Servias Ministries Blog

There are many times in our lives that each of us has to eat our own words.  The U.S. Congress seems to be inciting a riot among the constituents.  At a time when true unemployment exceeds 16%, and most of us are tightening our belts, the U.S. Congress is spending money in reckless abandon.  We are moving towards a $100 Trillion overall liability and nobody seems to care.

The Congress is ordering eight new planes at a cost of $550 Million.  See: http://online.wsj.com/article/SB124960404730212955.html   What adds insult to injury is that these planes will cost $66 million each, $17 million more than the sticker price of $49 Million.  With the soft aviation market, current street prices are about $43 Million.  See: http://blogs.wsj.com/wealth/2009/08/10/why-is-congress-paying-66-million-for-a-49-million-jet/  One of their complaints is that there current fleet of airplanes has to refuel more often.  How disappointing!  Congressmen are taking more trips to other continents (with their spouses) on “fact finding missions”.  C’mon.  How many facts will you find on a three week boondoggle to Europe with the spouses getting in the way?  It sounds like we all need to become public servants to get in on some of that lovin’.

What are they thinking?  At a time when many Americans are trying to pay the rent, 545 people in Washington are rubbing it in their faces.  The tax revolt tea party is being fueled by these less than prudent acts.  Are the lawmakers so disconnected from reality to believe nobody will notice as they take liberties in these times?

Is the mortgage situation getting any better? Deutsche Bank  believes continued declines in home values will increase the number of US mortgagors with negative equity from 14m in Q1/09 to 25m in Q1/11.

See:  http://www.housingwire.com/2009/08/06/deutsche-sees-48-of-all-us-mortgages-underwater-in-2011/  The green shoots the media speaks about may just be weeds.  The financial hole we’ve been digging for years may be too large to fill.  Our children and grandchildren will be the recipients of this generation of reckless spending.

Our Heavenly Father speaks of blindness of men.  Otherwise intelligent people are taking actions that will ultimately come back to haunt them.  As an observer of this blindness in action, I marvel at the preciseness of the Holy Scripture and the unfolding of the end of an age.

The new healthcare bill will be the defining moment of the United States.  If this bill is passed it will be the straw to break the camel’s economic back.  The cost of healthcare will further deepen our trillion dollar deficits.  China is the largest creditor and will not tolerate our expanded deficits.  The future of America is in the hands of China.  Congress is recklessly passing bills that will dramatically and negatively impact the average American because most Congressmen are not even reading the bills they are voting on.  When a country is in a recession, you don’t raise taxes.

Euthanasia is the intentional killing by act or omission of a dependent human being for his or her alleged benefit.  HR 3200 currently under consideration in the House of Representatives will promote euthanasia.  This bill will mandate who gets healthcare, what treatment, and when they should receive it. 

The bill:

• MANDATES a government audit of the books of ALL EMPLOYERS that self-insure (Sec. 113, Pg. 21-22)

• Sec. 122, Pg. 29, Lines 4-16 – YOUR HEALTH CARE WILL BE RATIO

• Sec. 123, Pg. 30 – THERE WILL BE A GOVERNMENT COMMITTEE deciding what treatments and benefits you get.

• Sec. 142, Pg. 42 – The Health Choices Commissioner will choose your benefits for you. You have no choice!

• Sec. 152, Pg. 50-51 – HC will be provided to ALL NON-US citizens.

• Sec. 163, Pg. 58-59 beginning at line 5 – Government will have real-time access to individual’s finances & a National ID health care card will be issued!

• Sec. 163, Pg. 59, Lines 21-24 – Government will have direct access to your bank accounts for electronic funds transfer.

• Sec. 201, Pg. 72, Lines 8-14 – Government is creating an HC Exchange to bring private plans under government control.

• Sec. 1121, Pg. 239, Lines 14-24 – The government will limit and reduce physician services for Medicaid. Seniors, low income and poor are the ones affected.

• Sec. 1162, Pg. 335-339, Lines 16-25 – The government mandates establishment of outcome-based measures. Rationing.

