Wicked Fairy Tales …

The shooting tragedy in Arizona is set to trigger market revulsion for American finance ‘products’ in the marketplace. America is now broken politically even as homicide rampages remain an integral part of the cultural landscape. The shooting may be a reality jolt that is extreme enough to destabilize the US stock exchanges.

The five or six people who read this blog know there are two simultaneously operating economies in the US and world, the real economy of production and labor, resources and capital with an abstract and parasitic finance economy attached where the real cannot reach to remove it.

The tapeworm economy is in the spasm of hyperinflation as credit is formed by finance firms with the moral hazard- encouragement of central banks and governments. Finance lends itself trillions so as to bid up assets and create a wealth ‘effect’ for itself. Ongoing real economy difficulties have so far not been allowed to spoil the wealth creation party. The tapeworm seeks to feed off the real economy more or less permanently rather than kill it outright.

The real economy is deflating, burdened by real costs for inputs alongside the excess debt service that the tapeworm economy refuses or is unable to lighten. The ‘container’ for both of these economies is a culture that holds out a (so- far false) material utopia of inevitable, endless progress. Advertising which is the lever of culture is a ‘diktat’: it is not just television or mobility that is demanded and promised but only acceptable types of flat screen televisions and SUV mobility.

Progress is our past: the visions of Hollywood designers and commercial artists of the 1950s. Our present mobility is leveraged to the automobile. The future is not just cars but flying cars: not just flying cars but gigantic flying pickup trucks.

Culture demands, “Carz or social/cultural death” while the real economy insists the choice is between having a car or having a job, then having a car or having something to eat. This is our cultural dilemma: our culture clothes the unreachable as the virtue ‘hope’ even as hopefulness undermines itself. Meanwhile, our auto- centric culture is intolerant of other ‘non- material progress’ cultural narratives.

The fairy tale world insists on better lives for all, for children and grandchildren who will possess more conveniences and services and who will lives better than their parents. The real world of inconvenient entropy is shuffled off to the side and ignored. The fairy tale is promoted as real and the real made into a fraud.

The culture dictates and the participants act their appointed roles without question. Bankers look and act in the manner bankers are expected to look and act. The same is true of politicians and wicked fairies. Ben Bernanke is as locked into his central banker role as was Maleficent in her role as a wicked fairy. Alongside both is the role- playing wicked fairy in Tucson.

A difference is the Maleficent is more ‘real’ than both Bernanke and Loughner: unlike the two flesh- and- blood contemporaries, she is desperate to exit the super- max confinement of her script, even as/because the outcome is her destruction. This is the tension that her character embodies, which in turn reflects the artistry of her animators. Maleficent is the most vibrant of Disney’s menagerie of two dimensional, ‘No Negroes Allowed’ suburban Styrofoam cutouts. Like all theatrical characters, she becomes a carrier of what we bring to her outside of what the script demands. Even as she is trapped within her role, she quivers with the desperate energy of attempting to expand outside it. From ink lines on pieces of cellophane she becomes human then tragic. Maleficent’s complexity animates her character and the empathy felt by her viewers. Maleficent destroys herself when the one creature she loves and who loves her is turned to stone. Rejecting the script to the degree that she can, Maleficent lives outside the chances the animators and her two- dimensional world allow her.

Bernanke does the exact opposite, burying himself into the abstraction of the ‘central bank dude’ role, sacrificing his human identity or ability to act independently in the process. Bernanke is the opposite of the cartoon Maleficent, he abhors existence outside the script. Bernanke cannot separate himself from his role to accept the possibility of risk of any kind. Bernanke has become the establishment zombie without any life outside of what the word ‘Fed’ on a piece of paper dictates.

Bernanke’s role makes destroying the country he pretends to serve a pesky and ignorable externality. Our hyper- materialist culture destroys the country by hollowing itself out while role playing confines ‘central banker’ to being a voice over. Bernanke’s empathy vanishes as does ours for him. He is a blank, a familiar for the tapeworm which gets ‘fed’ while the country dies.

Loughner is the central banker golem/doppelganger, ranting about gold and hard currencies, submerging himself in the Bernanke role and cannibalizing his identity in the process. The tragedy spirals outward from Loughner who vanishes. Instead of Bernanke’s vacuous zombie, Loughner is replaced by a monster with blood on his teeth. Loughner has not seen fit to accept any options beyond what lies behind the Charles Manson mask. Unlike Maleficent’s brilliant animator who charged every frame with her impossible desire to escape a deathly life and crushing loneliness, Loughner has engulfed the false promises of the tapeworm economy along with those of its vicious shills. Engulfed in turn, he’s strip- mined of identifiable truths then everything else. He is a vapid and avenging thing, banal and outside of ruthlessness, a bowling ball that rolls down the alley then knocks other things over.

The hegemonic nature of our culture creates non- linear roles that carry through to logical (or illogical) conclusions. Loughner’s role was to behave in a threatening manner in public, to be menacing and eventually become the central heroic figure in the pop- theater, the gay outlaw: a character from a Truman Capote novel. What destabilizes is that political assassination is not part of the theater, it’s too serious. America does not have a gay culture analog of anarchist Gavrilo Princip and his Bosnian- Serb gang.

