The New York Times had a number of articles on the front page this morning that are appropriate to our current national state of being:

 

Detroit Faces Millions in Bills for Bankruptcy

By Monica Davey

The city has been charged more than $19.1 million by the firms and people hired to sort through the bankruptcy.

Worsening Debt Crisis Threatens Puerto Rico

By Mary Williams Walsh

Mired in debt, Puerto Rico has been effectively shut out of the bond market and is financing its operations with bank credit and other short-term measures.

Health Exchange Delays Are Tied to Software Crash

By Michael D. Shear and Robert Pear

A major software component, designed by contractors, buckled under the weight of millions of users, officials said.

It isn’t really necessary to read the articles because they all say the same thing: the Federal government — the country — cannot bail out Detroit, it cannot bail out Puerto Rico and it cannot manage the bailout of its health insurance industry … which ironically does not need a bailout. At the same time, the associated costs — of managing failed systems in Detroit, Puerto Rico and elsewhere — are relentlessly expanding.

Here’s another from the Times:

With Default Deadline Near, Wall St. Stays Calm … for Now

By Nathaniel Popper

The relative quiet on Wall Street is worrying some investors, who fear the markets will not signal to politicians the true danger of hitting the debt ceiling until it is too late.

Reading isn’t required, the fact of potential default by the US government speaks for itself. Since 2008, the business of the establishment has been to prop up key men — systemically important institutions and agencies — everywhere in the world. In 2013, key men appear faster than there are props for them, the establishment cannot keep up, it can only pretend.

In the US there is onrushing economic failure, there is accompanying political failure. The US government can certainly borrow a lot more than it has so far, the loans are simply wished into existence at very small initial cost . Yet the loans are obligations not gifts, they must be repaid with interest; the the costs grow exponentially, they have been growing for decades and have now become unbearable. At this moment, there is little difference between the cost of defaulting and the cost of not defaulting. Added to energy, the aggregated costs of credit have outstripped the ability of flesh-and blood humans with all of their magic toys to meet them particularly since the toys themselves have costs which require credit.

 

 

One foot of the borrowing regime rests within the realm of fantasy: that some day, some way, some ‘Ultimate Borrower’ will emerge Paul Bunyan-like to retire the debts accumulated by all borrowers before him. This mythological character is absolutely necessary, he must exist like a replacement for God, otherwise there is no point to extending credit. Every loan becomes the predecessor to others which in turn precede others still; loans begetting loans like Mehusim begetting Abitob then Elphaal. The outcome are daisy chains of interdependent, interconnected loans that inevitably lead to … somewhere?

Right this minute both borrowers and lenders are coming to the unpleasant conclusion that this mythical ultimate borrower is just that, that the accumulated debts are too great to ever repay by anyone — or any thing — that is alive today or will be alive, ever. The repayment numbers have simply become too great, that debts are articles of (misplaced) religious faith, not real claims against actual goods and services … that these things will never catch up, and cannot; that there are limits and we have reached them.

 

Our key men do not understand that everything has a life-span, including ideas, economies, styles and fashions … and key men. We insist that market capitalism as practiced on Wall Street and in the City of London in 2013 is an immutable force of nature, that it is a permanent condition or state of affairs; part of a continuum that reaches back thousands of years to the Roman Republic … without having any idea what sort of economy the Romans actually practiced. As it is, the market state in its current iteration is a farce/folly no more enduring than disco, split-levels or Twiggy … and made of the same stuff.

Here’s Yves Smith;

Budget Brinksmanship: American Exceptionalism Gone Bad

Being exceptional apparently means never having take responsibility for your actions.

The budget stalemate in Washington looks to be going from bad to worse. Here we are, ten days from hitting the debt ceiling limit, and by the reckoning of Wall Street’s watchful analysts, only about three weeks away from default (Treasury can do some creative footwork for a couple of weeks until some large payments must be made, in particular, Social Security disbursements), and both sides are digging in.

