Servias Ministries Blog

Oil surpassed $70 per barrel last week, up from $37 back in December.  The unwinding of speculative positions forced the price down from $147.  In the intermediate term of six to twelve months, I expect the stock market to show signs of life which will help support higher oil prices.  The real issue is supply destruction in the oil industry and this reality is known as depletion.  All you hear about in the news is “demand destruction” but supply destruction is outpacing demand destruction thus forcing the price upward.

As in many markets, energy prices spiked to new highs and then subsided causing the average consumer to think the price spike was an aberration in the market.  We have maintained that peak oil occurred in 2005.  The peak is where new production does not exceed actual depletion of existing fields.  There have been some who believe that massive undeveloped oil deposits in various locations have been withheld for suspicious reasons.  I disagree.  It is true there are massive deposits but they are expensive to extract or they are in formations that do not easily give up the hydrocarbon.  The low hanging fruit has been developed.  The greed of man does not believe in patience when resources can easily be extracted and converted to cash.

Why do you think that the Obama Administration is making such a big deal about alternative energy?  They see the writing on the wall.  $200 oil is in the cards for the near future and will arrive sooner not later if the economies around the world heat up thus requiring more liquid fuel.  China is at the point of exceeding the U.S. as the #1 consumer of new autos and the demand appears to be strong.

The U.S. Dollar must decline in order for the U.S. to survive this economic crisis.  The Fed cannot raise interest rates without extending this “recession” or depression depending if you have a job or not.  By depreciating the U.S. Dollar, the current debt will become worth less, hopefully not worthless.

I now believe that one should increase their position of gold and/or silver bullion if possible.  5-10% is not enough insurance to weather the potential decline of the U.S. Dollar.  20% of your investment portfolio is not an unreasonable percentage.  The commodity bull market is alive and well around the globe.  If the U.S. Dollar declines by 5%, oil will increase by 5% without any change to the other fundamentals.  The opposite is true as well.  However, I do not believe that a strong dollar is sustainable given the quantitative easing by the Fed and the unfunded liabilities of the U.S.  Inflation is a currency event, not an economic cycle event.

Natural gas is cheap right now.  Its price is being set at the trading desks of hedge funds and investment banks rather than the economic supply/demand criteria of end users and suppliers.  Of course this is true for all commodities.  Perceptions of the moneychangers provide a perverted pricing function thus are ultimately stealing from the rest of us who consume commodities.  The world continues to consume more energy each year independent of the economic downturns and as the global population grows, this will be the reality.  All sources of energy must be tapped to keep up with the demand.  Right now, natural gas is cheap relative to the alternatives.  You can expect the price to be pulled up by the market in the coming months.

Mexico is in deep trouble.  Mexico’s Cantarell Oil field, The second Largest oil field in the World Is Dying.  In July 2008, daily production rate fell sharply by 36% to 973,668 barrels per day from 1.526 million barrels per day a year earlier.  Mexico may soon be an importer of oil rather than an exporter to the U.S.

Canadian Oil Sands extraction is unprofitable below $75-$80 per barrel.  This provides a floor for supply from this resource.  Venezuela’s exports are being committed to China.  In Colorado, new permitting requirements make it extremely difficult to drill for oil & gas.

I suggest that you prepare yourself for this coming storm.  Anything you can do to become more energy efficient now will reap rewards in the near future.  If you have a gas guzzler, you may want to trade for a more efficient vehicle.  There are little things you can do around the house to improve its energy footprint.  There are now energy tax credits for approved upgrades in the U.S.  You can grow a vegetable garden and start with the simple- tomatoes, onions, lettuce, radishes…  Yes, right now it seems like more trouble than it is worth but as energy prices go up, there will be less fresh produce to buy at reasonable prices.

If you own two or more vehicles, I would recommend that one of them be energy efficient with a notable range (gallons x mpg).  If we have an gasoline shortages, the impact will be less on those with energy efficient vehicles.