Markets accept the idea that American politics is dysfunctional and untrustworthy. The shooting tears away the scrim or plausible deniability that is the foundation of the tapeworm economy. It’s too real. We are forced to accept that the fake American representative political system was shot in the head in a supermarket parking lot. Acting out has knocked a prop out from under the already hopelessly corrupted political system while amplifying the harmful outcome of the corruption at the same time. It is a short step from role playing to stomping out the roles altogether. At that point there is no need for Fed Chairmen, or Feds or central banks or even markets. Uncertainty becomes the country’s only asset.

Here is a chart of M2, by the way, from the estimable John Williams’ Shadow Government Statistics:

While all this cheap theater is taking place the foundations of both the finance and ‘real’ economies are being constantly eroded by increasingly expensive fuel/input costs. Input costs are unsupportable by the output of the real economy which spells an end to the tapeworm version. Finance’s output is a demonstrable fraud. The real economy attempts to bootstrap input costs, externalities and profits. What has worked for the economic evil twins in the past of cheap energy inputs and ignorable externalities has been rendered unprofitable by the simple exhaustion of cheap energy.

Margin has been removed from the bootstrapping function. No profits equals no business. No business equals no workers. No workers means no customers for ‘other’ businesses. So it goes and has gone since fuel was dirt cheap in the ‘dollar peak oil days’ of 1998. Since then fuel prices have increased almost eight times from $12 a barrel to the current + $95! Eventually, all the businesses that need fuel will fail. There is nothing structural or within the fuel- use ‘culture’ to prevent this from happening.

High fuel costs are economy killers. Finance cannot parasitize a corpse. This does not mean high fuel costs are killers to all aspects of the real and finance economies at once. Once fuel becomes valuable it will be hoarded like gold, Picassos and all other valuable things. That will be the end of wasting fuel!

The damage done by high input costs emerges outside the strict fuel- supply ambit. People can afford the increased prices at the pump. They cannot afford the house, the vacation, the second car, the jet ski. This effects profits and company survival. Bond yields rise as funds to bid bond prices are diverted toward fuel. Labors’ ability to consume disappears along with ‘overpriced’ jobs that cannot compete with the fuel required to support them. Businesses fail for lack of customers driven off by higher fuel and goods prices. Since all goods are embodiments of petroleum and coal in differing forms, the increase in fuel cost translates into higher store- shelf prices even as the means to afford those increased prices evaporates.

This price squeeze is eroding economies while the waste- enabling culture built upon the scaffold of cheap input remains. Since the culture does not allow any deviation from the ‘progress’ narrative, non- linear events are either swept into one of the culture’s many mansions or ignored.

Our fairy tale fantasies which we have convinced ourselves are useful have unintended consequences. Putting cross-hairs on a map is violently suggestive. Our vitriolic partisanship and organized denial is also suggestive. What makes pop culture powerful is its ability to partner with atrocity as long as the ‘pop’ part can render the ‘atrocity’ part fashionably stylish. The American ‘love that dare not speak its name’ for aggressively militaristic German fascism and its various machine fetishes is just as much a part of Warholian pop culture as Notorious B.I.G., Bonnie and Clyde … and Thelma and Louise.

This is undermining: our fairy tales are ultimately self- destructive. Loughner’s Golem is another denier, equidistant from energy company shills Michael Lynch and Fred Seitz. The fairies pimp a life without work, that our wastes are harmless, that we can fill the world over and over with ourselves, our machines and our agriculture with no consequences; that there is a large and benevolent fairy looking out for us when we should be shouldering responsibilities and looking our for ourselves and our only home. Our fairy tales should give us duties along with handsome princes and beautiful princesses, but they don’t. The duties have been scraped off and lost in the shuffle of endless advertising and cheap distractions.

Anarchy suggests the existence of something outside the pop culture narrative. A vulnerable narrative leaves little to inspire future confidence in markets which are the axle around which culture turns. The establishment is given a choice: to tolerate an outlier as part of ‘business as usual’ or accept that the establishment is fatally flawed cannot defend itself.

Furthermore, the libertarian container for the anarchist narrative and its insistence that the only restraint must be upon the idea of restraint itself becomes auto- destructive when carried to its logical conclusion. American finance is undone by disorder and uncertainty. If disorder is embraced by the establishment ostensibly as part of the progress narrative (along with its neo- fascist fascination with pomp) the establishment is set to annihilate itself as it cannot be comfortably financial and anti- financial @ the same time.

What does this all mean in practical terms? It suggests the injection of anarchism into the heart of the establishment along with violence at the extremities will destabilize the markets. Bond markets are jittery about the tea party activists shutting down the government, not increasing the debt ceiling and now the apparent passive acquiescence toward the use of lethal force against political adversaries.

We have just exited the fairy tale world of permanent growth and progress and entered someplace a lot more real.