Servias Ministries Blog

Recently a friend of mine went to a wedding where he saw an old friend who works in a major bank.  The friend has been with the bank for over thirty years and handles investments for the more conservative customers of the bank.  These customers’ goals include capital preservation with a modest return on investment… simple and without risk.  This used to be a no-brainer job.  5% CD’s and high quality bonds with a few blue chip dividend paying stocks would be the standard answer.  Today the investing environment is different.  She stated that she hated to go to work.  She was tired of clients calling her up asking her advise in what to invest in.  She had no idea!  CD’s pay nothing, bonds pay nothing and have an inherent risk of loss if interest rates rise (and they will), and blue chip stocks are subject to a precipitous drop in the economy.  She claims that the problem is “The Economy is built on a lie”.

What I find interesting is that banks invest peoples’ money by committee.  This is to protect the bank from a rogue officer exposing the bank to unnecessary litigation by unhappy customers.  The bank choses the conservative approach thus when this bank officer makes a statement of this nature, you can be sure that this reflects the committee’s view.  The chief economist of the bank generally provides a monthly or quarterly direction of the economy to position the bank to either be in an expansion mode or a defensive posture to minimize risks.  Clearly, banks are in the defensive posture and this lady’s remark confirms it.

The private sector is shrinking and the government sector is taking up the slack but adds sovereign debt which in turn exacerbates the problem even further.  The economic fundamentals have changed and the multi-decade assumptions are no longer valid.  Retiree pensions are at risk and those people who worked 30 and 40 years with one entity are now faced with uncertainty of their future.  How  many greeters does Walmart need?  See: http://articles.cnn.com/2011-07-21/us/rhode.island.pensioners_1_retirees-pensions-social-security-benefits?_s=PM:US

The President and Congress are arguing about the debt ceiling as of this writing.  The same group of people who created the problem are now trying to come up with a solution.  When a lie is initiated, another lie must be created to cover the first lie, and so on.  Before long, the liar has lied so often that he begins believing his own lie and lives a life of illusion.  Often, the only solution is to crash and burn, become bankrupt, hit rock bottom.  We have seen several examples of politicians telling lies then later acting as though they never did.  Media archives are full of examples.  It is sad but true that the American public no longer requires the truth to be told.  Just give them 150 cable channels, a six-pack of beer and they are happy.  The truth has been diluted down to the point where lies are used to sway public opinion without any repercussion in the short run.  The government reflects the heart of the people.

The Day of Reconciliation appears to be around the corner.  Our Heavenly Father will “reconcile” the books and evoke righteous judgment on the land.  Men and women will cry out and ask “Why?”  They will be reminded of their past actions (or lack of) and they will suffer through the judgment necessary to cleanse the land of unrighteousness.  Truth will sweep away the refuge of lies!

The above Bloomberg.com graph shows a high correlation of gold to the U.S. debt.  I expect gold to overtake the U.S. debt once the public figures out that we are approaching a tipping point where we cannot pay back the debt without hyper-inflating the U.S. Dollar in order to pay back with cheaper dollars.  Our creditors will not like the devaluation.  We cannot tax our way out.  The free ride is just about over.  With the U.S. being 25% of the world’s economy, many countries have a vested interest in keeping the game afloat.  What a mess!  LORD help us.

Grief is the emotional suffering we feel after a loss of some kind.  This can be a loss of a loved one, a job, or even a belief system.  The Middle East young people were fed a belief that their current political system would work for them and allow them to be productive and experience opportunity.  That is not the case thus unrest has swept the region facilitated by the Internet and wireless communications.  In the past, isolation has been the best weapon for governments to keep the masses in line.  If you can’t confirm a problem, it remains a suspicion and you are less likely to act.  However, once a confirmation arrives, you are now energized to take action.  Tunisia was the confirmation for the Egyptian masses and thus we saw a “tipping point” occur.  If the people of a nation are being treated properly and allowed to pursue economic benefit, peace spreads.  Otherwise, change will ultimate occur.  Holding people in bondage, once realized, forces the people to respond in kind.

Five Stages Of Grief

Denial and Isolation.
At first, we tend to deny the loss has taken place, and may withdraw from our usual social contacts. This stage may last a few moments, or longer.
Anger.
The grieving person may then be furious at the person who inflicted the hurt (even if she’s dead), or at the world, for letting it happen. He may be angry with himself for letting the event take place, even if, realistically, nothing could have stopped it.
Bargaining.
Now the grieving person may make bargains with God, asking, "If I do this, will you take away the loss?"
Depression.
The person feels numb, although anger and sadness may remain underneath.
Acceptance.
This is when the anger, sadness and mourning have tapered off. The person simply accepts the reality of the loss

The above steps apply to economic loss.

