The Crash of 2015, Day 49: Hell to Pay

You have this perfectly good structure, and then you kick out a few of the supporting pillars, and the next thin you know the SEC is on the phone.

What do you mean, Uncle Clarence didn’t believe they were going to do it, and stayed in his room?

I know, it’s old news. If I stop by on Monday and tell Oscar Oblivious that his house appears to be on fire, he is of course concerned. But when I stop by on Wednesday to say it’s still burning, has consumed most of the structure, and collapse appears to be imminent, he demands to know why I am bothering him with old news. The Crash of 2015, the burn and crash of the economies of much of the world into — at least — serious recession for a very long time, is well under way. It is of course no news at all for the mainstream media, transfixed as they are with simpler stories of happier, imaginary times. But for you who come here from time to time, it’s old news. How is it then that you are still in the burning house? Continue reading

The Crash of 2015: Day 29 [UPDATE Day 30]

You have this perfectly good structure, and then you kick out a few of the supporting pillars, and the next thin you know the SEC is on the phone.

Maybe we could still live in the top floor? If we could just slow it down a little?

A couple of things to keep firmly in mind as we watch the Crash of 2015 unfold, pretty much on the schedule I’ve been writing about here for six months. First, the drop in oil prices is not the cause of this disaster, merely an accelerant. The fracking industry is succumbing to its inherent high expense, toxicity, rapid depletion rates and over-reliance on junk financing. Similarly, the stock market crash we expect to follow the fracking collapse would have come anyway because of its inherent instability, and indeed may yet occur before the chain reaction in the fracking fields has run its course. And finally, what is happening to fracking is also happening to the legacy oil business, only slower. Continue reading

The Consumer Economy Becomes Consumptive

The Randall Park Mall in Ohio was once the world’s largest, with two million square feet. It has ben rotting down since 2009. (Photo by Nicholas Eckhart/Flickr)

The Randall Park Mall in Ohio was once the world’s largest, with two million square feet. It has ben rotting down since 2009. (Photo by Nicholas Eckhart/Flickr)

The Masters of the Universe like to talk about our “consumer economy,” as if we have discovered the equivalent of the perpetual motion machine: an economy that can prosper while consuming, without having to produce anything except fast food and loan documents. Such an economy has the future of a snake that has swallowed its own tail — that full feeling is not going to last. Such an economy is not a “consumer” economy — that is almost an oxymoron — but a consumptive economy, which is to say one suffering from a wasting disease.

People trapped in a burning building don’t spend much time worrying about whether they have a wasting disease. So it’s understandable that with the American oil revolution imploding and the stock market reeling drunkenly along the edge of a cliff, not much attention is being paid to the spreading dry rot of ordinary American retail business. Still, it’s there. Continue reading

The Crash of 2015: Day 21 [Update: Day 22]

Hold on a second, we’ve changed our minds. Can you just hold it right there, please? We’ve decided we like it the way it is…..

The economy of the United States and the world is on fire, and with the flames and smoke visible in any direction one cared to look, the President of the United States declared last night that the worst is over, “the shadow of crisis has passed,” and happy days are here again. In reality (a state that presidents and candidates for president never seem to visit) 2015 is shaping up to be one of the worst any of us have ever seen.

It’s a potent mix of flammable situations, from an unhinged stock market to a drought-ravaged West to the fiscal convulsions of China, Russia and Europe. But for us in America, the collapse of the bogus New American Oil Revolution is the fire that’s burning hottest and spreading fastest. This is how it’s likely to go: Continue reading

Living the Dream. No, Really, You’re Dreaming. Wake Up.

If American consumers would just consume more, the American economy would be all right. Whether you think they are, or are not, doing their part depends on who you read. Amd whether you’re awake or dreaming. (Wikipedia Photo)

If American consumers would just consume more, the American economy would be all right. Whether you think they are, or are not, doing their part depends on who you read. Amd whether you’re awake or dreaming. (Wikipedia Photo)

Fortune Magazine, the journal of the Masters of the Universe, posted the following headline at 11:33 yesterday morning: “U.S. shoppers finally shed funk: Retailers post strong holiday season gains.” At the same time the experts at NASDAQ.com. writing for the same audience of one-percenters, headlined: “Retail Sales Drop .9% as Consumers Pull Back.” Wait, what? Did we Americans shed our funk, as Fortune insisted (“retail sales for November and December rose 4%…the industry’s best showing in three years.”) or pull back, as NASDAQ saw it (“Sales at retailers and restaurants decreased a seasonally adjusted 0.9% in December from a month earlier…the largest monthly decline since January 2014.”)

