Servias Ministries Blog

Contango is a term used in the futures market to describe an upward sloping forward price curve (as in the normal yield curve). Such a forward curve is said to be "in contango" (or sometimes "contangoed").  Futures contracts have specific maturity dates for delivery such as March ’09, June ’09, etc.  If you are buying wheat for delivery in June of 2009, you may pay 50 cents additional over the current price (spot price).  This is the contango scenario.

Formally, it is the situation where, and the amount by which, the price of a commodity for future delivery is higher than the spot price, or a far future delivery price higher than a nearer future delivery.

The opposite market condition to contango is known as backwardation.

Backwardation occurs in seasonal commodities such as natural gas where in the winter shortages may occur and force the short term price up whereas prices in the future assume no shortage.  Dramatic immediate demand causes backwardation.

As of 12/19/08, The spot price for natural gas was higher than the futures price:

NATURAL GAS ($/MMBtu)

                                                       PRICE*   CHANGE     % CHANGE        TIME

Nymex Henry Hub Future       5.33         -.21           -3.86            12/19

Henry Hub Spot                     5.68          .04               .71            12/19

Anticipated increased demand in the future causes future prices to rise relative to immediate price transactions.  Expected reductions in demand cause prices to decline… in normal circumstances in the current system.

When a financial tsunami hits, futures markets react differently and cause investors to move away from greed and respond with fear.  Investors begin to liquidate positions due to the unknown.  Technical models no longer work and fundamental investing is put on hold.  Price volatility sends amateur investors heading for the doors.

When an abnormal contango occurs, suppliers respond by buying near term contracts and sell longer term contracts.  Currently, large oil companies with plenty of cash are buying oil (rather than producing it) at $34 and immediately selling it on a futures contract for $43.  They have leased tankers to sit in the harbor and store this oil until the delivery date (within30-60 days) and pocket a $9 profit per barrel less cost of storage.  See: http://uk.reuters.com/article/allBreakingNews/idUKL365240820081203?rpc=401&

If you have $90 Million handy, you can do the same.

The Kingdom of God does not operate on speculation (contango & backwardation) but on wisdom, understanding, knowledge, and skill from above.  Joseph was given instruction from Our Heavenly Father in dealing with a Great Depression/famine in the times of Pharaoh.  When David was king, the country entered into a famine.  He inquired of The Lord and found out what to do in order to end the famine.  Wisdom from above is required to get us through these times of great perplexity.  Elijah prayed earnestly to end the drought on the land.  Supernatural intervention is the key to solving the world’s crisis.  It appears that man has now reached his "level of incompetence" in dealing with this more complex world.  Leaders are groping around for solutions to the myriad of problems confronting the nations.  Iceland is bankrupt, Ecuador is in sad shape, and Greek protestors are frustrated with government’s ineffective handling of the economy.

Events are occurring in an accelerated fashion.  This acceleration defies man’s understanding and is causing many to question the future of their nation as well as the global economy.  It would appear that we are at an end of an age where complexity ultimately crumbles under its own weight.

What should the individual do?  We should each seek The Father’s Face.  We should enter into our closet, be still, and wait on The Lord.  Jesus didn’t say "if you pray", He said "when you pray".

Mat 6:5-13

"And when you pray, you shall not be like the hypocrites. For they love to pray standing in the synagogues and on the corners of the streets, that they may be seen by men. Assuredly, I say to you, they have their reward.

"But you, when you pray, go into your room (closet or booth), and when you have shut your door, pray to your Father who is in the secret place; and your Father who sees in secret will reward you openly.

"And when you pray, do not use vain repetitions as the heathen do. For they think that they will be heard for their many words.

"Therefore do not be like them. For your Father knows the things you have need of before you ask Him.

"In this manner, therefore, pray:

Our Father in heaven,

Hallowed be Your name.

Your kingdom come.

Your will be done

On earth as it is in heaven.

Give us this day our daily bread.

And forgive us our debts,

As we forgive our debtors.

And do not lead us into temptation,

But deliver us from the evil one.

For Yours is the kingdom and the power and the glory forever. Amen.

Those who are motivated by Love and service to mankind will receive the wisdom, understanding, knowledge, and skill to establish HIS Kingdom on this earth.

