James Howard Kunstler: A Still Moment

04-26-2010 • Kunstler.com

This sucker is going down because the train of bankruptcies underway has a remorseless self-reinforcing power to provoke more and more bankruptcies at every stop along the line as every promise to pay is welshed on. The mortgages will not be paid and securities will not pay their investors and the banks will choke on the bad paper promises in their vaults and the pension funds will not pay their beneficiaries and the states and counties and municipalities will go broke and not pay their employees and creditors, and the federal government will not be able to "print" new money in sufficient quantities fast enough to compensate for all the money not being paid up-and-down the line... and one morning we will wake up and discover that all those promises to pay were sham promises based on no productive activity whatsoever... and that will be a sad day. Perhaps the Dow Jones Industrial Average will hit 35,000 on that day. Nothing can stop this chain of bankruptcy. It's already baked in the cake. There is probably some wish on the part of those in charge, like Mr. Obama, to try everything possible to postpone it. And there is likewise surely a huge effort underway in the banking sector right now to cream off as much cash as possible so that when this sucker does go down they will bethink themselves better positioned to survive the consequences. Personally, I believe that the damage was mostly done during the tenure of poor dim George W. Bush, and his predecessor Bill Clinton. I suspect that Mr. Obama learned at the height of 2008 election campaign -- during those days of the Lehman collapse and the TARP -- just how completely the government -- and the people of the USA -- were in fact hostage to the banking system, and that it has been his unfortunate role to pretend that there is some other fate to bargain for besides this sucker going down. It is probably why he continues to smoke so much. He must be lighting one Marlboro off the tip of another, one after another, in whatever inner sanctum he repairs to when the midnight chimes toll around the White House. It's sad to think of this graceful, still rather young man going down in history as the chump-of-the-century, a reincarnation of Herbert Hoover on steroids, with sugar on top.