Tuesday, 7 April 2009

Jim Kunstler says...

Every now and then James Howard Kunstler tells us how the world is ending. He may be right, he may be wrong, but his prose is always entertaining. Here is an excerpt from this week's rant, on how there is no actual capacity to service new debt, which is the "fix" most governments are pushing - get lending restarted.

Sooner or later the daisy chain of credibility in the fundamental transactions of business lose legitimacy and something's got to give. My guess is it will first take the form, sometime after Memorial Day* (but maybe sooner) of wholesale liquidations of everything under the North American sun: companies, households, chattels, US Treasury paper of all kinds, and, of course, the S & P 500. We'll soon find out whether an organism the size of the United States can run an economy based on one family selling the contents of its garage to the family next door. My guess is that this type of economy won't support the standards of living previously enjoyed in places like Dallas and Minneapolis.

Your neighbours won't have milk or meat for sale in their garage, that's for sure. And who'll sell you gasoline on credit? It wasn't like this before Obama got in.

* Memorial Day is Monday 25 May this year.

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