When will the storm arrive?  You can be sure that leadership will not forewarn us since they do not want the masses rising up in fear.  If everyone topped off their gas tanks at once, we would have a gasoline shortage immediately.  That is how tight supplies really are.  What would happen if people began to hoard gasoline because of being told of a coming energy storm?

Proverbs 6:6-8
Go to the ant, thou sluggard; consider her ways, and be wise:

Which having no guide, overseer, or ruler,

Provideth her meat in the summer, [and] gathereth her food in the harvest.

Abrogation: To abolish, do away with, or annul, especially by authority.

The Obama Administration has abrogated contracts in private industry “for the greater good”.  Contract Law is the basis of free enterprise and once you begin to tamper with contract enforcement you will see the demise of free enterprise.  As this is written, Chrysler is attempting to survive with Fiat’s assistance.  However, three of the secured bond debt holders felt that receiving 29 cents on the dollar was not enough.  The Administration has clearly demonstrated that contract law is subservient to presidential desires.  The President, a former law professor, must have forgotten about the need to honor contracts.

China is not happy with the U.S. Administration’s economic policies.  In a recent trip to China, Timothy Geithner was laughed at by Chinese students as he was attempting to give a speech on Monetary Economics.  The Chinese are creating trade agreements with Brazil, Russia, Indonesia, and other countries bypassing the U.S. Dollar in the settlement of trade.

True Unemployment is 16.4% when you include discouraged workers and those working part-time wanting to work full-time.  Officially, 345,000 jobs were lost last month but 200,000+ jobs were added by the “birth/death” model which hardly ever loses jobs.  “Liars figure, figures lie”.

The Administration has blown off the Tax Tea Party.  In an attempt to protect the current paradigm, Obama will attempt to raise taxes in any area he can.  The facade will be put in place to lead us to believe that only the wealthy will be taxed.  Not so.  The wealthy provide the capital for business creation which in turn benefits the average citizen by providing jobs.  Obama wants to change the tax laws for small oil & gas companies.  The net effect of this move will be to wipe out many of the independent exploration companies and thus lower oil output.  This in turn will push oil prices up toward $200 per barrel and ultimately will tax the public at the pump.  What are these guys in Washington thinking?  Expect a national value added tax (VAT) to be implemented, one similar to England.  Notice that they’re in worse shape than we are!

Most people were against the bailouts but the Administration did not care.  GM threatened bankruptcy months ago and received billions.  Now they are in bankruptcy and are receiving additional billions.  What a deal!

The little people are being squeezed, you and I are in that category.  Most of us are in the “too small to save” category.  Have you ever noticed how the government “gives” money to the large entities and loans money to the average citizen, if they qualify?  Giving a bank $5 billion at 0% interest allows them to invest the money and receive interest income without any expense.  Once they are done, they simply return the money to the government.  Why can’t you and I get in on some of that lovin’?

The printing of money is simply to relieve the symptoms, just like a pharmaceutical.  The U.S. needs to contract and rid itself of unworkable and unprofitable businesses.  If a bank can’t manage its business properly, why prolong poor management?  If a car company can’t make a profit, why prolong its poor management or business model?  How long do you think it will take GM to pay back $50 billion to the government out of its profits?  Forever!

The greed, mistakes, and criminality of Wall Street gang is being protected at the expense of the average citizen.  As our family members grow older, it becomes critically important to retain family wealth for their care.  The current system is designed to extract wealth by taxation, inflation, and any other means to keep the current system going.  Only the elite will be assured of asset protection.

The Bailout Bubble by definition is the last bubble of this current series of bubbles.  A nation’s currency is that last bubble to inflate.  History tells us that the bursting of this bubble will not be pretty.  How long can this bubble continue to inflate?  Only Our Heavenly Father knows.  With the continued global population growth, commodities will be in greater demand.  As I see it, ownership of food, water, oil, gas, gold, and silver is the only possible insurance policy the average person can have.  Paper assets will continue to depreciate as the Fed tries to save Wall Street.  As we proceed forward, chaos is at hand for the average citizen.  When men become desperate, they will justify any action to feed their families.  The nations of the earth will then turn toward Heaven and seek guidance from above… finally!