So to summarize: It was the best of times, it was the worst of times… Continue reading

Living the American Dream is a Nightmare

plato-cave

In Plato’s little-recognized prediction of the Age of Television, slaves chained to their couches watch reflections of events, while philosophers struggle up to the sunlight to see what’s really going on.

Plato asked us to imagine a group of people chained to a wall in a cave in such a way that they could not see what was going on around them, only reflections cast on the cave wall opposite them by firelight. He invited us to consider how skewed the prisoners’ understanding of the world would become over time, and to value the contributions of philosophers who go out into the sunlight and see things as they really are. It’s easy for us Americans of 2015 to grasp the first part of his allegory, because it’s a perfect description of us watching TV (remarkable that he nailed that prediction 2,000 years ago, don’t you think?). It’s the second part that mystifies: what would a philosopher, stumbling out of the cave of shadows on the wall, make of our realities? Continue reading

CNN: “Russia Headed for Crash.”

Russia, known for its long, hard winters, may be entering a very long, very hard one. (Photo by Elen Schurova)

Russia, known for its long, hard winters, may be entering a very long, very hard one. (Photo by Elen Schurova)

In the headlong rush toward the edge of the cliff at the end of the industrial age, Russia has suddenly pulled ahead by a nose(dive). The headline “Russia Headed for Crash” has appeared on the CNN Money website, although the news mavens in the Situation Room see no reason to go wall-to-wall with coverage when there are Cosby accusers to flush and another Bush is thinking about (!) running for president(!) in 20016! The lamestream media are trapped deep in the spurious narrative of the steely-eyed Putin resuming the Cold War as if it were 1950 and he were the Soviet Union, while Chinese tentacles slither across the globe projecting the power of the world’s largest (!) and weakest (!) and quite likely stupidest (!) economy. Continue reading

Conn’s Game: Subprime Loans, Subhuman Lenders

One of the stores built by a Conn’s game, based on junk bonds and subprime loans, in Houston Texas.  (Photo by Mather Rutledge/Flickr)

One of the stores built by a Conn’s game, based on junk bonds and subprime loans, in Houston Texas. (Photo by Mather Rutledge/Flickr)

After some rant or another about the combined greed and stupidity of the industrial Masters of the Universe, I frequently get this response: “Look, they couldn’t be that stupid or they wouldn’t be in charge. They know what they’re doing, and we just don’t understand it.” Seriously. I get that. If a quick refresher on the Enron Bubble and the Dot-com Bubble and the Housing Bubble are not enough to put this turkey of an argument into the deep fryer for once and for all, then consider the true story of Conn’s, a Texas-based 90-store retailer who came up with the Business Plan to End All Business Plans. And it did. Continue reading

Wall Street: “Quite measurably out of its mind.”

Forget the bull statue they have in the street in front of the stock exchange -- this is the guy who’s taking over in 2015. (Photo by Tambako the Jaguar/Flickr)

Forget the bull statue they have in the street in front of the stock exchange — this is the guy who’s taking over in 2015. (Photo by Tambako the Jaguar/Flickr)

John Hussman runs a very large mutual fund whose performance for the past five years has not been great. He is reviled by many of his fellow Masters of the Universe for saying of them, as he did in a recent client newsletter, that Wall Street, collectively, is “quite measurably out of its mind.” Others balance the scorn of the gamblers against the fact that Hussman was saying much the same thing just before the crashes of 2000 and 2008.  In a world whose collective memory maxes out at 90 days, in which logic and mathematics are optional belief systems, Hussman is an historian and number cruncher. What do the numbers tell him? To brace for impact. Continue reading

Insurance Companies On Climate Change: Don’t Ask, Don’t Tell

Great, you lived through Hurricane Sandy, now just call your insurance company. What do you mean, it’s an unlisted number? (Photo by Wavlan/Flickr)

Great, you lived through Hurricane Sandy, now just call your insurance company. What do you mean, it’s an unlisted number? (Photo by Wavlan/Flickr)

Property-insurance companies are just like politicians in that they don’t want to talk about climate change, because if they did they would be expected to explain what they are doing about it, and they aren’t doing anything about it. Unlike politicians, who seem to be getting away with pretending ignorance, insurance companies are being presented with ever more claims, that are ever more expensive, for more and more losses. To stay in business, they are finding, they have to not only appear to be doing something, which is all we ask of politicians, they are going to have to actually stop the hemorrhaging. Tricky, when you can’t admit the patient has been injured.

In the best traditions of American Free Enterprise, the insurance companies are striding forward into the far distance, girding to protect their policyholders against any risk except those which actually exist. These are some of their favorite methods: Continue reading