As we wrote earlier, House Speaker John Boehner had reportedly said privately last Friday said he would not push the US into default. Over the weekend, in public, he took a much harder line. And new reports indicate, as we speculated yesterday, that he could well decide to align with the apocalyptic Republican majority on the assumption that Obama will have to do what it takes to avoid default. And since Obama and his mouthpieces have repeatedly foresworn using sensible routes out of this impasse, like invoking the 14th Amendment or more creative devices, the Republican hard core believes its brinksmanship will force concessions from Obama.

From the Robert Costa; National Review (hat tip Business Insider):

In private, Boehner has told his allies that he won’t bring up a clean CR, and he’s hopeful that as the deadline nears, President Obama will deal. “There’s no way the president holds firm,” a House GOP insider predicts. “Once that crack opens, I don’t know how the debt limit will be addressed, but it won’t be by Republican capitulation.”

The New York Times similarly reports that both sides are hardening their positions. Both sides are trading barbs; there’s no sign that anyone is interested …

The content of the articles doesn’t matter so much as that the content is emerging at different levels widely across the mediasphere, not just at the fringes. The Washington establishment embodies the status quo; meanwhile its actions are a repudiation of it. Neither congressmen nor the president can say the system is falling apart but they are acting it out with great conviction; their actions are the falling apart! The message of these things is the costs associated with our ‘way of life’ are now greater than even the mighty US government itself can bear. Throwing money cannot work, only something else. Nobody knows what that ‘something else’ is, what citizens see is the public face of frustration and failure.

It really is different this time. Imagine what it will be like when 7 billion humanoids wake up one fine morning, look around and discover in the same instant, “We’re screwed!”

 

It’s not so much that the US administrators are evil and irresponsible rather they are caught in system- created circumstances that do not allow any more room to maneuver. The establishment as well as the rest of us are at the end of the gangplank. Here’s more:

China tells US to avoid debt crisis for sake of global economy

A senior Chinese official has warned that the “clock is ticking” to avoid a US default that could hurt China’s interests and the global economy. China, the US’s largest creditor, is “naturally concerned about developments in the US fiscal cliff”, vice finance minister Zhu Guangyao said.

Washington must agree a deal to raise its borrowing limit by 17 October, or risk being unable to pay its bills. He asked that “the US earnestly take steps to resolve” the issue.

Mr. Zhu said China and the US are “inseparable”

China gained over a trillion US dollars by way of mercantile trade, over the period it swapped currency-in-hand for interest bearing Treasuries. At issue isn’t the particular form of money but rather China’s gigantic surplus of US money by itself. China is in the hard school of learning Steve’s First Law of Economics: that the costs to manage surpluses increase along with them – at some point the costs exceed the worth of the surpluses themselves. The costs can be distributed toward others — this is what economies do — but only so far as those others can bear the costs. When they cannot, the costs emerge elsewhere, unpredictably, where they do the most damage.

China’s surplus money costs cannot be wished away, they are just as real as the surplus itself, one way or the other China will bear these costs even if it means the bankruptcy of China. Meanwhile, the Chinese get down on their knees and beg, what they need to do is get rid of the surplus. One way or the other, it’s gone.

Without constant debt subsidy, all industry stops, the managers know this but the costs of debt have become unbearable. Our economy cannot bear the costs, it also can’t bear to stop borrowing because debt finances every single industrial enterprise on Planet Earth. We moderns have reached the end of the gangplank we’ve cleverly built for ourselves, the view from here is pretty unnerving. Those shadows just out of sight under the surface are the monsters waiting to tear apart whatever falls in, (from Bloomberg):

 

The Chinese would like the US to ‘get its act together’ but the act itself is impossible. Like all the other perpetual motion machines, the US act can borrow diminishing amounts of time for itself and China but nothing more.

The Brent fuel price is very high right now, high fuel prices undo economies, very high prices do damage at once, slightly lower than very high do the same damage but over a longer period of time. It is reasonable that the current price is too high for economies to afford, economies built assuming low-cost fuels into perpetuity. Instead of gas lines and rationing, there are credit ‘problems’ as high prices are met with more and more costly loans.

George Patton in 1945 said, “My men can eat their belts but my tanks have gotta have gas …” In 2013, so does everything else.