all large structures is the same thing as opposing large scale collectivism.

      Needless to say, the US military is an example of large-scale collectivism, and it’s not possible to have such a military in a non-collectivist way. That’s part of why I can’t take any of these people seriously – they constantly engage in prima facie self-contradictions and hypocrisies.

      (Even if someone thought e.g. a bloated military was necessary during the Cold War, where was their call for it to be dismantled once the Cold War ended? From all our economic “libertarians” – crickets.)

      You say the Rand quote isn’t typical. Is the same true of Hayek’s support for the Hitlerian Pinochet regime? Actions, of course, to the extent that one has the power to act, always trump words. Although here’s the words he said about Pinochet:

      “My personal preference inclines to a neoliberal dictatorship and not to a democratic government where all neoliberalism is absent.”

      If I recall you missed the fun at Yves’ “libertarianism” thread last weekend. But among other things I touched on the very point that true non-collectivism would impose a strict cap on the size and complexity of our endeavors. Here’s a few excerpts from my comments:

      “There is no coherent libertarian position for this context[offshore drilling].

      A truly freedom-loving libertarian would believe civilization should reach the highest level of economic and political organization which is compatible with freedom and lack of coercion and then sustain itself there. That would be a level far less centralized and with much smaller concentrations of wealth and power than what we have now.

      But it’s utterly incoherent to want levels of organization larger and more concentrated and heirarchical than regional communities and economies and yet still blather about how one still wants “freedom” and “non-coercion”. On its face it’s obviously impossible to do that. How can a continent-wide government or multinational corporation not be extremely coercive? It’s existentially impossible….

      It looks like everyone on this thread who calls himself a “libertarian” wants e.g. deepwater drilling to exist, even though as I said there’s no way it can possibly be done by a loose coming together of volunteers. How do you do something like that without roping in untold numbers of people either without their fully knowledgeable consent or against their will, through using their tax dollars and exposing them to the risk, like for example from, um, something like an explosion and hemorrhage?”

      Comment by Russ — May 20, 2010 @ 3:14 am

      • It seems to me that self-contradictions are extremely difficult to avoid in the real world. Any system (physical or ideological) has limits to where it is applicable, and when the context changes, the desired outcomes may change.

        I don’t understand why collectivism is such a dirty word. It exists at every level of our universe (particles -> atoms -> molecules -> cells -> organisms -> ecosystems -> solar systems -> galaxies). I am embedded in the world, a product of my environment, not separate from it in any way. As humans we all require the same things: clean air and water, nutritious food, shelter from the elements, and knowledge of how to sustainably obtain these. My personal security relies on other people also having access to these resources. If collectivism (and democracy) represent some extreme idea to you, then what do call the condition where there is balance between individuals and their environment? To me that *is* collectivism, where all aspects of all levels are taken into account.

        What do you think of peer-based social archetectures?


        Comment by Karl — May 22, 2010 @ 9:34 pm

      • Thanks Karl, you may have caught me using a term in a sloppy way.

        You’re right, collectivism as such is nothing bad, and some level of it is necessary for any human endeavor. I was going along with the current prejudice of saying/thinking collectivism = large-scale centralized collectivism. I’ll have to be more careful about saying “large-scale” or “centralized”, or better yet not using the term at all.

        That’s an interesting link you gave, and so far I only poked around the pages a little bit, so I don’t have anything intelligent to say yet. I bookmarked it and will start delving this week. The stuff I skimmed looks related to my so-far embryonic thoughts about the blogosphere as the only real, significant-scale space for positive democracy and positive freedom we have going at the moment.

        Just yesterday I jotted down a few notes on why, although the system is irremediable existentially and morally, and activism at the federal level is generally pointless, and therefore most of our efforts should be geared to relocalization, why in spite of all that the two issues where we do need to draw a line and fight at every level are civil liberties and the integrity of the online positive space (thus net neutrality, public internet access, etc.).

