6 June, 2011
The U.S. Economy Shows Signs of Stalling
There are growing indications that the U.S. economy is headed back towards negative growth. The recovery that economists claim we've been having over the past several months has been mild at best. The unemployment rate went from a high of over 10 percent to just under 9 percent. We still have 16 million Americans out of work, and nearly 25 percent of the workforce is underemployed.
Several key financial indicators are pointing to a slowdown. Here are a few:
In April, the economy created only 54,000 new jobs.
The unemployment rate climbed to 9.1 percent.
Factory orders fell 1.2% in April, most since May 2010.
GDP growth has declined to 1.8 percent.
You can't have a recovery in the general economy without the participation of the housing market. Real estate saw modest improvement, thanks to a tax credit program that has now expired. In the last few months, home prices have collapsed. The average selling price of a home is now below the levels seen during the 2008 subprime meltdown. The decline has even surpassed the decline seen during the Great Depression.
President Obama tried to put a positive spin on the latest woes, telling auto workers at an Ohio plant that it would take a while for the economy to mend.
"There are still some headwinds that are coming at us. Lately it's been high gas prices, then you have the economic disruptions following the tragedy in Japan," Obama said. "There are always going to be bumps on the road to recovery. We are going to pass though some rough terrain."
The problem with the American economy is driven by longer-term issues. The national debt is now over $14.4 trillion, and is within a couple of percentage points of equaling our Gross National Product. We already have a $1.5 deficit projected for fiscal year 2011. If the economy stalls, the deficit will soar over the $2 trillion mark.
The rating agencies that track the creditworthiness of our debt are starting to see the reality behind the numbers. Last week, Moody's warned that it might have to cut the United States' coveted top-notch credit rating if the White House and Congress do not make progress by mid-July in talks to raise the debt limit.
Another huge danger is the solvency of banks. As the value of real estate drops, so does the value of the balance sheets of banks that hold those mortgages. The big money center banks were already insolvent when we went into this mess. Congress changed the accounting rules to allow banks to keep the original loan value on their books.
At some point, the drop in housing prices will trigger a meltdown. The Bank of America has $2.4 trillion in mortgages. If the market value drops by 5 percent, the potential loss for the Bank of America is $120 billion. The firm only has a stock value of $114 billion. If millions of people start to walk away from their mortgages, the too-big-to-fail banks will need trillions of dollars to stay afloat.
At the end of this month, the Federal Reserve will conclude its program to buy $600 billion in bonds from the U.S. Treasury. Since the Fed has been buying 70 percent of our debt at the weekly auctions, it's not clear who will step up to take its place.
The Chinese have already said they are not interested in raising their holdings of U.S. debt. China has just sold 97 percent of its holdings in our Treasury bills--which are securities that mature in one year or less. All their holdings are now in longer-rate bonds that demand a higher interest rate.
There is no way we can survive a return to recession. The Federal Reserve has already printed $3 trillion to keep us afloat, and we simply don’t have enough credit to fund round two. We’re now at the point where the dollar and the bond market could collapse at any moment.
I am amazed at how long our financial system has held together. There are so many fuses all leading to the same pile of dynamite, you would think that one of them would have been triggered by now. I think the guiding hand of God is the only explanation for why the system has survived.
This whole scenario reminds me of a documentary I saw about the bombing of Hiroshima. Months before the deployment of the "little boy" device, the city was excluded from any bombing campaigns. The residents of Hiroshima thought it was odd that Allied bombers never targeted their city, which had major industrial and military operations. After August 6, 1945, it was instantly obvious that the city had been spared to measure the damage caused by the first military use of an atomic bomb.
The fact that we've managed to avoid a depression for three years now seems to indicate that God may be planning to drop a financial bomb on this sinful world. The Rapture may be what triggers the financial meltdown. We will soon find out.
“I must work the works of him that sent me, while it is day: the night cometh, when no man can work” (John 9:4).