• Sec. 1233, Pg. 425, Lines 4-12 – Government mandates Advance (Death) Care Planning consultation. Think Senior Citizens and end of life. END-OF-LIFE COUNSELING. SOME IN THE ADMINISTRATION HAVE ALREADY DISCUSSED RATIONING HEALTH CARE FOR THE ELDERLY.

• Sec. 1233, Pg. 425, Lines 17-19 – Government WILL instruct and consult regarding living wills and durable powers of attorney. Mandatory end-of-life planning!

• Sec. 1233, Pg. 425-426, Lines 22-25, 1-3 – Government provides approved list of end-of-life resources, guiding you in death.

• Sec. 1233, Pg. 427, Lines 15-24 – Government mandates program for orders for life-sustaining treatment (i.e. end of life). The government has a say in how your life ends.

• Sec. 1233, Pg. 429, Lines 1-9 – An “advanced care planning consult” will be used as patient’s health deteriorates.

• Sec. 1233, Pg. 429, Lines 10-12 – “Advanced Care Consultation” may include an ORDER for end-of-life plans – from the government.

• Sec. 1233, Pg. 429, Lines 13-25 – The government will specify which Doctors (professional authority under state law includes Nurse Practitioners or Physician’s Assistants) can write an end-of-life order.

• Sec. 1233, Pg. 430, Lines 11-15 – The government will decide what level of treatment you will have at end of life, according to preset methods (not individually decided).

• Sec. 1711, Pg. 764 – The government will require preventative services – including vaccinations (no choice).

SEE: http://www.lc.org/ and read the bill for yourself.

Members of Congress will be exempt from this healthcare bill.

The fundamentals of education historically have been Reading, wRiting, and aRithmetic, known as the 3 R’s.  We have been conditioned to believe that growth is always good, the one exception being “weight”.  Most of us do not want to grow our weight anymore and would enjoy a decline in weight.  Zero growth in weight once I left high school would have been ideal based on the current insurance tables.

Most people do not understand the exponential growth curve.  This may be one of the most important concepts you, your children, and your grandchildren should understand because it will affect every person on this earth unless of course Our Heavenly Father intervenes soon.  Actually, this concept supports Divine intervention soon.  Prophets have been anticipating a change on earth.  The Mayan calendar projects an end of the current eon.

The following 8 part video provides one of the best explanations on why I believe that commodities are one of the best long term investment strategies.  Don’t be concerned about the mathematics other than understanding that the arithmetic is accurate and adequately explains where we are going with the current growth rates and consumption rates.  Our motto of “simplify” may be forced on us sooner rather than later.

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On Friday, September 26th, 2008, I post a blog stating that the bailout could reach $25 Trillion.  The last projected numbers place the commitment at roughly $24 Trillion, or roughly $80,000 for every man, woman, and child in the U.S. See: http://www.msnbc.msn.com/id/32010841/ns/business-us_business

If the FASB (Financial Accounting Standards Board) decides to force the issue of toxic assets being valued at market value, this $24 Trillion will rise further and it won’t be a pretty sight.  See:  http://www.bloomberg.com/apps/news?pid=20601039&sid=a5BsXz90CMso

Perception in the financial arena can make or break an economic recovery.  It has been expedient to report what people want to hear rather than the ugly facts.  Perpetuating a counterfeit reality will only work until Our Heavenly Father exposes the truth.  What will happen on that day?  It is hard to tell.  I’m sure those in power have contingency plans if the populace were to go ballistic about the hidden truth.  What most people don’t realize it that the truth has been reported but is difficult to assimilate with all of the perceptions being reported as well.  Too much data hides the truth and truth surrounded by half-truths is difficult to recognize.

The citizens of the U.S. have been promised transparency but it would appear that the promise is either being broken or those in charge do not understand how serious the problem is.  The following video provides an unfortunate chronology of Ben Bernanke:

I have strongly recommended that individuals pay off debt in order to improve their sleep cycle.  Individuals ultimately make up a nation.  In the past, different nations were in different stages of development somewhat independent of the rest of the world.  This is no longer true.  With telecommunications reaching every nook and cranny around the world, all countries are interconnected in some way.  Money easily flows around the globe in milliseconds now.  American depositors can now have a bank account denominated in other currencies with a click of the computer mouse.