You lead sheep and you drive cattle.  Jesus made it clear that we are to be likened to sheep, not cattle.  Sheep and fish are the two species that accept newcomers without reservation or critical review.  Flocks of sheep can grow into the thousands on the way to market because of this reality.  Sheep also know the voice of their leader.  On the other hand, cattle must be driven by “force” and rounded up by experienced cowboys on equally experienced horses.

Love leads and Ego drives.

The ego must control and manipulate to move its agenda of lordship.  When you put two strong egos in the room, you create competition.  The ego must dominate to sustain its relative position thus you have the cattle driven by the egos of “leaders”.  In recent years with the access to information provided by the Internet, private individuals have been able to uncover the manipulation of data by those in power.  Whether it be the local banker who was paying low rates on CD’s or inflation rates with hedonic indexing, the proverbial cat is out of the bag.  Long-term promises were made to the American people by short-term leaders who knew they would not be around when delivery of those promise came due.  With the unfunded liabilities in the ten’s of trillions, there is no alternative but to devalue the dollar.  In order to do this and survive, the cattle drivers must prop up the current paradigm for as long as possible.  At its core, the ego knows that competition is a core method of misdirection.  Why do you think that we have so many different professional sports in the U.S.?  As Joe Sixpack focuses on the latest game or motor race, the dollar is crumbling away.

Have you ever noticed that politicians seem to enter politics as a middle class citizen then shortly after leaving politics they seem to become independently wealthy in a short period of time?  They receive “consulting” revenue from the very companies and industries which fared well during their political office.  The system perpetuates itself.  There are a few exceptions and they are called leaders.  Ron Paul from Texas has understood the perils of a fiat based currency.  His ongoing quest to challenge the status quo has caused people who understand his mission to follow Congressman Paul.  They know that he has their best interest at heart.  That is a sign of a true leader.  In the past we would call these types of politicians- statesmen.  When is the last time you heard that term used?

Cattle drivers create problems and then fix them to convince people of their “calling”.  This leads to domination over opponents by creating a resume that has been fashioned to attract voters and big money to support the “leader”.  It assumes ignorance of the facts by those who are called upon to support this leader.  As an example, how can a person with a law degree and no management experience be thrust into a management position of the largest economy on earth and be expected to make the right decisions?  How can an economics professor with no private industry management experience formulate economic policy that affects millions of small businesses?  The short answer is that they cannot hence the need to drive cattle by utilizing “think tanks” to help sway public opinion to get those theoretical policies in place.  The long term effects of those policies are not known until those who made the policies are long gone.

Recently, Brian Deese, a protege of Dr. Lawrence Summers (Obama’s Economic Advisor),  was assigned to dismantle GM and put it back together again.

Deese is a 31 year old Law student with no automotive, finance, or management experience yet he has been given the task of overseeing one of the largest reorganizations in world history.  See:http://www.nytimes.com/glogin?URI=http://www.nytimes.com/2009/06/01/business/01deese.html&OQ=_rQ3D3Q26hpw&OP=2b747986Q2FQ7BKbQ27Q7BHDRQ2A8DD.BQ7BBQ51Q51IQ7BQ51oQ7BQ51YQ7BQ27,Q2AC-bQ2AQ2AQ7BQ51YHbbQ2AbJq.9Q60

See: http://www.foxnews.com/story/0,2933,524757,00.html

What are these guys thinking?  Leadership seeks out those who are called to a position and places them in their calling.  Cattle drivers simply find a warm body to fill a position hoping they can somehow muster up enough luck to complete the task.

When a man is left to his own devices, his path leads to destruction.  When all he has to rely on is his ego which leads him to believe he is qualified to do a job, he will surely fail.

Proverbs 16:18  Pride [goeth] before destruction, and an haughty spirit before a fall.