Perplexity is "trouble or confusion resulting from complexity ".  If you have been reading this site in the past, you have been exposed to my crusade for moderation and simplicity: SIMPLIFY!  As my wife and I were inquiring of THE LORD recently, we were given the following passage spoken by Jesus:

Luke 21:21-26

21 "Then let those who are in Judea flee to the mountains, let those who are in the midst of her depart, and let not those who are in the country enter her.

22 "For these are the days of vengeance, that all things which are written may be fulfilled.

23 "But woe to those who are pregnant and to those who are nursing babies in those days! For there will be great distress in the land and wrath upon this people.

24 "And they will fall by the edge of the sword, and be led away captive into all nations. And Jerusalem will be trampled by Gentiles until the times of the Gentiles are fulfilled.

25 "And there will be signs in the sun, in the moon, and in the stars; and on the earth distress of nations, with perplexity, the sea and the waves roaring;

26 "men’s hearts failing them from fear and the expectation of those things which are coming on the earth, for the powers of the heavens will be shaken.

This passage focuses on the pre-conditions to the arrival of "THE SON OF MAN", CHRIST found in the next verses:

27 "Then they will see the Son of Man coming in a cloud with power and great glory.

28 "Now when these things begin to happen, look up and lift up your heads, because your redemption draws near."

Our Heavenly Father had us focus on verse 25, specifically the word "perplexity".  The "confusion resulting from complexity" clearly describes the state of the global economy today.  We are in the midst of a great perplexity.  World leaders are attempting to sort out this global mess of financial instruments of mass destruction.  The greed inherent in the system over the last 3 decades has created a bubble of epic proportions.  Our Heavenly Father issued this passage as a warning of the times.

In the Stock Market Crash of the 1930’s, men jumped out of windows to their death.  Now as men see their entire life savings evaporate in the stock market and hedge funds, we can expect to see failing hearts from fear and from the expectation of things to come.  We are told these things so that we can prepare.  How can we tap into the wisdom from above?  By following His instructions.

We were then told to proceed to the book of Titus, specifically the following passage:

Titus 2:10-3:3

10 not pilfering, but showing all good fidelity, that they may adorn the doctrine of God our Savior in all things.

11 For the grace of God that brings salvation has appeared to all men,

12 teaching us that, denying ungodliness and worldly lusts, we should live soberly, righteously, and godly in the present age,

13 looking for the blessed hope and glorious appearing of our great God and Savior Jesus Christ,

14 who gave Himself for us, that He might redeem us from every lawless deed and purify for Himself His own special people, zealous for good works.

15 Speak these things, exhort, and rebuke with all authority. Let no one despise you.

3:1 REMIND them to be subject to rulers and authorities, to obey, to be ready for every good work,

2 to speak evil of no one, to be peaceable, gentle, showing all humility to all men.

3 For we ourselves were also once foolish, disobedient, deceived, serving various lusts and pleasures, living in malice and envy, hateful and hating one another.

Verse 13 ties us back to Luke 21.  We are warned to deny ungodliness and worldly lusts. Instead, we should live soberly (in moderation), righteously, and godly that He might redeem us for "His own special people".

Everyone is enjoying the breather in high gasoline prices.  Do not be lulled to sleep, these prices will rise again with a vengeance.  The de-leveraging phenomenon hit all commodities with a sudden wave of sellers who were required to raise cash.  The fundamentals of peak oil have not changed in the last 36 months.

Who is at the center of this oil de-leveraging? It may include Glencore International AG, a privately held company owned by its management and employees. Headquartered in Baar, Switzerland.  The following unverified graph provides a view of the exposure of Glencore:

I have not fully verified this data but if it is accurate, Glencore has a serious problem.  With the unwillingness of banks to extend credit, even large companies may not survive.  Total Assets were US$ 60.0 billion and Total Glencore Shareholders’ Funds were US$ 15.7 billion at 31 December 2007.  It will be interesting to see Glencore’s 2008 numbers.  According to an Australian Public Radio report, "Glencore’s history reads like a spy novel". The company was founded as Marc Rich & Co. AG in 1974 by billionaire commodity trader Marc Rich, who was charged with tax evasion and illegal business dealings with Iran in the U.S., but pardoned by President Bill Clinton in 2001. In 1993 and 1994, Rich sold all of his majority share in Marc Rich & Co. AG back to the company.  The enterprise, renamed Glencore, is now owned and run by his former associates, including former Glencore CEO Willy Strothotte and present CEO Ivan Glasenberg. In 2005, proceeds from an oil sale to Glencore were seized as fraudulent, in an investigation into corruption in the Republic of Congo. See: http://en.wikipedia.org/wiki/Glencore

From my personal experience, the Swiss tend to be hush, hush about financial issues of their own industries.  If Glencore was on the wrong side of credit default swaps, we will soon find out.