Government has become a big spender over the last eleven years.  It takes $6 of debt to create $1 of Gross Domestic Product (GDP) in the U.S.  The government has increased in size whereas the private sector has shrunk and has in turn provided less tax revenue.  Tax revenue has dropped from 18% of GDP to 14.7%.  These lower tax revenues are causing politicians to focus on tax hikes.  They are missing the point, America needs jobs in the private sector.  History has shown that tax increases reduce jobs further. 

Although this website is apolitical, it is important that we show the illusions that mankind is living under.  Our Heavenly Father will judge nations based on righteousness and we must not continue living in denial of the fallacies that are causing us to drive over an economic cliff.  The following youtube presentation provides a view of the fallacy of taking all the money of the rich to solve our economic woes:

We do not endorse the Bill Whittle channel but his presentation brings home the point of the magnitude of America’s debt/spending crisis.  Soon, Americans will be getting angry as they move through the stages of grief due to the loss of the American Dream.  The assumptions of owning a house, two cars in the driveway, and perpetual prosperity are coming to an end for many.  The debt monster is looming and the day of reconciliation is coming.  It will not be pretty!

There has been much reporting about the debt ceiling debate, political positioning, and alternatives.  However, the official debt ceiling is not the issue.  The “unofficial” debt is the issue.  Medicare, Medicaid, and Social Security unfunded liabilities require an additional $20 Trillion over the next decade as they are currently defined.  Raising the borrowing capability of an addict to buy more drugs does not rehabilitate the addict.

When have politicians kept their word ten years out in the future?  Kicking the can down the road has been the standard operating procedure for decades, specifically since 1971 when the gold disconnect began.  The U.S. keeps the war machine in place for “national security” purposes.  Meanwhile, China acquires hard assets around the world to support future growth and economic strength.  Time is ticking away for the transfer of power to be complete.  China’s problem is they have too many people to manage, a diseconomy of scale.  Larger populations generate complexities that consume productive resources and can ultimately crash an economy.

A new wave of internet companies will create a bubble similar to the 1990’s tech bubble.  Unbelievable valuations are coming out of Silicon Valley once again.  Social networking companies are converting to public companies creating millionaires once again.  The insatiable appetite for information rather than revelation is fueling this surge.  “If I can just get more connected, life will be better” is the chant across the country.  If that were true, University professors would be running the world.  The mindset of economics continues to disconnect from reality.  Moving from tangible value to intangible value prevails.  Our service economy will implode sooner rather than later.  When things get tough, services are the first thing we cut.  Heck, I can mow my own lawn and fertilize it if need be.

Perilous times are ahead.  Revelation, not information, is needed.  We must seek Our Heavenly Father and open our ears of understanding if we are to minimize the pain coming our way.  We don’t need more debt, we need less “stuff”.

I recently returned from my annual trek to the beach at the Alabama/Florida border.  It provides me with a “boots on the ground” view of the economy.  I-10 was busy on the July 4th weekend as usual.  On the other hand, the beach traffic thinned out dramatically by Wednesday, a sign of the economic times.  Wait times at restaurants were lighter than 2008-2009.  Last year the BP oil spill caused us to change destinations.  We did experience some minor oil splotches while in the water but were easily removed with my wife’s survival kit.  People are cutting their vacation costs in half and are eating out less.

It is clear that the economy is still suffering and the For Sale signs along the coast are plentiful.  Those who bought 2nd homes on the gulf coast are now trying to unload them.  The good times of vacation rentals may be near an end.  New condo construction is way off, only 1 currently being built in the area.  Foreclosures are being advertised on the banners following the airplanes that fly past us while on the beach.  What encouragement!

Treasury Secretary Timothy Geithner is now voicing what we already know, tough times are ahead for many: http://news.yahoo.com/geithner-says-hard-times-continue-many-150523958.html 

Since his buddies, the investment bankers, were complicit in the meltdown, I am surprised that he is being called on as a point man to describe the current conditions.  As millions of Americans are expected to be saddled with the unbelievable debt that was racked up in part by following the paradigm of the high leverage era, the CEO’s of the investment banks took bonuses that would even make Bernie Madoff look like an altar boy.

We continue to move toward the cliff at breakneck speed as the average American focuses on the Casey Anthony trial in Orlando that has little to do with the future of America.  Gold is moving toward my initial $1,600 target as Ben Bernanke tried to surprise everyone with his next quantitative easing #3 (QE3).  Why don’t we call it Patriotic Printing 1 (PP1) so we can salute each time we hear about it?  It looks to be getting nastier out there while the loudspeaker in the local grocery store blares out: “Poop clean up needed on aisle four”.