It has been reported that the world GDP (Gross Domestic Product equivalent) is $60 Trillion.  See:http://siteresources.worldbank.org/DATASTATISTICS/Resources/GDP.pdf

The following graph indicates that governments around the world will need $5 Trillion in new money to fund their 2009 debt issuance:

This graph indicates that governments around the world need to attract funds equivalent to 9% of the world’s GDP.  HOUSTON, WE HAVE A PROBLEM!  This year the amount of funding needed is three times the five year average!

With much of the globe fighting off a recession, where will these funds come from?  Increasing interest rates to compete with other investments is not plausible.  It would appear that the monetary printing presses will heat up to take up the slack.  This will be bullish for commodities including oil, gas, gold, and silver. 11+ states in the U.S. are dealing with the potential of bankruptcy with California in the lead.  Official Unemployment will probably exceed 11% soon.  Tighten your belts, things are getting interesting!

In the 1970’s, Peter Drucker, “The Father of Business”, promoted Management By Objective (MBO).  Current global leadership is attempting to manage by perception (MBP).

Government statistics are no longer accurate and properly accounting for money growth, unemployment numbers, and gross domestic product.  Later this year, we may see a temporary bounce in the economy which will be touted as a recovery.  This will probably be a sucker’s rally which will draw money into the market and place the returning money into higher risk.

There is a lot of cash sitting on the sideline waiting for the market to recover and that money is becoming impatient.  Equities look pretty cheap versus historical price/earnings ratios.  The market pundits expect low interest rates through 2010 but the bond vigilantes may surface and push the rates up.

The government needs the value of the dollar to decline but other countries like China want that value to remain high and stable.  The decline of the U.S. Dollar is the only solution that will be palatable for domestic voters.  This higher inflation rate will be friendly to debtors but will penalize creditors with repayment of loans using cheaper dollars.  It will be a tightrope walk by the current administration.

China is a master at patient negotiations when dealing with adversaries who consistently underestimate the opposition.

“All warfare is based on deception.” Quote from Art of War by Sun Tzu

The Chinese understand strategy when dealing with The West.  Don’t underestimate the Kings of the East.

Central Banks are printing money and are attempting to hide the growth of the money by reclassifying demand deposits by sweeping transaction deposits into overnight time deposits thus misstating monetary growth of demand deposits.

Globalization of manufacturing has distorted the manufacturing capacity utilization of the U.S.  When you have less manufacturing capacity, improvements are easier to achieve.  Manufacturing employment has dropped notably over the last two decades in the U.S. and China has been glad to take over the manufacturing duties.  Most of the goods in Walmart and Best Buy are made in China, India, Vietnam or Mexico.

Americans have come to believe they are entitled to consume 25% of the world’s goods and services while third world countries have starving masses.  The character of the American has changed in the last three decades and it is not a pretty sight.  There will be a ground swell of intolerance once the average citizen realizes what his indifference has caused.  The following video is a sample of what will become the rallying cry once the sleeping giant has awaken.  Indifference will be replaced with anger.  Leaders will be forced to rediscover what public servants are.  Will this anger surface in a perfect storm with the financial crisis?

Our biggest problem in the U.S. is found in the mirror:

Interference in the economy by the current administration is causing businesses to wonder how they can operate a profitable operation.  A cap & trade tax of $2 trillion ultimately will be passed on to the consumer.  The average work week is 33 hours in the U.S., the lowest since 1958.  The next wave of foreclosures will reduce home prices another 10-15%.  All of this uncertainty causes businesses to defer investment until stability arrives in the market.

On a technical basis, there is a possible global catastrophic “head & shoulders” formation forming.  If it finishes forming, there is a notable probability of a financial catastrophe.  The Federal Reserve is expected to no longer monetize debt after August.  3 1/2 trillion dollars worth of bonds are to be rolled over later this year which will put a lot of supply of U.S. Bonds.  This is negative for low interest rates.