How many of us have simply parked or sold our cars and travel by foot or bicycle?  Once you have a taste of mobility, you never want to go back.  This is the reality of China and India.  Their demand continues to rise.  The following graph from the IEA depicts the demand growth of energy:

The following graph depicts the needed supply growth over the same period:

The IEA expects the following:

– A serious decline in currently producing fields

– A leveling off of total crude oil production (optimistic)

– A growth in natural gas liquids to take up the slack.

This will require 64 million barrels per day of gross capacity additions- 6 times the current capacity of Saudi Arabia.

$300 oil is on the horizon…

Will Our Heavenly Father release the revelation of free energy?  Only when Love prevails.  Until then, brace yourself for a wild ride.

Throughout Economic History, there has been a battle between indigenous and surrogate power.  Each of us has indigenous power- native, innate, and before intrusion.  On the other hand, surrogate power appoints another as a replacement for one’s own power and authority.  Each of us has rights given by our Creator.  When governments (surrogate power) are formed, we assign or give up some of our rights (indigenous power).  As long as the government represents our will everything works well.  However, when the government attempts to operate as an indigenous power, society begins to suffer.  As this illusion grows, so do the problems and repercussions.  Since true indigenous power is native to each of us, it has no attached liability whereas surrogate power has a liability to those who assigned the power.

When you borrow money, you assign power to the lender.  In turn, the lender becomes a surrogate power towards you.  Proverbs 22:7 states "The rich ruleth over the poor, and the borrower [is] servant to the lender."  Money is at the center of surrogate power.  Debt promotes surrogate power and as we leverage up our balance sheet, we continue to assign power to the creditors.  When you move to debt-free living, you take back that power and you begin to operate with indigenous power again.  You are free to bless others without the surrogate powers limiting your actions.  Bondage is removed and you are set free.

U.S. Currency (or Federal Reserve Notes) is a surrogate power to gold.  Gold has no liability attached to it though the U.S. Dollar has tremendous levels of debt attached to it.  Over the last 37 years, the U.S. Dollar has enjoyed surrogate power and the power of perception.  The U.S. had productivity and growth to support the debt it issued just as we as individuals could support debt as long as we had a job to service that debt.

In 1776, the framers of the Constitution were tired of the surrogate power of England controlling their destiny.  They began a historical journey of recapturing indigenous power.  This quest would cost many lives but there was a corporate revelation that this surrogate power could no longer subvert their unalienable rights.

The children of Israel were given indigenous power by Our Heavenly Father.  He created a Theocracy and they lived by His Commandments and had no surrogate power extracting their rights and wealth from them.  But that did not last long:

1Samuel 8:7-8

7  And the LORD said to Samuel, "Heed the voice of the people in all that they say to you; for they have not rejected you, but they have rejected Me, that I should not reign over them.

8  "According to all the works which they have done since the day that I brought them up out of Egypt, even to this day–with which they have forsaken Me and served other gods–so they are doing to you also.

As the people served other gods, they rejected Our Heavenly Father and asked Samuel for a king (1 Samuel 8:6) to judge them as other nations.  They were assigning their power to a king which turned out to be King Saul, the Pentecostal King.  They wanted to sin and have a man judge them rather than GOD.  This path never turns out well.  Surrogate power ultimately puts us into bondage, extracts our resources, and exploits our gifts.  When this happens, we only have a limited ability to be a blessing to others.  We ultimately move into survival mode.

Each of us is one revelation away from a return to indigenous power.  The bondage of debt can be broken with one idea.  Sickness and disease are subject to The Creator’s power of healing.  Revelation comes from above and to tap into this power, we must repent or turn away from the earthly wisdom and pursue our relationship with the Heavenly Father.  We must spend time in our closet (or booth):

Matthew 6:6
But thou, when thou prayest, enter into thy closet, and when thou hast shut thy door, pray to thy Father which is in secret; and thy Father which seeth in secret shall reward thee openly.