How many billions of dollars will be lost from poorly informed decision making?  I suspect we will not found out the extent of the damage from placing a 31 year old inexperienced law student to do a seasoned leader’s job.

Leaders are moved by love to serve people, cattle drivers are compelled by ego to serve self.

Depreciation is a decrease in value.  There is a normal decline in value of a physical asset because it simply wears out.  Depreciation can occur when a product is no longer in demand relative to its supply.  On a global basis, when a currency is excessively created, its supply outstrips demand is depreciates in value.  The Federal Reserve is creating a large supply of the U.S. Dollar

Deficits in the U.S. are running at historic highs at an anticipated $1.2 Trillion for 2009.  On the balance sheet, a deficit reduces owner equity relative to the liabilities.  If the liabilities outstrip the ability of income to service the outstanding debt, insolvency will occur.  The assumption that the government has the power to create money is applicable to the degree that the rest of the world is confident in the valuation of the U.S. Dollar.

Debt accumulated by consumers has forced a reduction in consumption in order to pay down the accumulated liabilities.  With the consumer accounting for 70% of the Gross Domestic Product (GDP) of the U.S., the economy must contract to allow for a re-balancing of the consumer’s balance sheet.

Dwellings or housing is normally the largest asset held by a consumer.  Most of those who purchased houses in the last seven years may have lost a sizable value of the personal net worth.  If the asset value declines with the liability still in place, net worth evaporates.  When the emotion kicks in that your net worth has declined substantially, your spending habits change drastically.  Depending on your leverage (assets divided by net worth), you may have to liquidate holdings in an adverse market thus perpetuating a deflating asset price.

Deflation of goods and services adversely affects accumulated wealth of the individual stock portfolio especially when there is monetary inflation occurring at the same time.  When demand decreases relative to supply, prices deflate.  However if those goods and services are discretionary, then the price deflation does not help the consumer.  If you own a hotel stock in your portfolio but the public has reduced travel plans, you lose.  The price for a room goes down, the value of the stock goes down, but you are still dealing with monetary inflation decreasing the value of your purchasing power as you attempt to buy food and energy.

Demographics is a huge issue for the developed countries.  Like a broken record, I keep referring to the “baby boomer” generation.  The current paradigm of social security will not handle the liability commitment to this generation.  Over the last forty years, Congress has misappropriated the social security funds and placed IOU’S in their place.  I believe this issue is the reason many legislators have opted to leave public service when there was no apparent reason to step down.  Whoever is in power when this issue arrives at the breaking point will suffer the wrath of the baby boomer generation.  We worked throughout our adult lives paying into the system while being assured of retirement funds at the age of 65.  This backdrop assured the less fortunate of a subsistence level of living.  See: http://www.usdebtclock.org/

Derivatives are bets against the future.  There is a buyer and seller of the derivative and the seller receives a “time” premium for selling the derivative.  The buyer’s incentive is that he wants to cap his risk in the underlying investments.  The problem lies in the seller’s financial strength that backs the derivative instrument.  If the seller sells more derivatives than his capital structure can support, the derivative’s value becomes worthless thereby resulting in the buyer having no real insurance supporting his investment.  Derivatives are now in the quadrillions and a substantial portion of that total cannot be supported by existing capital.  As derivatives unwind the losses must be realized on the balance sheets and when this happens capital evaporates and moves the entity toward insolvency.

Devaluations of asset values has an emotional impact on the owner of these assets.  As the devaluations move toward a minimum operational level, the equity owner will change their spending pattern.  For example, if you have an equity of $1 million you will spend as though you are a millionaire because you have plenty of buffer if you have a negative economic event occur.  You will take nicer vacations, make home improvements, and eat at restaurants more often.  In other words, your consumption goes up.  If you lose $600,000 in equity, you will cut back in all discretionary spending and move to a defense posture.  You will defer spending thus increasing deflation of consumption based goods and services.