Many countries are moving away from the U.S. Dollar.  China, the largest holder of dollars, wants to move away from the risk of holding dollars.  China is diversifying out of dollars into commodities according to George Soros.  That is one reason the commodity complex is the best performing sector.  The valuations of oil, gas, gold, and silver are low and appear to be a great buy.

For the aggressive investor, investing in an ultra bear index fund may be a good investment to offset the rest of the portfolio at risk of a major decline.  However, an ultra bear investment can slice both ways.

Precious metals are forming a reverse “head & shoulders” expected to have the opposite impact relative to the stock market.  The summertime is normally weak for precious metals prices.  The final four months of the year is normally robust for the price of gold & silver.  Some central banks appear to be buying gold without making official announcements.

Unemployment is approaching 10% on an official basis but is double that to 20% based on raw numbers that have no “tinkering” done to them.  As I have said before: If your neighbor is unemployed, it is a recession; it you are unemployed, it’s a depression.  Reduced employment means reduced sales.

“Less bad” is now called improvement or green shoots in the economy.  The consumer is reducing consumption in favor of savings and payoff of loans.  Government stimulus payments have added only 8% in consumption thus defying the government’s intent and creating a possible jobless recovery.  Unemployment is expected to increase through next year.  Expect another stimulus package soon, they will do whatever is necessary to increase consumption at the expense of our children and grandchildren’s tax burden.

Tax Load:  $1 Trillion of new taxes in 2011 (Bush Tax Cuts expiring),  $2 Trillion in Cap & Tax, and  $1 Trillion in Healthcare coming.

They want to phase out your itemized deductions on your tax return.  What are these guys thinking?  They seem to be assuring us of a double dip recession.  When they add another stimulus, there will be a temporary recovery as they trade their stimulus for your itemized deductions and other tax benefits.  Remember when you could deduct interest from your car loan off your taxes?  Remember when your real estate taxes where based on the original cost of your house?

Threats to recovery include: higher interest rates, Fed tightening credit, higher inflation rates, protectionism, BRIC countries’ economies slowing down, black swan event.

Only Our Heavenly Father knows the future but HE gives us eyes to see and ears to hear and provide perspective about being prepared for what is coming.  Watchmen on the wall were placed there to alert the rest of the people of the adversaries approaching the city.  It appears we are on course of an economic challenge that most of us have never seen.

The Old Covenant in Scripture was a conditional covenant.  It was based on “if” and “then”.  IF you will turn from your wicked ways, THEN I will…  Both Our Heavenly Father and Israel made commitments.  As we know Israel failed and Our Heavenly Father mercifully pulled them out of the fire many times.

The New Testament was based on the unconditional commitment of Love with Jesus going to the cross on behalf of mankind for all generations.  This Love did not rely on our performance but relied solely on Jesus and His blood.  As a display of His economic responsibility, Jesus fed the multitudes by focusing His Love on the fish and bread to multiply them to meet the economic needs of the people.  The mind has a hard time grasping this Kingdom principle.  And when the mind cannot grasp something, it will direct you away from this reality.  What the mind doesn’t understand, it tends to rationalize to alternate area of understanding.

On June 17th, 2009, President Obama delivered a speech concerning Financial Reform.  The following is an excerpt:

“As a result, the failure of one firm threatened the viability of many others. The effect multiplied. There was no system in place that was prepared for this kind of outcome. And more importantly, no one has been charged with preventing it. We were facing one of the largest financial crises in history — and those responsible for oversight were mostly caught off guard and without the authority needed to address the problem.”  See: //www.whitehouse.gov/the_press_office/Remarks-of-the-President-on-Regulatory-Reform/

Timothy Geithner, the current Treasury Secretary, was previously the president of the Federal Reserve Bank of New York, the most influential of the twelve Fed Districts.  The New York Fed implements monetary policy, supervises and regulates financial institutions and helps maintain the nation’s payment systems.