Our rewards will include recapturing the power we assigned to others.

Update on Gold:

SPOT MARKET
Dec 11, 2008 17:13 NY Time

Bid/Ask
819.70 – 820.50

Low/High
804.00 – 835.90

1 year change
+8.10  +1.00% Increase

Gold is up 1% versus this day last year.

Update on Stock Market:

Dow Jones Industrial Average 12/11/07: 13,432.77

                                                12/11/08:  8,565.09     1 year change: -36% Decline

Update on U.S Government Commitment to stave off a Great Depression:

Commercial paper – the Fed has committed to 1.8 trillion dollars.  (Commercial paper are short term notes issued by companies which use the proceeds to pay their bills from payroll to inventory.)  ($271 billion exercised)

The Term Auction Facility- (Banks borrow from the Fed)  commitment $900 billion (415 billion has been issued)

Finance company debt purchases-  $600 billion (buy debt issued by government-chartered housing companies such as Fannie and Freddie)

Money market facilities- up to $540 billion.

The Citigroup bail out, $301 billion, ($291 billion issued)

Term security lending for collateral- $250 billion

Term asset-backed loan facilities on credit cards and business loans- $200 billion

Loans to AIG- $123 billion

Discount window borrowing- $92 billion

Commercial program number 2- $62 billion(lends to banks so they can buy commercial paper from mutual funds)

Discount window number 2- $50 billion

Bear Stearns bailout- $29 billion

Overnight loans- $10 billion

Secondary credit- $118 billion

FDIC commitment loan guarantees- $1.4 trillion

Guarantees on GE Capital- $139 billion

Troubled Asset Relief Program or TARP passed by Congress- $700 billion

Stimulus package earlier in the year- $168 billion

Treasury exchange stabilization fund- $50 billion

Tax breaks for banks- $29 billion

"Hope for Homeowners" (the July bill)- $300 billion

Total:  $8 ½ trillion dollars

Total does not include next year’s stimulus program, which preliminary talks mentioned in the Journal or press conferences can range anywhere from $500 billion to $2,000 billion.

Below is a stock chart of the Great Depression. The chart begins in 1920 and ends in 1939.  The Dow peaked at 381.17 in 1929 and dropped to 41.22 in 1932, an 89% decline.  It wasn’t until 1954 that the market recovered to its previous high.  This is what Washington is afraid of- a destruction of wealth and the nation.

Hyper-inflation is on the horizon and hard assets will be the store of value.  In order to recover, the U.S. Dollar needs to decline in value.

Wealth destruction has been occurring in cycles for centuries.  Businessmen have made and lost fortunes.  Regions have suffered from depression-like cycles while others enjoyed expansion.  However this time looks to be different.  Nobody likes a personal economic compression (or depression).  Compression is valuable in that it functions to remove unproductive actions, ventures, assets, and thoughts.  During these times is when we find out that we are "void of GOD’S Word".  When times are good we tend to coast through life and become lax in our relationship with Our Heavenly Father.  It seems that there is no need to enter into our prayer closet and seek His Holy Face.

I was taken through the financial wilderness for 18 months from March ’95 to September ’96.  During that time I could not seem to generate revenue for my family.  Fear gripped my heart.  Each day I would spend at least one hour in prayer prior to beginning that day’s activities.  Peace would come as well as reassurance that HE was still on the Throne.  Some days I would weep, other days I would dance before the Throne, and some days I would just be still and wait for a Word.  What a roller coaster of emotion!  At the end of the 18 months, Our Heavenly Father gave me the revelation of The Feast of Tabernacles and its implications to my life.  After our darkest hour comes the morning light.

The prodigal son in Luke 15 parallels what is happening today:

Luke 15:13-17

13 "And not many days after, the younger son gathered all together, journeyed to a far country, and there wasted his possessions with prodigal living.

14 "But when he had spent all, there arose a severe famine in that land, and he began to be in want.

15 "Then he went and joined himself to a citizen of that country, and he sent him into his fields to feed swine.

16 "And he would gladly have filled his stomach with the pods that the swine ate, and no one gave him anything.

17 "But when he came to himself, he said, ‘How many of my father’s hired servants have bread enough and to spare, and I perish with hunger!

