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Monday 21 September 2009

The banking fiasco still underway is at once a proxy for the larger failure of the American economy and the greatest fissure in it.  Put as simply possible: we can’t service our debt, we can’t generate more debt, and the notional “capital” we thought we possessed is dissolving into nothingness.  The federal government and Wall Street remain committed to supporting all the rackets associated with a suburban sprawl economy that has entered its own zone of remorseless failure.  It is failing as a capital investment first, and is secondarily failing as a practical living arrangement.  The two failures will continue in a close race toward terminal entropy. The dirty secret all along was that by 2005 there was no economy left in the USA beyond the suburban sprawl economy with its so-called “consumer” nexus — largely devoted to the outfitting of suburbia.  More mortgage debt (and credit card and car loan debt) will go bad and the investment paper that represents it will go bad and it will eventually destroy our current system for accumulating, valuing, and deploying wealth.  It will not destroy the function of capital — no matter how many angry intellectuals inveigh against the straw man of capital-ism, as if it were merely a belief system - but it will be a long long time before anything sturdy or credible in the way of banking will be reconstructed out of the wreckage. James Howard Kunstler

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