Paris Afterparty, by James Howard Kunstler

Beethoven’s “Ode to Joy” instead of the French national anthem? Emmanuel Macron is off to an auspicious start. (See “She Said That? 5/7/17“) From James Howard Kunstler at kunstler.com:

First mistake: Emmanuel Macron’s handlers played Beethoven’s “Ode to Joy” instead of the French national anthem at the winner’s election rally. Well, at least they didn’t play “Deutschland Über Alles.” The tensions in the Euroland situation remain: the 20 percent-plus youth unemployment, the papered-over insolvency of the European banks, and the implacable contraction of economic activity, especially at the southern rim of the EU.

The clash of civilizations brought on by the EU’s self-induced refugee glut still hangs over the continent like a hijab. That there was no Islamic terror violence around the election should not be reassuring. The interests of the jihadists probably lie in the continued squishiness of the status quo, with its sentimental multiculture fantasies — can’t we all just get along? — so En Marche was their best bet. LePen might have pushed back hard. Macron looks to bathe France’s Islamic antagonists in a nutrient-medium of Hollandaise lite.

The sclerosis of Europe is assured for now. But events are in charge, not elected officials so much, and Europe’s economic fate may be determined by forces far away and beyond its power to control, namely in China, where the phony-baloney banking system is likely to be the first to implode in a global daisy-chain of financial uncontrolled demolition. Much of that depends on the continuing stability of currencies.

The trouble is they are all pegged to fatally unrealistic expectations of economic expansion. Without it, the repayment of interest on monumental outstanding debt becomes an impossibility. And the game of issuing more new debt to pay the interest on the old debt completely falls apart. Once again, the dynamic relationship between real capital creation and the quandaries of the oil industry lurks behind these failures of economy. In a crisis of debt repayment, governments will not know what else to do except “print” more money, and this time they are liable to destroy faith in the value of “money” the world over.

To continue reading: Paris Afterparty

 

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2 responses to “Paris Afterparty, by James Howard Kunstler

  1. ” In a crisis of debt repayment, governments will not know what else to do except “print” more money,”

    Robert, don’t you find it fascinating when someone writes about the impossibility of paying debt obligations with debt, and then writes the above?

    I recently did a back-of-the-napkin calculation of my total wealth, including the Present Value (PV) of all the cash streams my wife and I are currently promised (including private and public pensions and social security.) I sincerely doubt most people ever consider doing this, but it’s quite eye-opening.

    On paper, this viewpoint renders my wife and me quite wealthy. I suspect that others have such “visions of sugarplums dancing in their heads” too, if not so explicitly.

    My expectations are that in order of likelihood of getting stiffed, we have my wife’s public pension, my social security “promise” and then my private pension. Losing all that would be a massive blow to our “current PV.” If we also lose what we have in the banking system, it will be a very bad trip indeed. All of this is entirely possible.

    What Kunstler and a million other pundits don’t grasp is that when all those promises of future cash flows evaporate, the reverse wealth-effect should be historic.

    No one will even be able to CONSIDER “printing” up replacements for all that until after all those IOU’s are gone, because attempting the Zimbabwe/Wiemar Gambit would simply hasten the evaporation of the IOU’s.

    Like

    • Yours is one of the more perceptive comments I’ve seen. I agree, and have made the same point in numerous posts, most recently in Cataclysm.

      Like

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