Prodigal living is functioning in a "wastefulness and riotous excess"; lawless, reckless, and extravagant expenditure, chiefly for the gratification of one’s sensual desires.  Doesn’t this reflect the American culture of the past three decades?  Didn’t Wall Street capitalize on this type of living by providing excessive credit to satisfy those wasteful, reckless, and extravagant expenditures?

Notice the compression cycle that occurred in verse 14.  Just as he was totally "strung out" (on leverage), the severe famine came and he began to be "in want".  His standard of living took a nose dive and became a servant to swine.  After he hit bottom, he came to his senses (or revelation) and knew that if he returned to his father, at least he could eat as well as the hired servants.  Upon his return, The Father rejoiced with a party and the son enjoyed a steak dinner.

The Global Leaders are attempting to sustain the party.  The amount of debt created over the last 30 years is unsustainable and some type of compression will take place.  In previous recessions, the Federal Reserve and other central banks used interest rates to stimulate the economy as well as fiscal spending programs.  With interest rates approaching zero, what worked in the past is not working now.  The Central Banks will do whatever is necessary to prevent a severe depression.  Compression is coming!  Hearing GOD’S Word will determine what we will be eating for dinner- pig slop or steak.

Eight new acronyms to remember:

• TARP: Troubled Asset Relief Program. This is the Treasury’s big $700 billion ($850B including pork) program that has been used to prop up financial institutions.
• TAF: Term Auction Facility (or TAFfy). Program by which the Fed auctions funds to financial institutions — allowing them to use their toxic assets for collateral.
• TALF: Term Asset-Backed Lending Facility (or "son of Taffy"). Recently announced Fed program designed to help the market for student, auto and other consumer loans.
• CPFF: Commercial Paper Funding Facility. Buys commercial paper directly from corporations.
• AMLF: Asset-Backed Money Fund Lending Facility. Fed program designed to buy short-term paper (including commercial paper) to prevent money market funds from "breaking the buck."
• TSLF: Term Securities Lending Facility. Fed program that lets banks swap bad mortgage and other debt from their books in exchange for Treasuries. 
• SLF: Special Lending Facilities. Originally designed to loan money to fund JPMorgan’s purchase of Bear Stearns in March. Also used to back AIG’s balance sheet to avoid total collapse.
• PDCF: Primary Dealer Credit Facility. This is the Fed program that allowed broker/dealers and other non-banks to tap the Fed’s discount window (back when there were independent broker/dealers).

At warp speed, legislators approved a $700 Billion bailout for Wall Street with the total now standing at $8.5 Trillion.  Wall Street Executives single handedly have wiped out trillions of dollars of wealth while receiving exorbitant bonuses in the process.  Hank Paulson was a recipient of some of this bonus money as well while at Goldman Sachs.  AIG has received over $100 Billion in spite of their luxurious getaway.  Major banks were handed billions of dollars even if they did not want it.

The U.S. automakers are asking for $35 Billion and are being burned at the stake.  I know there is much criticism of the U.S Big Three.  However, the market has voted with its dollars to keep these guys in business.  The Big Three simply gave the American people what they wanted- Hummers, luxury SUV’S, etc.  The U.S. Congress breezed through $8.5 Trillion for the banks with very little criticism.  The ratings agencies who were supposed to protect the global community from toxic investments have had no public hangings.  Yet for a request of 4/10ths of 1% (35/8500), the U.S. Automakers are being sliced and diced.

C’mon people! Let’s keep these things in perspective.  The blue collar worker will be the one to suffer if the automaker bailout does not come, not Wall Street.  Where is the support for Main Street when it really needs it?  Have you forgotten about all of those extravagant bonuses paid to all levels of Wall Street employees?  Do you think a line worker in a GM plant gets anything close?

The U.S. is the largest debtor nation in history.  Our leader flies on the most expensive corporate jet in existence, Air Force One.  It’s cost per mile to operate is unbelievable yet we do not want our leader taking a junket to China or the Middle East when we have our hand out for more of their wealth to support our debt or way of live, now do we?

This arrogance directed toward three CEO’s underlines the fundamental mess we are in.  Pride and ego have taken center stage.  Let’s find some whipping boys to take the heat while the real culprits are found on Wall Street, not Main Street.

"The U.S. credit-card industry may pull back well over $2 trillion of lines over the next 18 months due to risk aversion and regulatory changes, leading to sharp declines in consumer spending, prominent banking analyst Meredith Whitney said.