        Sometime later this week I’m planning to put up a post on it, just laying out my basic thoughts.

        Comment by Russ — May 23, 2010 @ 5:12 am

  5. Freedom for individuals requires intelligent limits on the powers and rights and behaviors of corporations, particularly large corporations. In America, we prefer to regulate people at the bottom. For those at the top, we encourage predation, speculation, looting, monopoly, graft, all in the name of ‘economic growth’, which is a fantasy that ignores externalities. I am not certain that dividing America into six or twelve countries would improve matters, but perhaps it is worth a try. I have known since 1965 that my most dangerous enemy is my own government, because it has been captured by scoundrels adept at perverting its proper purposes for private benefit, and consequences be damned. I believe it is too late for our civilization to be saved by any conceivable reform. Whether we will first succumb to fascism, chaos or climactic disaster is the only serious question.

    Comment by jake chase — May 20, 2010 @ 6:34 am

  6. “How can a continent-wide government or multinational corporation not be extremely coercive? It’s existentially impossible”

    Well, you need rules preventing monopoly, and you need trade restrictions and capital controls, which means you must understand that large corporations cannot be treated as free individuals but as poteconspiracies which will choke freedom given half a chance. Corporations should be strictly regulated and taxed at steeply progressive rates on their capitalization rather than what they choose to regard as income. In America, we prefer to regulate people (licensing, drugs, parenting, marriage, etc.) and permit corporations total freedom to pillage and loot. We have been sold the bogus idea that encouraging predation and speculation will produce ‘growth’ that will trickle down to a sleepwalking population that can devote itself to entertainment while enjoying comfortable dreams about the future and understanding nothing whatsoever about the present.

    Comment by jake chase — May 20, 2010 @ 6:47 am

  7. Those are both good comments, Jake.

    As you said in the first one, the system can’t be regulated, which is why the hypothetical regulations you suggested in the second can’t work under these conditions.

    I assume you meant that in principle large corporations could be non-coercive, by way of disagreeing with my term “existentially impossible”.

    Well, I suppose philosophically lots of things are possible which could never work in practice, and that’s what I meant by “impossible” – impossible as a practical matter in the world we have.

    As you said, the overriding prerogative of the corrupted government is to round up the people as corporate sheep (and eventually slaves) while allowing the corporations to run wild.

    Comment by Russ — May 20, 2010 @ 7:05 am

  8. If you conceive of a corporation as a priviledged entity the rights of which are enjoyed at the cost of affirmative and continuing obligations, corporate regulation is not a particularly difficult problem to solve. The problem is political corruption hiding behind a bogus ideology which fails to distinguish an incorporated pizza restaurant from Dupont, and insists upon extending the same “rights” to both.

    Comment by jake chase — May 20, 2010 @ 4:41 pm

    • Yes, although there’s no reason for a pizza restaurant to be incoporated either, and it would not have been according to the original constrained concept of “corporations”.

      Essentially what was supposed to be an exception became the norm, what was supposed to be limited in scope and lifespan and “rights” became unlimited.

      And without the fossil fuel inheritance to draw down anymore (as a rule original “corporations” involved that, directly or indirectly), it’s doubtful there’s any longer a rationale for even the original concept.

      Comment by Russ — May 21, 2010 @ 3:11 am

      • The idea was limited liability, which was necessary to capitalize risky ventures by selling shares to wealthy investors. That is still a good idea, but it must be combined with strict accountability for officers and directors, which has been stripped away by judicial idiocy and political corruption.

        Comment by jake chase — May 21, 2010 @ 7:53 am

      • Yes, it sure has been. But I thought you said there was never a time when it was any better. I gather that things weren’t always this far gone, but there’s no way to roll back the clock.

        Comment by Russ — May 21, 2010 @ 3:12 pm

RSS feed for comments on this post.

Sorry, the comment form is closed at this time.

%d bloggers like this: