Servias Ministries Blog

As I have written in the past, predictors of economic direction fail to account for “black swan” events.  In the Scripture the term “then suddenly” represents a black swan event.  We make our plans according to our paradigm of “normal” but then something unexpected happens that screws everything up.  In 18 short days, Egyptian citizens ousted their ruler.  Nobody saw it coming.  The U.S. spends billions of Dollars funding agencies such as the CIA and was unprepared for the Black Swan event.  The U.S. funded Mubarak’s regime with over $30 Billion and now has lost his influence in the Middle East.

The following countries in red provide us a perspective of civil unrest:

Wisconsin is not included because we are all in denial that our citizens are unhappy with their state governments, etc.  The European countries are also left out because their pain isn’t as great as those in the “developing” countries.  Other Middle Eastern countries are watching closely because they could be next as targets of civil unrest.  If those in power had not taken such an “entitled” view of the world but instead acted as servants to the people, their countries would not have been affected.  Leaders around the world should repent of their past actions and seek to understand Love and its fruit.  Neglected and abused people have no loyalty to their masters.  Is there one world leader currently known as “beloved”?  Think about it.

Google, Facebook, Apple, Twitter, and many companies that supply the Internet, especially the mobile Internet, with software and hardware have facilitated the global revolution.  This is why governments want to control the Internet.  If you can restrict information and revelation then you can control the public.  To reverse this information revolution would incite even greater unrest and quicker change.

It is my understanding that Libya has already declared force majeure with respect to its oil delivery obligations.  With true production being tight, any further disturbance could shoot the price of oil another $10 -$50 per barrel.  In turn, the Western economies would suffer and move back into recessionary territory.  Those with non-commodity stock portfolios might want to consider hedging their investments against a market drop.  There may be more black swans out there.

The current path of global direction is unsustainable on multiple fronts.  The U.S. Dollar is the current world reserve currency and is backed by America’s ability to produce and manage itself.  In the past decades, you could go to just about any country and they would welcome your dollars.  That is now changing.  Economic mismanagement is taking its toll on the Dollar.

The predicted level of oil consumption is unsustainable.  According to a Wikileaks published cable: “The US fears that Saudi Arabia, the world’s largest crude oil exporter, may not have enough reserves to prevent oil prices escalating, confidential cables from its embassy in Riyadh show.”  I have been preaching “peak oil” for the last 5 years and conventional oil production has not exceeded the 2005 level, even in 2008 when oil hit $147.  Why?  Because the producers can’t open the spigots wider.  Oil production is limited by well depletion, cost of oil extraction, and lack of new oil discovery.  See:  http://www.guardian.co.uk/business/2011/feb/08/saudi-oil-reserves-overstated-wikileaks  Even though I do not endorse lawlessness, the leaking of “the facts” being withheld from the public appears to be a sovereign act.  Is it lawful to withhold the truth and the facts from the citizens you serve?   Don’t we have unalienable rights to know the facts that ultimately affected us all?  The political double standard will come back to bite those who have been complicit in the lawlessness of withholding the truth from the citizenry.  Have you noticed that there have been no criminal convictions of the financiers who got us into the recent financial crisis that threatens the economic stability of the world?  I am amazed at the passiveness of the average American citizen as their world is in the midst of crumbling.  I guess we just need to play another song on the deck of the Titanic and enjoy another drink.

Speaking of “unsustainable”:

Inflation is alive and well in the commodities market and is now hitting the shelves at the local food market.   Have you begun storing up six months’ of food supplies to be rotated as used?  We are moving towards chaos and thus toward WWIII unless Our Heavenly Father intervenes.

The oligarchy (from Greek ὀλιγαρχία, oligarkhía) is a form of power structure in which power effectively rests with a small number of people. These people could be distinguished by royalty, wealth, family ties, corporate, or military control.  In the book 13 Bankers, the author claims that the top 13 banks in the U.S. form an oligarchy.  Goldman Sachs and JP Morgan Chase are at the top of the list.  From these banks come many of the Secretaries of the Treasury and other influential political appointees.  Howard Hughes claimed he never lost a political race, he funded both sides.  These banks were allowed to recklessly invest in highly leveraged investments with no regulation or accountability.  In the end, the American taxpayer shouldered the risk while these banks paid billions in bonuses to the top employees.  Due to the complexity of our society and the lack of transparency at all levels, these banks had a free ride and evidently will continue their course of high risk.  To my knowledge, there have been no criminal prosecutions of high level players.  Injustices like these will continue until righteous judgment manifests itself in America.  The rich and the powerful have enjoyed a free ride for years and do not expect it to change.  In the meantime, millions of people are on the food stamp program, out of work and discouraged.  JP Morgan Chase recently admitted to overcharging active military personnel on home mortgages and foreclosing on several houses of active soldiers, a violation of Federal Law.  Will anybody go to jail?  See: http://online.wsj.com/article/SB10001424052748704858404576134163713192544.html

What is the solution to our problem?  The solution will only come by prayer and fasting for our brethren.  Prayer places the focus on our relationship with Our Heavenly Father and fasting is to subdue the “anti-Christ ego” that challenges our anointing.  Only when we are found to be acceptable to receive the power and authority from On High will change truly occur.  Violence never solves any problems but only hardens the hearts of the wicked.  We must appeal to the High Court of Heaven to find resolution to our current circumstances.  Selah!

I doubt it.  The Bureau of Labor Statistics (BLS) modified its statistical assumptions.  504,000 gave up looking for a job therefore were removed from the unemployment statistic.  And despite the rosy picture painted by the media, food stamp usage continues to rise:

It has been reported that 1 in 6 Americans are on the program and lines up with the above graph.  Those of us with family members unemployed know first hand how this unemployment picture sucks wealth out of the family structure to help provide food, shelter, and clothing to the unemployed.  In the meantime, those in power enjoy their delicacies and social functions without regard for the children who are crying in their pillows.  More Americans could qualify to get food stamps but don’t because of personal pride of not accepting handouts.  The rich seemingly get richer as the middle class dwindle away.  Since the world has become such a complex environment, the guilty can hide from the populous but not from Our Heavenly Father, Thankfully!  HIS Righteous judgment will take care of the perpetrators of the widespread injustices to HIS children.

For most of the world, inflation in food prices are much more important than the cost of a new TV.  In the U.S., the CPI measurement has been watered down over the years to be virtually worthless to the average person.  Those $2.50 hamburgers are now $5.25.  How can this happen when inflation is running at only 2-3% on an annual basis?  The protests in the Middle East are connected to inflation and unemployment.  Protestors in Jordan complain about food prices.  China’s big concern is inflation in food prices affecting its poor population.  Hunger is a strong motivating force and the various dictatorships are scurrying around trying to come up with a solution before they are run out of town by a hungry and angry mob.

It’s all about percentages.  If my monthly food bill is 5% of my total salary, I am irritated when I have to pay more for a pound of hamburger meat.  But if my monthly food expense is 25% of the total, I’m infuriated.  If I can no longer afford to buy the staples, I’m just flat desperate.  This is a major problem in the Middle East.  When the Federal Reserve decides to print money in order to stimulate the economies around the world, there are consequences.  Ben Bernanke went to sleep last night on a full stomach.  I would be surprised if he had ever gone to bed hungry.  If you don’t know how it feels, it is hard to appreciate the plight of those protesting higher food costs and unemployment.

The above picture provides us with a stark reminder of the repercussions of a loose monetary policy and supporting dictatorships.  When the tipping point occurs, the status quo is removed.  The path of Love at the highest levels is the only lasting solution to peace and prosperity.  The people will then respond in like manner.

The trend is your friend: http://www.commodityonline.com/news/China-to-raise-gold-silver-reserves-in-2011-36118-3-1.html

U.S. attempts to control multiple political outcomes and a global geo-political/military order rests on the ability to finance and control that order.  The key word is “finance” at this point.  Egypt is disintegrating before our eyes on TV.  The U.S. aid to Egypt has been running $1.4 Billion on an annual basis with most of that going to the military.  Inflation around the globe created by Federal Reserve monetary policy is shrinking the middle class at an alarming rate.  Interviews with Egyptian college graduates that can’t find jobs reveal how bad it is in Egypt.  As we saw in the early 70’s during the Vietnam era, students are the initiators of the protests.  Once they have taken actions, others follow.

The masses are only controlled until they become unified against the status quo.  The police in Egypt found that out.  You can’t kill everyone.  The Egyptian military rolled into Cairo to protect the national treasures but appear to side with the protestors at an individual level.  Populations reach a tipping point where they just won’t take it anymore.  Government leaders are watching closely and taking notes on the Egyptian crisis.  Things had better change or other countries will suffer the same revolt.  You can’t buy food with rhetoric and once people get desperate, the rule of law is no longer the driving force, hunger is.

The wealthy are leaving Egypt and the threat of looting behind.  Most of the private jets are heading to Dubai.  Those who can’t afford to leave are guarding their houses with guns and bats.  Would you want to have all you money in Egyptian currency right now?  In one week, things can change drastically.

The OTC derivative crisis of 2008 caused banks to shrink lending and curb global economic growth.  The Fed threw trillions of dollars at the issue to maintain the current financial paradigm.  It did not work.  The large financial institutions being guarded from failure came at a cost to the global population.  Ireland, Spain, Portugal, Italy, and now Egypt are hanging in the balance.  If these dominos fall, the whole system is at risk.

“Peak Oil” will not go away!

A $3.79 increase in oil on Friday accentuates the sensitivity of global oil concerns.  Naysayers point to deposits such as the Canadian Oil Sands with its huge deposits.  The problem is “flow rate”.  You can have a huge asset but if you can’t quickly convert it to cash, you have a challenge.  The annual output of the oil sands is low compared to the reserves and increasing output is not an inexpensive affair.

