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World’s on fire, world’s on fire/And it’s too close to the wire/World’s on fire, world’s on fire/And it’s about to expire — The Prodigy, “World’s On Fire”

Watching the markets jump on President Obama’s advice that stocks are a good bargain is both illuminating and sad at the same time. Illuminating, because as this pleading U.S. News blog indicates, the markets are essentially one giant scared, petrified, insecure thumb-sucker that needs coddling and reassurance from our father-leader. It’s sad because this is common-sense Investing 101 advice that anyone who thinks they can play stocks and win knows–”Buy low, sell high”–and it’s pathetic that it took the President to deliver it in such a way to overcome the collective paranoia.

But paranoia strikes deep, and as I’ll explore further after the jump, it may be too late to turn back the clock. We have to start considering what will happen when every system we’ve come to take for granted simply isn’t there anymore, and what we do as a result.

What’s happening right now is that there’s an increasingly desperate attempt by the people in power–from Congress to banking execs and everyone in between–to reset the clock and rebuild the system they’ve spent decades fetishizing and venerating–the very system of credit that Obama lionized in his Not Really The State Of The Union Address. No one wants to flat-out nationalize the banks because that would be socialist, of course, so instead we’re ending up with Democrats in California–the epicenter of the housing crisis–pushing to prevent homeowners from renegotiating mortgages in bankruptcy:

Conyers already made changes in a manager’s amendment to pick up support, but the vote count has been shaky because of opposition from banks, which argue that it would increase lending because investors would not be guaranteed any returns.

If that wasn’t bad enough, also here in California, we have a lot of the same scumbags who perpetuated the mortgage meltdown now forming companies to help homeowners privately reduce their loan terms and collecting the difference as profit:

Stanford L. Kurland, Countrywide’s former president, and his team have been buying up delinquent home mortgages that the government took over from other failed banks, sometimes for pennies on the dollar. They get a piece of what they can collect.

In a just world, these people would be facing jail time and huge civil/criminal lawsuits for the fraud they perpetrated. Instead, they’re using their expertise and huge cash cushions to make money off the very crisis they engineered, whether through willful greed or simple ignorance. And the people who’re supposed to be fighting for us are actively helping them do it, because this is somehow better than nationalizing the banks. Because that’s socialism, and therefore bad.

Sigh.

It gets worse, though. At the very end of the original NYT article Christy links to, there’s a quote from a homeowner helped by PennyMac who bought the typical oversized, overstuffed house in a neighborhood they couldn’t afford, for their four kids, on a salary that could barely afford you an apartment in this area. (Trust me, I know–I live in Woodland Hills, right next to Calabasas. It’s not expensive, but it ain’t cheap, either.) She says something like “I don’t care who’s responsible. I’m just glad my home is safe and my credit is secure.”

You can only stick your head in the sand for so long before you choke on the dirt, but this is what decades of cultural programming has taught us to believe–that pursuing ever more unsustainable lifestyles, with bigger houses, bigger cars, endless consumption, and blithe disregard for any possibility that it may not last forever. And the worst part? Now that people are finally beginning to do what we should have done all along–save more, spend less, and pursue more sustainable ways of living, that may be the very thing that puts a stake through our economy’s heart:

Fresh evaluation from Wall Street analysts steeped in economic traditions outside Boston and the Beltway is focusing on the idea that the government’s recovery efforts depend too much on people acting rationally in a way that fits historical patterns of calmer times. If people instead ramp up their savings rates to a degree not anticipated by the economists’ models, then consumer spending will decline at a rate that that will crush corporate earnings and, in turn, push stocks a lot lower. The resulting loss of confidence will then reflexively cause people to save more, leading to a vicious downward spiral.

When you’ve got millionaires fretting about buying guns and gold, and celebrated investors saying it’s time to go organic and build your own farms, I’d say we’re pretty far past “rational.” But Obama has made the terrible mistake of letting corporatists like Tim “TurboTax? What’s that?” Geithner and the odious Larry Summers run the show when it comes to dictating financial and fiscal policy, so that means we can expect billions more to be handed to banks with no oversight and less concern, while any actual public works spending, as in the case of the stimulus, is going to be nickel-and-dimed to ensure we get the most minimal return possible.

And that’s the same type of thinking that has led to 1 in 5 mortgages being underwater, the FDIC running out of money to cover the cascading bank failures (levying taxes on community banks to pay for the big financial flops!), and billions spent by Wall Street to ensure Washington meets its every need without question, no matter the consequences. Meanwhile, you have legendary drug addict and sex tourist Rush Limbaugh hoping Obama and his crew will fail, as if he has prescriptions for the nation’s ills that are any better than the metric ton of OxyContin Rush has delivered to him each week.

None of this can last for much longer.

We have to start thinking about the next big societal shift, away from centralized financial empires and top-heavy bureaucracies that can be easily accessed, bribed, controlled, and misdirected, and towards decentralized, open-source communities and networks that are harder to pinpoint, easier to rebuild, and quicker to adapt to change. This is one reason why I’m such a big open-source supporter–it’s not just about freeing information flow for making better computers, but teaching people to look for their own solutions (as one of my commenters poetically said to me) and adopt that principle to everything they do.

There are signs Obama gets this and is responding wisely, such as his selection of net neutrality advocate Julius Genachowski to head the FCC. But it’s bigger than him and even his considerable power. Right now we’re in a struggle between the paradigms of James Howard Kunstler, who has proclaimed for years that we’re pretty much all fucked and should go back to living like the Amish, and John Robb, who advocates a global ideal of “resilient communities” that is more like what I want to happen, but tainted with the typical paranoiac post-apocalyptic militarism of roving gangs with guns plundering the seas and lands (though it’s probably more like gangs of haX0rz plundering the Treasury these days).

We have more choices than these, but it requires a deeper level of commitment and planning than many people can possibly comprehend. But it’s got to be done. We can’t continue as we have been, and no matter how hard we try to put this fire out, it’s going to blaze far beyond our control.

So it’s up to us to determine what will come next.