Current functions of the Federal Reserve System include:

• To address the problem of banking panics
• To serve as the central bank for the United States
• To strike a balance between private interests of banks and the centralized responsibility of government
  • To supervise and regulate banking institutions
  • To protect the credit rights of consumers
• To manage the nation’s money supply through monetary policy to achieve the sometimes-conflicting goals of
  • maximum employment
  • stable prices, including prevention of either inflation or deflation
  • moderate long-term interest rates
• To maintain the stability of the financial system and contain systemic risk in financial markets
• To provide financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation’s payments system
  • To facilitate the exchange of payments among regions
  • To respond to local liquidity needs
• To strengthen U.S. standing in the world economy

Secretary Geithner was in the middle of all the action while the problem was brewing.  How can we expect him and others in leadership to fix a problem that President Obama claims they were caught off guard?  In a subtle fashion, he has judged his own cabinet members.  This is a serious issue!  We need wisdom from above to solve these problems.  The solution may not be what we expect but we must rely on our Covenant with Our Heavenly Father to bring us through this mess.  The current path leads to destruction.

Congressman Paul from Texas understands the issue:

Bill Clinton coined the phrase in the 1992 Presidential Election- “It’s the economy, stupid!” and stayed focus on that issue which helped win him the election.  Now there is a greater issue at hand- the world economic system with the U.S. Dollar as the reserve currency.  For decades the U.S. Dollar has been the medium of exchange for global transactions thus creating a consistent demand.  Times are a changin’!  The U.S. supremacy is coming into question and those in power are attempting to keep the wheels on the wagon by expanding power without oversight.

The following interview was conducted during the Financial Services Subcommittee on Oversight and Investigations hearing of May 5, 2009. Rep. Alan Grayson asks the Federal Reserve Inspector General about the oversight responsibilities:

This interview makes us wonder just who is in charge?  Further, as we all know that the Federal Reserve is a private entity, how can there be no accounting to the people of the United States whose money is being spent?  The country may be becoming “too big to survive” instead of too big to fail.

A primary battle front is the price of gold in U.S. Dollars.  The following graph shows an interesting technical formation:

Notice from Mid February thru the current session that there is a reverse head & shoulders pattern forming.  This is a power pattern if and when it is confirmed.  The following is a historical example of this pattern:

Notice that once the price moved above the “neckline”, the stock headed upward.  For gold, the neckline is $1,000 and if it penetrates that price with strong volume, technicians expect a strong price move to $1,300 and that does not bode well for the U.S. Dollar.  This is why the battle is on between central government intervention and the investment community.  Over the last nine years, gold has yielded 16.4% return on investment but you hear very little in the press about that performance.  Gold is the “canary in the mine” for the fate of the U.S. Dollar.  $5,000 gold is no longer an unreasonable peak price.

Have you noticed how many U.S. officials are making trips to China these days?  China has a huge investment in Dollar holdings and must be reassured that the dollar isn’t going to tank.

At a recent trip to China by Timothy Geithner:

“Chinese assets are very safe,” Geithner said in response to a question after a speech at Peking University, where he studied Chinese as a student in the 1980s.

His answer drew loud laughter from his student audience, reflecting skepticism in China about the wisdom of a developing country accumulating a vast stockpile of foreign reserves instead of spending the money to raise living standards at home.  See: http://finance.yahoo.com/news/Geithner-tells-China-its-rb-15396905.html?.v=2

Gold acts as “insurance” against a declining U.S. Dollar and there is not really too much anyone can do about the decline except to try to slow the descent.

In a recent speech, economist John Taylor from Stanford told the Atlanta Fed that with the current spending policies in place, the U.S. Government will need to increase taxes of the American people.  A 60 percent tax increase across the board would be required.  Otherwise to cut the debt being created, an inflation rate of 10% for 10 years will be required. http://www.stanford.edu/~johntayl/Systemic_Risk_and_the_Role_of_Government-May_12_2009.pdf

Take your pick!

You can better understand why the BRIC countries are signing bilateral trade agreements thus removing the U.S. Dollar from the mix.  BRIC or BRICs is an acronym that refers to the fast-growing developing economies of Brazil, Russia, India, and China.  Russia is the only country with sufficient internal problems that may slow down the move away from the use of U.S. Dollars to settle trade among those countries.

History tells us the every country whose currency was used as the world’s reserve currency and became a debtor nation to the extent of the U.S., their economy ultimately collapsed.