Dollar, that is the U.S. Dollar, is in serious risk of default.  The long term decline (3 t0 5 years) is expected to be 50% of its current value.  This translates to an equivalent decline in purchasing value to the average U.S. citizen.  Those on fixed incomes will suffer the greatest loss of purchasing power.  Workers may have a small buffer by demanding greater wages to offset inflation but will lag behind the dollar decline.

Depression is becoming a real global possibility, mainly for the developed countries.  Those economies who shipped their manufacturing jobs to cheaper jurisdictions in favor of a service-based economy will suffer the greatest contraction.  Anytime you have a decline in revenue, services get cut first.  There is a battle between the government protecting the current paradigm and the reality of the consumer-based de-leveraging requirement.  The de-leveraging requirement will win.

Destruction may result from man’s attempt to defy realities created by greed.  Resources are being consumed at record rates and the global population growth cannot be supported by the current infrastructure.  When this happens war results, maybe a world war.  Each country believes it is entitled to resources and when that country becomes desperate, they will take desperate measures.

There are more D’s we could cover but the above provides us a clear view of the current environment.  Filled with negatives, the D’s are a result of man’s best attempt to manage the globe without the Wisdom from above.  As men become desperate, they will shift their focus from the mirror to the Heavens and seek Our Heavenly Father’s face.  Could this be the major paradigm shift many of us have been looking for?  The smoke and mirrors of government rhetoric will not bail us out of this time of extended greed.  A new era is coming whether it be natural or supernatural!

The Internet bubble burst back in 2000 and was followed by the housing bubble.  We are now facing the biggest bubble of them all: the Monetary Bubble.  This bubble is a precursor to hyper-inflation and this environment will take no prisoners.  The megabanks have operated as drug addicts and the Fed has become their “enabler”.  Their actions moved them to insolvency and the Fed has endorsed their actions by funding their addiction.  Bankruptcy of these institutions was the best solution in order to cleanse the system of unfruitful works.

The following is an example of insolvency:

Mat 21:19  And when he (Jesus) saw a fig tree in the way, he came to it, and found nothing thereon, but leaves only, and said unto it, Let no fruit grow on thee henceforward for ever. And presently the fig tree withered away.

We are not to judge the heart of man, only the fruit.  Jesus became a fruit inspector of Israel and found it lacking.  It was bankrupt.  Our Heavenly Father had been longsuffering with the sins of Israel and had once “married” Israel only to divorce later.  The people no longer loved The Lord and chose to live according to fleshly desires.  They gave lip service to serving The Lord but their actions communicated a different direction.  Revelation was converted to tradition and the Glory of The Lord had left the Temple.

Today, the financial industry is no different.  Rather than serve the public, these institutions are exploiting their customers with predatory practices of high and hidden fees, high interest rates relative to their cost of money (nearly 0%), and misleading information about their financial status.  Effectively, they have exploited customers and the government at the same time.

Irresponsibility-a form of untrustworthiness; the trait of lacking a sense of responsibility and not feeling accountable for your actions.  The last fifty years has seen the monetary system go from a conservative, stable system to a casino-style system of greed.  Don’t get me wrong, greed was always there but was in check until Congress lifted the restraints.  Those restraints had been in place since the Great Depression.  Once again we have confirmations that man’s sin nature is alive and operational.  Community banks generally did not participate in the instruments of greed because they knew that they are too small to save.  They simply had to make money through normal, prudent lending and investing practices.

The economic environment is changing.  Baby boomers will swing to the ultra-conservative side by curbing consumption, cutting back on luxury goods, and looking for more secure investments.  It is no surprise that Home Depot and Lowe’s home improvement centers are topping Wall Street estimates.  People will repair and enhance their current homes rather than increase their square footage.  The repair industry will show signs of life.  Homebuilders will shrink to pre-1990’s levels.  Commercial real estate will be the next topic of the network nightly news anchors.  The contraction is rapidly reducing the retail space needs around the country.  Some of the large mall operators have already been mentioned in the financial news media as having serious cashflow problems.

