The American Fiasco - a Moment of Clarity

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by James Kunstler

Last week, I had one of those clarifying moments when the enormity of the American fiasco stirred my livers and lights again. I was riding in a car at sundown between St. Cloud and Minneapolis on I-94 through a fifty-mile-plus corridor of bargain shopping infrastructure on each side of the highway. The largest automobile dealerships I have ever seen lay across the edge of the prairie like so many UFO landing strips, with eerie forests of sodium-vapor lamps shining down on the inventory. The brightly colored signs of the national chain fried food parlors vied for supremacy of the horizon with the big box logos. The opposite lane was a blinding river of light as the cars plied north from the Twin Cities to these distant suburbs in the pre-Thanksgiving rush hour.

All that tragic stuff deployed out on the prairie was but the visible part of the storm now being perfected for us. On the radio, Iraq was coming completely apart and with it the illusion of America being able to control a larger set of global events -- with dire implications for all glowing plastic crap along the interstates, and the real-live people behind the headlights in those rivers of cars.

The main fresh impression I had amidst all this is how over it is. The glowing smear of auto-oriented commerce along I-94 (visible from space, no doubt) had the look of being finished twenty minutes ago. Beyond the glowing logos lay the brand new residential subdivisions full of houses that now may never be sold, put up by a home-building industry in such awful trouble that it may soon cease to exist. If suburbia was the Great Work of the American ethos, then our work is done. We perfected it, we completed it, and, like a brand new car five minutes after delivery, it has already lost much of its value.


The chief failure in American politics lately has been the inability to appreciate the relationship between how we live here and how other people in other lands support us with their resources -- oil from the Middle East, human labor and money saved from the fruits of human labor from the Far East. The oil obviously runs all the cars and the money from China and Japan supports our debt (and incidentally pays for building ever more big box stores and fried food emporia). The Middle East is now so close to exploding that we may not get so much oil from them in the years ahead. China and Japan have stepped back from buying American debt in the form of US Treasury certificates.

Even if there were no exogenous forces operating, the proverbial Man-From-Mars casual observer would have to conclude that America has built all the shopping venues it will ever need (and far beyond), and certainly more single-family housing subdivisions useful only in a happy motoring meta-system. But the exogenous events are out there and they are going to assert their power to make us uncomfortable and to alienate us from the very stuff that we have poured all of our wealth and spirit into.

The New York Times headlined yesterday that the US government might try to start negotiations with Iran and Syria over the fate of Iraq -- an idea so preposterous that it might have been a wire-story from The Onion. Iran and Syria have no interest in the matter whatsoever except in the failure of America to control events, and the humiliation entailed by that failure, which is happening on its own. So the story is a clear signal of our desperation that we are even pretending to make overtures.

For the US military this is a tragedy of classical Greek dimensions, a playing out of implacable forces despite its heroism or even good intentions. But for the American public, back home, enjoying the bright lights of the WalMarts and the steaming heaps of baby back ribs, and the comfort of the ride home with the latte plugged into the cup holder and Jay-Z's inspirational thoughts playing on the car stereo -- it's really the end of the road.

I've been saying for a long time that as our illusions dropped away, the US economy would fall on its face. I think the process is underway, especially with last week's movement of the dollar against the Euro. All the elements are now set for a full-throttle depression in which currency loses value while credit dries up and incomes are lost. You get a fire-sale of assets that behaves like a deflation while the dollar itself inflates. The Federal reserve can't possibly drop interest rates if foreigners will not buy our bonds.

Losing your house to the repo man is a major illusion-breaker. The housing bubble has popped and entered a downward self-reinforcing feedback loop that will be understood as a death-spiral of valuation. Even if nominal house prices stayed close to where they are, dollar inflation would signify a real drop in value. The jobs associated with the bubble -- everything from the legions of house-framers to the realtors to the creative mortgage hawkers to the Crate-and-Barrel furniture elves -- will drop into a black hole. Mortgage obligations will not be met, credit card payments will stop, house refinancings will no longer be possible as equity dissolves, the WalMart associates will get their pink slips, the vacancy signs will go up in the strip malls, and a mighty sob will be heard above the prairie wind.

This is really a tight spot. Wider war in the Middle East is hardly out of the question, with Iran and a broad array of jihadistas emboldened by America's flounderings in Iraq. A year from now, perhaps, or less, we will lose our access to a substantial portion of the imported oil that we run all our stuff on. The sodium vapor lamps will flicker out. The last taco will be served. The US public will have to start paying attention and making other arrangements. I believe what Garrison Keilor says about the people in Minnesota. Scratch below the surface, you'll find a thoughtful, practical mentality. I believe that when they can't do anymore of what they're doing now, they'll turn around and do something else.

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