The credit card is the second key source of consumer liquidity, the first being jobs, the Oppenheimer & Co analyst noted.

"In other words, we expect available consumer liquidity in the form of credit-card lines to decline by 45 percent."

Bank of America Corp, Citigroup Inc, and JPMorgan Chase & Co represent over half of the estimated U.S. cards outstandingsas of September 30, and each company has discussed reducing card exposure or slowing growth, Whitney said.

Closing millions of accounts, cutting credit lines and raising interest rates are just some of the moves credit card issuers are using to try to inoculate themselves from a tsunami of expected consumer defaults."

See: http://biz.yahoo.com/rb/081201/business_us_finance_research_oppenheimer.html

The credit card crisis is running 18 months behind the mortgage crisis.  Those who have been on cash flow life support by using the credit cards will have the plug yanked out of the wall.  This will exacerbate the mortgage crisis as well as the dismal retail numbers being reported.  If the consumer represents 70% of the Gross Domestic Product (GDP), a 10% decline in consumer spending yields a 7% decline in GDP, and that is a serious problem.

In the 1930’s deflation was a major issue.  To fight deflation, Franklin Roosevelt’s took action which resulted in a 40 percent devaluation of the dollar against gold in 1933-34, enforced by a program of gold purchases and domestic money creation.  This action proved to be successful in dealing with the Great Depression.  Ben Bernanke is the expert on monetary policy of the Great Depression.  I expect the U.S. Dollar devaluation to begin sooner than later.

A $2 Trillion reduction in credit limits by the major credit card companies accompanied by an increase in credit card interest rates will place further drag on any recovery.  A forced cleansing cycle for the credit card abusers is ahead.

The underlying issue of the financial crisis is the handling of OTC derivatives.  Over-the-counter (OTC) derivatives are contracts that are traded (and privately negotiated) directly between two parties, without going through an exchange or other intermediary. Products such as swaps, forward rate agreements, and exotic options are almost always traded in this way. The OTC derivative market is the largest market for derivatives, and is unregulated. 

The financial community securitized every debt imaginable- mortgage loans, credit cards, car loans, student loans, etc.  The size of the problem is somewhere between 200 and 900+ trillion dollars depending on who you talk to.  There is no public market for these instruments and nobody is talking about creating one.   This financial crisis will not be solved without creating a financial market for these securities.

Why is there no financial market for OTC derivatives?  Those in power know that a "market" would cause ‘price discovery" to occur and then we would find out how worthless or near worthless these instruments were.  Once the cat is out of the bag, we would find many institutions to be insolvent.  So much for transparency.  The powers that be are just throwing good money after bad.  The longer it takes to come to a day of reckoning, the more severe the cleansing will be.  Those who profited from this OTC derivative scam are not innocent… and they know it!

Pro 28:20  A faithful man shall abound with blessings: but he that maketh haste to be rich shall not be innocent.

There continues a pattern of economic turmoil throughout the earth.  A multi-decade abuse of credit is heading toward the "day of reconciliation".  The books must be reconciled.  Man’s blind eye to the mess that Wall Street facilitated will have its consequences.  The blindness of mankind is nothing new.  The Pharisees in New Testament were blinded to the arrival of the Messiah.  Throughout history kings have used and abused power only to be replaced.  Mankind is reaching a crescendo in human history.  Knowledge is truly circling the earth via the Internet.  What happens in one country is immediately reported around the world.  The expansion of knowledge is not the solution to peace on earth.

Cycles are fundamental to living.  The earth has cycles, people have cycles, and economies have cycles.  Expansion and compression are simply a fact of life.  The Bible speaks of cycles in detail.  The lunar cycle determines the feast dates.  Our Heavenly Father established a 3 feast cycle: Passover, Pentecost, and Tabernacles.  Economic Theory has 4 cycles: expansion, contraction, compression, recovery.  These cycles are similar to the four seasons.

Everyone agrees that we are now in a "contraction" or recession and the only question will be how severe and how long.  Everyone is seeking an oracle to tell them what to do, where to go, and how to retain the wealth they have accumulated- real or perceived.  People crowd around Warren Buffett hoping to glean a piece of investment advise to make them rich.  Prosperity by association is nothing new.  Close associates to the Google founders are now millionaires.  This is also true for close associates in Microsoft’s early days.  Everyone cannot be financial millionaires but everyone can be wealthy.