Right now, Brent Crude Oil is priced 99.42 whereas NYMEX Crude closed at 89.34 and this $10 difference will be reconciled.  Most of the globe is buying at the Brent Crude price.  Why would sellers take $10 less per barrel.

The next 24 months will be historic to say the least.  The Chinese do not want to experience an uprising like Egypt.  They will throw the U.S. under the bus if necessary to keep their own house from crumbling.  Until peace breaks out around the globe, gold and silver should provide “insurance” against currency debasement and global crisis.  $1,300 gold is now looking pretty cheap!

Congressman Ron Paul wants to know what is behind the curtain by the end of 2112: http://paul.house.gov/index.php?option=com_content&view=article&id=1822:audit-the-fed-reintroduced&catid=63:2011-press-releases

Oh my goodness!  Toto, we’re not in Kansas anymore!

Is this what the Mayans predicted to be the end?

Social Security is the latest focal point for the “worse than expected” rhetoric:  “The Congressional Budget Office (CBO) reports that Social Security will effectively run a $45-billion deficit in 2011 and continue to run deficits totaling $547 billion over the coming decade.”  I am amazed at the lackadaisical attitude of all Americans concerning this slow train wreck occurring before our very eyes.  The Social Security deficit has begun five years earlier than predicted.

The record deficit of $1.48 Trillion for the Government for this year hardly gets any media attention.  Ben Bernanke keeps throwing newly printed money at the problem without much success.  If it were not for other countries in worse fiscal condition, the U.S. Dollar would now be in the tank.

Japan’s creditworthiness has been downgraded by Standard & Poor’s.  Remember when the Japanese were buying America?  It takes only a couple of decades to turn a robust economy into a mess.  The Japanese Government have allowed their financial institutions to carry toxic debt on their books for years but that did not fix the problem.

Living on perception and illusion can last only so long before the denial of reality changes to anger.  The average man will become desperate and begin challenging the status quo.  A confrontation is coming and I regret that it will be looking pretty ugly.  Some 3,000,000 homes will foreclose this year after the government’s program to save most of them failed.  Real Estate will continue to have this albatross hanging around its neck for years to come.  We have yet to see the bottom of the real estate prices.

Because of the predatory practices by large financial institutions, the Feds are implementing about 300 new consumer regulations for community banks.  This will have a crushing blow on many of the smaller banks.  They will respond by charging consumers fees on anything and everything.  One of the banks I have an account with now charges $5 for a noncustomer to cash a check written against the bank.  What happened to “payable on demand”?  I suspect there will be another Tea Party uprising when these fees finally take up more space on our bank statement than the checks we write.

Simplification will come either by decision or by collapse!

Energy prices are expected to move up this year.  Diesel prices will increase on an expected demand increase of 6.2% this year.  Light, sweet crude oil prices exceed $100 in some areas.  Consumer confidence continues to go negative.  The consumer portion of the economy won’t stand on its own.  Four additional banks were closed yesterday which brings the total to 7 for the year.

China is dealing with food inflation, overheated housing, and greater energy demand.  Domestically, municipal bonds are now in the spotlight.  Municipalities will either raise taxes or go bankrupt.  The voter is not interested in tax hikes.  It has been reported in Vallejo, California, the city defaulted on their bonds and bondholders received about 5 cents on the dollar.  The local judge protected local pension funds which left the investors holding the bag.

Investing is probably more challenging this year than anytime in recent history.  Short term traders are dumping gold and silver yet the U.S. Mint is reporting unprecedented demand for 1 ounce silver coins.  Has money printing ended?  Not that I know of.  Has Europe resolved its fiscal problems? No.  The U.S. will be refinancing during the mid-year timeframe in the $3 Trillion arena.  This year appears to be paralleling 2008.  QE3 (Quantitative Easing or printing more money) may happen in the 3rd quarter.

Ireland may be the first domino to fall in Europe.  In March, the Irish may elect a new party who promises to default on its debt.  If that occurs, the other countries in trouble may follow suit.  Will this be a St. Patrick’s Day massacre?

A 20% correction in gold & silver would be healthy.   $1,150 gold would produce a notable correction to the related stocks.  I will be buying with what money I can scrape up to add to my stock positions.  Remember, gold and silver mining companies are making a lot of money at these price levels thus improving their cash positions.  One silver producer I invest in has a negative per ounce of silver mining cost.  Other metals mined pay for the mining expense. $27 silver is all profit.  What company has a better cash flow and income model? 

On the subject of Iraqi Dinars

Several people have asked my opinion about this investment.  My advice?  Ask Our Heavenly Father whether you should invest and how much.  Never invest in anything like this where you can’t afford to lose 100%.  If you do invest and the major revaluation occurs, then you have a new issue: How do you manage the windfall?  Money produces power and a sense of entitlement.  Only the strongest believers will be good stewards of the additional funds.  Others will lose the money and be back to their previous life, possibly with less.  Step 1: Pay your tax liability immediately.  Step 2: Pay off your debt immediately.  Step 3:  Wait on THE LORD to hear what or who you should invest in.  Don’t be in a hurry!  HE’LL talk to you if you will listen.