Credit card companies are attempting to keep the current paradigm intact by raising rates and fees while reducing credit limits.  Many of us have received notices of a reduction in credit limits due to lack of activity on the account.  The credit card companies have abused many cardholders with these changes and will force Congress to respond with new regulations.  Leadership maintained the status quo of consumer exploitation until the cries became too loud.

When you add up all of the woes in the current system, you find no good fruit.  The summation of Irresponsible actions over the last forty years has produced the current perfect storm.  Leaders around the world are desperately trying their best to keep the current paradigm intact.  “Hot” money is smelling blood in the currency arena and is now making large investments in precious metals expecting notable appreciation in gold and silver in the coming months and years.  Purchasing power of the U.S. Dollar will substantially decline in coming years with the current economic policies in place.  Stockholder rights have been shredded by the current government intervention in publicly held companies.  Mankind will hold on to recent history as their hope to restore things back to the way they were.  Is the writing on the wall?

Daniel 5:25 “This is the writing that was inscribed: MENE, MENE,TEQEL, and PHARSIN. 5:26 This is the interpretation of the words:  As for mene– God has numbered your kingdom’s days and brought it to an end. 5:27 As for teqel – you are weighed on the balances and found to be lacking. 5:28 As for peres  – your kingdom is divided and given over to the Medes (middle land) and Persians (pure).”

A toxin (Greek: τοξικόν, toxikon, lit. (poison) for use on arrows) is a poisonous substance produced or consumed by living cells or organisms.  My close friend Dr. Vince Speckhart, a highly successful oncologist who practiced medicine for forty years, once told me “the human body is designed to live forever”.  His success rate for treating cancer improved dramatically when he found a methodology that detected “toxic” interferences in the body thus allowing him to isolate a remedy for their removal.  Once the toxic substance or “signal” was removed, the body began to heal itself.  If you get a splinter in the finger, it will not heal until the splinter is removed.  The needle and tweezers used for the removal are not the cure, they simply facilitate the cure by removing the “toxic” substance.  In Dr. Speckhart’s practice, this simple understanding led him to an alternative way of treating his cancer patients.  Rather than promoting consumption of a toxic pharmaceutical, he focused on the removal of what appeared to be “triggers” or precursors to cancer.  Once he began to focus on toxin removal rather than “treating the symptom”, his success rate notably improved.

I had a friend who served as a medic in Vietnam and was exposed to Agent Orange (dioxin).  Within twenty years he was diagnosed with cancer in the lung area where his lungs were fusing with the wall around them (a layman’s description).  He went through the standard treatments and the doctor confirmed that Agent Orange was the trigger.  His immune system ultimately became overloaded and those “rebellious” cells began growing as cancer.

Dr. Sherry Rogers, another physician who began to search for alternatives to the current medical traditions, became deathly sick from her exposure to chemicals used on her parents’ farm.  Like Dr. Speckhart, she found that “detoxification” methodologies were her only solution.  Once she detoxified her body, her health returned.  She has written several books on using detoxification methodology to restore your health.  In her writings, she provides proof that chemicals ingested through commercially supplied means are poisoning our bodies on a daily basis.  Plastics are leached into our drinking bottles and are being stored in our bodies causing abnormalities.  Herbicides and pesticides used around the house are adding to the immune system burden of the body.  At some point, sickness and disease spring forth.

“Toxins” are occurring in our society as well.  Gradual introduction of perversity in society promotes illicit sex, violence, and destruction of the family unit.  With this path comes the consequences of death and destruction to society.  With the hippie movement of the 60’s and 70’s came open sexual relationships.  The 80’s brought unbridled greed.  The 90’s ushered in the demise of business ethics.  The “I’m OK, you’re OK” attitude meant that any act can be redefined as being acceptable.  This lawless attitude is promoting cancer to form and mastisize where only major surgery can remove it.