There are plenty of resources to go around.  Potable water is in short supply and is thought to be next "big thing" in commodity investing in spite of the fact that 80% is covered with water.  Now there’s an irony!  We are in short supply of a resource that covers most of the earth!  The only issue is the salt.  There are desalination plants that provide fresh drinking water from salt water but they are expensive to operate due to the amount of energy they use to complete the process.

There is an abundant supply of free energy to fuel the energy need of the entire globe.  The only issue is extraction from its current state.

Mankind is moving toward the "compression" cycle in Economics, otherwise known as "Depression".  Compression is necessary to cleanse the system of its illusions.  An illusion of wealth from home equity caused American consumers to go on a buying binge over the last several years.  An illusion of wealth in the stock portfolio added to this excess consumption.  Corporate America accommodated this illusion.  This compression may be severe.  Will the system be fully cleansed of the excesses?  Will this be the time where mankind turns (repents) to Our Heavenly Father?

Revelation of free energy and potable water would change the world.  Our Heavenly Father has withheld those two revelations from man.  Why?  Mankind has sought wealth and power rather than the Face of God!  Mankind’s arrogance and defiance have placed us in this critical juncture.  In the Parable of the rich landowner, Jesus revealed the perverted focus of priorities that mankind suffers from.  His perceived value of wealth was great one day but became worthless to him within 24 hours.  Had he focused on the "wealth" or treasures in the Kingdom of God, he would not have been destitute at death.  Jesus provides us the key to wealth and prosperity.  The promise includes sustenance while living on earth:

Luke 12:16-34

Then He spoke a parable to them, saying: "The ground of a certain rich man yielded plentifully.

"And he thought within himself, saying, ‘What shall I do, since I have no room to store my crops?’

"So he said, ‘I will do this: I will pull down my barns and build greater, and there I will store all my crops and my goods.

‘And I will say to my soul, "Soul, you have many goods laid up for many years; take your ease; eat, drink, and be merry."’

"But God said to him, ‘Fool! This night your soul will be required of you; then whose will those things be which you have provided?’

"So is he who lays up treasure for himself, and is not rich toward God."

Then He said to His disciples, "Therefore I say to you, do not worry about your life, what you will eat; nor about the body, what you will put on.

"Life is more than food, and the body is more than clothing.

"Consider the ravens, for they neither sow nor reap, which have neither storehouse nor barn; and God feeds them. Of how much more value are you than the birds?

"And which of you by worrying can add one cubit to his stature?

"If you then are not able to do the least, why are you anxious for the rest?

"Consider the lilies, how they grow: they neither toil nor spin; and yet I say to you, even Solomon in all his glory was not arrayed like one of these.

"If then God so clothes the grass, which today is in the field and tomorrow is thrown into the oven, how much more will He clothe you, O you of little faith?

"And do not seek what you should eat or what you should drink, nor have an anxious mind.

"For all these things the nations of the world seek after, and your Father knows that you need these things.

"But seek the kingdom of God, and all these things shall be added to you.

"Do not fear, little flock, for it is your Father’s good pleasure to give you the kingdom.

"Sell what you have and give alms; provide yourselves money bags which do not grow old, a treasure in the heavens that does not fail, where no thief approaches nor moth destroys.

"For where your treasure is, there your heart will be also.

There is a wealth that is locked up in the Kingdom of God waiting to be release to mankind.  There is a corporate need to repent or turn away from the current direction of force based economics.  This form of economics thrives on scarcity and a quest for power.  Attraction based economics thrives on Love.  Men were attracted or drawn to Jesus, similar to a magnetic pull.  The earth is held in orbit by magnetism, not force.  Love serves and attracts.  Lust takes by force.  The Key of David is Love for David was a man after GOD’S own heart.  For mankind to be transformed, Love must and will take center stage.  The doors of revelation and mysteries will open with this key.

During the Christmas season, people proclaim "Peace on Earth".  The only way you can have peace on earth is for Love to arrive first.  There will be no lasting peace until Love is the primary motivator of men, not lust.

U.S Treasury Bonds maturing in 3 months have a yield of .01%, effectively 0% interest.  The U.S. Government needs to raise trillions of dollars but the cost of borrowing is nearly zero… for now.  The Bond Market is being duped.  The market perceives the environment to be deflationary and that perception will cost them much wealth in the near term.  The monetary system is creating trillions of new money which is true inflation.  There is always a lag of inflationary prices after the monetary system is stimulated so you should expect hyper-inflationary prices to arrive soon.

