Debt and the Fog of Numbers
Aug 11th, 2009 | By James Howard Kunstler | Category: Featured, Macro Economics
One of main reasons behind the vast confusion now reigning in the USA, our failure to construct a coherent consensus about what is happening to us (or what to do about it), is our foolish obsession with econometrics — viewing the world solely through the “lens” of mathematical models. We think that just because we can measure things in numbers, we can make sense of them.
For decades we measured the health of our economy (and therefore of our society) by the number of “housing starts” recorded month-to-month. For decades, this translated into the number of suburban tract houses being built in the asteroid belts of our towns and cities. When housing starts were up, the simple-minded declared that things were good; when down, bad. What this view failed to consider was that all these suburban houses added up to a living arrangement with no future. That’s what we were so busy actually doing. Which is why I refer to this monumentally unwise investment as the greatest misallocation of resources in the history of the world.
Even this interpretation — severe as it is — does not encompass the sheer damage done by the act itself, on-the-ground and to our social and cultural relations. Suburbia destroyed the magnificent American landscape as effectively as it destroyed the social development of children, the worth of public space, the quality of civic life, and each person’s ability to really care about the place they called home.
It’s especially ironic that given our preoccupation with numbers, we have arrived at the point where numbers just can’t be comprehended anymore. This week, outstanding world derivatives were declared to have reached the 1 quadrillion mark. Commentators lately — e.g. NPR’s “Planet Money” broadcast — have struggled to explain to listeners exactly what a trillion is in images such as the number of dollar bills stacked up to the planet Venus or the number of seconds that add up to three ice ages plus two warmings. A quadrillion is just off the charts, out of this world, not really subject to reality-based interpretation. You might as well say “infinity.” We have flown up our own collective numeric bunghole.
The number problems we face are now hopeless. America will never be able to cover its current outstanding debt. We’re effectively finished at all three levels: household, corporate, and government. Who, for instance, can really comprehend what to do about the number problems infesting Fannie Mae and the mortgages associated with her? There’s really only one way out of this predicament: to get ready for a much lower standard of living and much different daily living arrangements. We can’t wrap our minds around this, so the exercise du jour is to play games with numbers to persuade ourselves that we don’t have to face reality. We’re entertaining ourselves with shell games, musical chairs, Chinese fire drills, Ponzi schemes, and Polish blanket tricks (where, to make your blanket longer, you cut twelve inches off the top and sew it onto the bottom).
Now that Newsweek Magazine — along with the mendacious cretins at CNBC — have declared the “recession” officially over, it’s a sure thing that we are entering the zone of greatest danger. Some foul odor rides the late summer wind, as of a rough beast slouching toward the US Treasury. The stock markets have gathered in the critical mass of suckers needed to flush all remaining hope out of the system. The foreign holders of US promissory notes are sharpening their long knives in the humid darkness. The suburban householders are watching sharks swim in their driveways. The REIT executives are getting ready to gargle with Gillette blue blades. The Goldman Sachs bonus babies are trying to imagine the good life in Paraguay or the archepelego of Tristan da Cunha.
While extremely allergic to paranoid memes and conspiracy theories, I begin to wonder about the impressive volume of World Wide Web chatter about an upcoming bank holiday — meaning that the US government might find itself constrained to shut down the banking system for a period of time to deal with a rapidly developing emergency that might prompt the public to make a run on reserves. God knows, there are enough black swans crowding the skies these days to blot out the sun. I hesitate to suggest that readers who are able to should consider stealthily withdrawing a month’s worth of walking-around money from their accounts.
Regards,
James Howard Kunstler
August 11, 2009
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If you take the $1 quadrillion and then divide it by the global pool of money (approx $50 trillion). A handful of investment banks have leveraged the GDP of the entire earth at 20:1!!! This can’t end well!
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Hi!
I am puzzled at one thing in this article.
Where does this “Polish blanket trick” term comes from?
I am Polish and I live in Poland, so if someone could please explain it’s origin, I’d be very happy.
Thanks in advance.
Julian
Dear Julian:
I don’t know for sure, but some jokes are interchangeable. For example, I live very close to a famous American university, Texas A&M. We tell what are called “Aggie” jokes, and the blanket thing could be one easily. They are pretty much interchangeable with “blonde” jokes, on the myth that all blondes are dumb. We change it around because we don’t want to hurt anyone’s feelings. “How many ____ does it take to change a lightbulb?” Fill in the ethnicity of your choice! The answer is usually something like, “Three. One to hold the bulb and two to twirl him around.” Silly. Just for fun.
We also say that you can’t make a string longer by cutting one end off and putting it on the other. I use that one to explain to people who don’t understand that I’m a night owl and I normally sleep from dawn until about 1:30. I don’t sleep MORE hours than most people, I just sleep different ones.
It could be that Mr. Kunstler will write with an explanation of where he heard the term and perhaps it does go back in history. MY guess is that it was the first foreign country that crossed his mind, although I could be wrong. We could change it to the Zimbabwe Blanket Trick, or the Venezuelan Serape Trick, or I’ll tell you a very old, dumb Texas joke. The cowboy went into the store and wanted some coffee, but all he had to put it in was his ten-gallon hat. (Which does not hold ten gallons.) The storekeeper filled the hat, but there was some left over. “No problem,” says the cowboy, turning the hat over, “You can put it in the crease here on top!”
Change the hat to a Brit’s bowler, or a sombrero, or Napoleon’s cocked hat. There are many people of Polish descent near where I live, and they are always the first to tell what they call “Polack” jokes. Very nice people.
Regards,
LBT
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