In the economics picture, removal of restrictions in the area of finance created a toxin-rich environment.  In the Great Depression, leaders found that the absence of regulation and allowing banks to be both commercial and investment banks created an environment conducive to lawlessness.  In 1933, in the wake of the 1929 stock market crash and during a nationwide commercial bank failure and the Great Depression, two members of Congress put their names on what is known today as the Glass-Steagall Act (GSA). This act separated investment and commercial banking activities. At the time, “improper banking activity”, or what was considered overzealous commercial bank involvement in stock market investment, was deemed the main culprit of the financial crash. According to that reasoning, commercial banks took on too much risk with depositors’ money. (See: http://www.investopedia.com/articles/03/071603.asp)  Under the direction of President Clinton and Treasury Secretary Lawrence Summers, the Glass-Steagall Act was repealed in 1999.  This was the first step to lifting protection of risky banking practices that have led to the current crisis.

The Bush’s administration continued to provide an environment that would lead to a toxic environment by removing or reducing regulation of the financial industry.  This photo from 2003 shows two regulators: John Reich (then Vice Chairman of the FDIC and later at the OTS) and James Gilleran of the Office of Thrift Supervision (with the chainsaw) and representatives of three banker trade associations: James McLaughlin of the American Bankers Association, Harry Doherty of America’s Community Bankers, and Ken Guenther of the Independent Community Bankers of America.

Once you remove the rule of law from any subset of society, greed and self interest will prevail.  Lawlessness and rebellion will prevail until the organism becomes toxic and ultimately perishes.  Only by removing the toxic origin will the organism repair itself.  By feeding the organism with an opiate, you simply provide it with a temporary “high” while it continues to die.

As I have written in the past huge amounts of bailout money have been made available to financial institutions.  Some local institutions were forced to take the money, and expect to send it back as soon as possible.  It would paint the picture that bailout money is being widely distributed rather than targeting a narrow audience.  Over time, we have consistently seen the “paint a rosy picture” scenario by various administrations tinkering with government statistics- employment numbers, consumer price index, core index, money supply, etc.  The latest “tinkering” is the accounting standards applicable to the banks’ valuation of toxic assets.  Effectively, the banks can play with their balance sheets thus effecting a drastic improvement of income and painting a better financial picture.  If you or I did the same in an effort to receive a loan from the bank, we would be convicted of fraud.  If those banks with toxic assets were to value the toxic assets at current market value, they would be “insolvent” and that is a scary prospect for the current financial system.

Why are the world leaders pursuing this path?  They are attempting to protect the counterfeit reality that keeps them in power.  The current structure promotes and protects its power structure from any outside interference.  Students of history know that this will not last indefinitely.  Rome fell, the British Empire lost its status, and the United States is on the same road to ruin.  There is no way in the current system to pay back the money committed other than defaulting on future obligations or inflating the currency thus devaluing individual wealth.  Either option will be devastating to the American taxpayer and future generations.  It is important to remember, government has no real money of its own, all the money it spends or commits comes from the taxpayer or is created out of thin air.

In the current system, economies require energy to grow and the “easy” energy is gone.  All of the easy to reach oil has been discovered and is being extracted.  We have not run out of oil but it is now more expensive to find and extract.  The same is true for the other commodities.  Cheap prices mask the problem and the current leaders have mechanisms in place to paint a rosy picture.  How unfortunate is short-term thinking!

2Kings 7:1 THEN Elisha said, “Hear the word of the LORD. Thus says the LORD: ‘Tomorrow about this time a seah of fine flour shall be sold for a shekel, and two seahs of barley for a shekel, at the gate of Samaria.'”

This story reflects a “black swan” event.  The Samarians were living life as usual, expecting the linear progression of their lives to continue.  “Then suddenly” Our Heavenly Father evoked a change to the Syrians’ future.  HE told Elisha to expect the change to the local economy and it happened as expected by the prophet who heard the voice of THE LORD.  The Book of Job reminds us that there are larger cycles in the universe than what we can comprehend and that when sudden change comes, don’t be surprised.  Job had everything stripped away so that he could prepare for a greater ministry.  That method goes against what most believe is optimum but we must shed the counterfeit realities that we have created in order to clear the way for Our Heavenly Father’s plan.