End-Times Violence in View
Memorial Day 2011, the holiday this year to remember those who have died fighting to keep American liberty alive, turned violent across the nation, the youthful, lawless bands making a mockery of our free society. In so doing, yet another prophetic signal of the end of the age crawled to the forefront of our headlines.
A few of the episodes of evil assaulting law and order comes from one report. The event known as "Urban Weekend" spawned many such displays of lawlessness. In Miami, even one gay organization head called for a restoration of civility.
[Herb] Sosa, president of Unity Coalition, Miami-Dade County's leading Hispanic gay-rights group, said he's concerned some people have called him racist, after he demanded an end to Urban Weekend.
"It has nothing to do with racism," said Sosa, who lives near 9th Street in South Beach. "It's a lack of respect for the city they're visiting. It's as simple as that. This morning, there were six cars parked on my block with their mirrors ripped off, their antennas ripped off." (Drudge Report, 5/31/11)
Reports of violent gang activity and intrusions into private Memorial Day gatherings caused anger among Miami residents. Sosa was but one who let his ire be known to the mayor.
Far to the north, the violence was even more pronounced.
Fights broke out among rival gang members on Carson Beach in South Boston yesterday and spilled out across the city, triggering a massive law enforcement response from at least five agencies to stem the violence.
Police said the gang members are part of a group of more than 1,000 youths who have used social media sites like Facebook to plan unruly gatherings on the beach on three of the past four nights.
The groups have been larger and rowdier than even veteran South Boston troopers remember.
"Veteran troopers assigned to the State Police barracks for a couple of decades have never seen as large a volume of kids that were there tonight," [a police spokesman] said. (Drudge Report, 5/31/11)
While fights started spontaneously over the city of Boston, requiring that mob-control law enforcement get involved en masse, things in Charlotte, North Carolina, exploded in violence as well. A Memorial Day-related festival turned into the rage of youthful gangs in that city, and one man reported:
“There were two female traffic officers and one male officer, and they were, like, taking cover because they didn't know what was going on," [Andy] David says. David says he was running with a crowd, "and then we looked to our right, and there was a guy just laying there and blood was pouring from him."
One man died, another was injured, and it all led to one of the city's largest mass arrests. (Drudge Report, 5/31/11)
These outbreaks were not isolated to Miami, Boston, and Charlotte. Similar acts of rage in the streets spanned the country over the holiday period. The availability of Internet is pointed to as helping those responsible for organizing the violence.
Like with the "days of rage" we hear about that are planned for the Middle East, and the many violent displays in Europe exploding over economic turmoil, America is beginning to reap the violence of refusal to discipline ourselves in every way discipline should have for decades been applied. This neglect now means the chickens are coming home to roost, as President Obama’s America-hating former pastor, Jeremiah Wright, said of our nation deserving being attacked on September 11, 2001.
And, no, I’m not agreeing with Wright that America deserves such attacks. I’m simply trying to point out that our failure to tend properly to matters of morality, law, and order now is causing the nation to inherit the whirlwind of consequences. For example, the violent intrusions from across our borders to the south, with American ranchers, border patrol officers, and illegal aliens trying to find a better life for themselves are being butchered by the drug cartel thugs, because the U.S. Constitution about governing immigration has been ignored by this administration.
This neglect is particularly manifest within the nation’s youth gangs. The dumbing-down in education of the black and Hispanic--and, yes, the dumbing-down of Caucasian youths, too--and the ever-expanding welfare rolls destroy incentive to improve the individual. Lawmakers making every effort in 1963 to kick the God of heaven out of America’s public classrooms lies at the heart of the tragedy.
We have written on many occasions that the perilous times Paul the apostle warned about are upon this fallen world. He wrote in prophetic terms that people in the days just before Christ returns will be "fierce." Jesus Himself foretold that it would be in that day "as it was in the days of Noah."
Violence filled the whole earth in the days before the Flood of Noah’s time. Daniel the prophet said the end would be with a flood. Violence is surely an ever more observable part of that end-times tsunami about to swallow this generation.