How can I come to that conclusion with commodity prices is such decline?  There has been a 25 year cycle of leveraging that is in full reversal.  This reversal is on display in the COMEX (Commodity Exchange) market.  At the beginning of this year there were 593,953 gold contracts outstanding.  A gold contract represents 100 troy ounces of gold, currently worth about $80,000.  As of the end of the current reporting period, there are 289,700 contracts outstanding.  This is a classic case of de-leveraging out of an investment.  Speculators have closed out their short positions in gold with gold up $145 since these contract levels were last seen.  Gold is now poised to resume its upward momentum.

This 0% interest rate policy severely hurting the savers.  Retirees are being sliced and diced with the pathetic rates being offered by the banks.  Each day wealth is being transferred from the savers to the black hole of the financial system.  Clearly, the Federal Reserve is not the friend of those individuals that "did the right thing" in their lifelong financial planning.  Wealth destruction is in full force now and there seems to be no end in sight.

The challenge individuals face is the protection of wealth accumulated over a lifetime.  Inflation eats away at wealth.  In the past, interest rates generally exceeded the true inflation rate.  They were somewhat linked together and you could be assured that your wealth was protected if you placed your money in a bank and received interest.  Since WWII, this assumption was valid in the U.S.  Now we have a deterioration of the monetary system and the financial institutions are on life support.  The local community banks are functioning fine for now.  The major banks continue to reveal their poor management of assets and are placing the nation in a highly exposed position.  Where can one place his assets where they are protected and retain their value?

Mat 6:19-20  "Do not lay up for yourselves treasures on earth, where moth and rust destroy and where thieves break in and steal;

"but lay up for yourselves treasures in heaven, where neither moth nor rust destroys and where thieves do not break in and steal.

It appears that we are moving into perilous times.  The financial assumptions we have based our everyday lives on are being dismantled before our very eyes.  Very few of us have experienced this before.  People from other countries have lived through major upheavals but Americans have been buffered from those financial catastrophes.  The U.S. has been the beacon of hope for others around the world.  GOD’S protection stood as a testimony to other countries who were envious of the American Dream.  This Dream was replaced by arrogance.  The humility of being under GOD’S grace has been forgotten by most.

Are you rich toward GOD or have you attempted to lay up a treasure for yourself?  The following parable speaks to the problem faced by Wall Street and those who relied on Wall Street’s wisdom:

Luke 12:16-34

Then He spoke a parable to them, saying: "The ground of a certain rich man yielded plentifully.

"And he thought within himself, saying, ‘What shall I do, since I have no room to store my crops?’

"So he said, ‘I will do this: I will pull down my barns and build greater, and there I will store all my crops and my goods.

‘And I will say to my soul, "Soul, you have many goods laid up for many years; take your ease; eat, drink, and be merry."’

"But God said to him, ‘Fool! This night your soul will be required of you; then whose will those things be which you have provided?’

"So is he who lays up treasure for himself, and is not rich toward God."

Then He said to His disciples, "Therefore I say to you, do not worry about your life, what you will eat; nor about the body, what you will put on.

"Life is more than food, and the body is more than clothing.

"Consider the ravens, for they neither sow nor reap, which have neither storehouse nor barn; and God feeds them. Of how much more value are you than the birds?

"And which of you by worrying can add one cubit to his stature?

"If you then are not able to do the least, why are you anxious for the rest?

"Consider the lilies, how they grow: they neither toil nor spin; and yet I say to you, even Solomon in all his glory was not arrayed like one of these.

"If then God so clothes the grass, which today is in the field and tomorrow is thrown into the oven, how much more will He clothe you, O you of little faith?

"And do not seek what you should eat or what you should drink, nor have an anxious mind.

"For all these things the nations of the world seek after, and your Father knows that you need these things.

"But seek the kingdom of God, and all these things[fn3] shall be added to you.

"Do not fear, little flock, for it is your Father’s good pleasure to give you the kingdom.

"Sell what you have and give alms; provide yourselves money bags which do not grow old, a treasure in the heavens that does not fail, where no thief approaches nor moth destroys.

"For where your treasure is, there your heart will be also.