Below is a little humor to offset the dismal financial picture described above:

As people attempt to protect their life savings, they are constantly bombarded by market noise of where to invest.  Although I do not believe in the “all in” investing strategy, I do believe in increasing the weighting of investments toward precious metals and related stocks.  The following video clip provides perspective on gold versus other investments:

The following video provides you with the understanding of how Wall Street and the financial community could contrive a way to extract taxpayer money and stay in business.

The Geithner Plan provides a back door to bank re-liquification without grossly affecting the stockholder, bondholder, or current bank management but shifting the bulk of the loss to the taxpayer without Joe the taxpayer realizing it.  I guess these guys think we’re all stupid and that assumption will turn out to be a strategic error.

Revelations 16:12 Then the sixth angel poured out his bowl on the great river Euphrates, and its water was dried up, so that the way of the kings from the east might be prepared. (NKJV)

Euphrates mean “fruitfulness”.

The Revelation of John has many applications to our lives and world history.  I do not claim expertise in either area.  However the Spirit of God is an expert in both areas and HE resides in me.  There is so  much information and opinion circling the globe today, it is impossible to discern the truth versus lies except by the Holy Spirit and the voice of Our Heavenly Father.  The complexity of finance, technology, government, and the actions of 6.5 billion people surpasses human understanding.  This Scripture just keeps surfacing in my consciousness as I read about the actions of the world leaders.

“Flexibility to the point of collapse” is where we are at today.  Increased complexity is designed to fail.  Long gone are the days where a teenager could repair his own car.  Complexity designed to tickle our logic has replaced the beauty of simplicity.  Society is forcing us to move away from paper records in favor of electronic shadows of “on” and “off”, + or -, 1 or 0.  Why?  Because of convenience.  I am amazed at the mentality of society today.  It falsely assumes that every person in an organization that has access to your debit card information is trustworthy.  Your information is only as good as the weakest link in the information chain from retailer, retailer bank, clearinghouse, your bank, and all the subcontractors in between.  It is more convenient and profitable for the bank when you use a debit card rather than a check which provides a perfect audit trail of the commercial transaction.  Customer Service is replace by Supplier Servant.

The U.S. Leadership has been taken over by the major financial institutions.  The threat of systemic failure has caused the leaders to mortgage the future of the U.S. in favor of keeping 20 banks from failing.  The other 7,000 community banks in the U.S. will suffer from the action of a few.

AIG’s bailout money is re-capitalizing a few very large multi-national banks who are also receiving assistance;

Goldman Sachs received $12.9 billion

Société Générale of France and Deutsche Bank of Germany, which each received nearly $12 billion

Barclays of Britain ($8.5 billion)

Merrill Lynch ($6.8 billion)

Bank of America ($5.2 billion)

UBS of Switzerland ($5 billion)

Citigroup ($2.3 billion)

Wachovia ($1.5 billion).

See: http://dealbook.blogs.nytimes.com/2009/03/26/cuomo-widens-his-aig-investigation/

As you can see, the money did not go down a black hole at AIG, they simply paid out contract obligations that were written by their London “casino” office who had absolutely zero regulatory oversight.  The Fed knows where this money ended up but does not want the public to realize the pass through “double dipping” by those banks.  If the public was upset by $165 million in bonuses, what would happen if they understood the preferential treatment of the above list? 

All of this has put China in a position to demand global change favorable to their agenda.  While Western Leaders are printing money to bailout financial services institutions, China continues to invest in infrastructure for the future.  In the 80’s we looked to Japan for their manufacturing prowess.  It appears in the 10’s we will look to China for their governing ability.  The West is certainly preparing the way for the Kings from the East.

vi [dīfang]
watch out!