Wilfred Hahn

A Good Crisis Wasted :: by Wilfred Hahn

Published on: by RR2

The spring robins are out and warbling. Around the world, policymakers and politicians are congratulating themselves on a crisis well averted.

Last month, US Treasury Secretary Timothy Geithner was already prattling: “[…] major policy intervention (including Emergency Economy Stabilization Act — EESA) was, in the end, successful in achieving the vital but narrow objective of preventing a systemic financial meltdown.”1 “We continue to expect economic activity to bottom out, then to turn up later this year;” opined Ben Bernanke of the Federal Reserve.2 He is also forecasting that the worst is behind. Internationally, the same sentiment prevailed. “We are, as far as growth is concerned, around the inflection point in the cycle.” said Jean-Claude Trichet, President of the European Central Bank. 3

For good measure, President Obama, too, is constructive recently saying, “When you look at the economy right now, I think it’s safe to say we have stepped back from the brink, that there is some calm that didn’t exist before.” (Reuters, May 26, 2009) This is the same Obama that has also been telling China that their investments in the US treasury bonds are safe. Another fact to remember is that none of the above-quoted soothers, saw the crisis coming in the first place..

All of this newfound euphoria should have been well anticipated, though the short-timing of such swings are hazardous at best. Stock markets around the world have soared massively from their early March lows … some emerging markets and oil prices nearly doubling from their lows. The question that begs now: Is it a false dawn or the start of a long-term recovery?

There are a few problems with the rosy perspective now being adopted. For one, it doesn’t fully align with economic and financial realities over the longer-term, nor the cosmological timeline.

Crisis Wasted

If the Global Financial Crisis (GFC) is really already receding into history, the humanists and global reconstructionists will have wasted a good crisis … in fact, one of the biggest in almost a century. According to the Rahm Doctrine (named after Emanuel Rahm, the profane Chief of Staff of the Obama Administration who was  quoted as saying “Never let a good crisis to waste”) it is times of crisis that can be counted on to break inertia and force irreversible change. In this view, if the GFC is indeed over, then it has been an unsuccessful one.

There has been a lot of talk about reforming regulations, new global initiatives and so on. However, to date none of it has yet been enacted as new policy. Without a continuing crisis, these proposed changes will likely be abandoned just as occurred following the Asian Crisis of 1997-1999. Early financial recoveries quickly dissipated the sincerity of previous commitments.

There is little chance that the ramifications of the GFC are over. As mentioned, the real question centers now on the prospects for false dawns … how many, whether long or short … etc. Through all of these highs and lows — no matter yet how grim or euphoric — we still maintain that the financial system will not be allowed to collapse. Taking a prophetic perspective, we can know that the future 10-king alliance and Antichrist will not be able to effectively rule nor establish their prophesied financial interventions without the benefit of such a system.

Actually, the very essence of this argument is on clear display right now. This is the very card that financial executives are playing to extract billions and trillions from the pockets of ordinary citizens. Effectively, they are saying this: “You can’t recover without us. If you don’t rescue the financial industry first, there is no future.” This has been the winning slogan of all the lobbyists crawling aroundWashington D.C. during the past 18 months.

The Extent of False Dawns

All major crises have false dawns … at least one or more. Whatever the nature of the “false dawns” that are yet to be expected, we can say without reservation that the GFC and its implications for the Western world, specifically America, are far from over. To quote, Ronald Reagan, “You ain’t seen nothing yet.”

That is the easiest of conclusions to draw. The most difficult answer concerns queries about the nature and specific manifestation of the next stages of the GFC’s fall-out. There is more than one scenario to consider. I wish I could provide an answer that had 100% certainty. However, given the complexity of the many global crosscurrents, the wild-card policy actions, massive wealth skews, fear and greed … etc., it simply is not possible.

Of two things you can be sure: There is a massive amount of capital that is likewise waiting for a sure answer. Whichever way it sloshes, there are bound to big waves and troughs. Lately, there has emerged a wave of money from the bunkers, which is now running scared that it may be missing out on potential gains. The time for that strategy is already probably near over … and too late for now. But then again, desperate times can lead to desperate actions.

The other certainty is that the vast majority of people (ordinary households, in other words) will continue to be caught unawares and bewildered. The average citizen is being herded from one disaster to another. It reminds of the Bible prophecy to Israel describing the experience of the future “day of the Lord.” “It will be as though a man fled from a lion only to meet a bear, as though he entered his house and rested his hand on the wall only to have a snake bite him.” (Amos 5:19)

An aspect of this is playing out right now. No sooner do people think that they are safely invested in government bonds, than these bite them in the hand. (Bond markets literally melted down in recent weeks.) No sooner have they fled from the bear of falling stock markets, a lion is chasing manic people back in.

Can we at least try to get a better fix on the future? Consider this perspective excerpted from our upcoming book, Global Financial Apocalypse Prophesied: Preserving True Riches in an Age of Deception and Trouble.

“What will happen next? Will there be another bubble? Can there be a sustainable economic recovery? The correct answers here are related to two other questions that we must first ask. They will confirm the likely prognosis.

Firstly, will policymakers choose to continue to try to outrun consequences of past mistakes or will they face up to them? The answer is eminently clear by now. Governments and central banks around the world have chosen to try escape the results of past folly. In so doing, they are now setting up the conditions for a much greater economic collapse in the future. However, this need not necessarily happen right away. First, a major recovery period may occur — at least in some parts of the world — before this eventuality again looms.

To date, many countries are aggressively raising national debt levels by boosting government spending and bailing out various industries, above all companies in the financial sector. For example, Britain, itself home to the second largest financial center in the world, has now breeched government debt levels greater than 100% of GDP (annual gross domestic product of the economy) and is risking a downgrading of its credit rating. Incredibly, this former world empire has finally come to this shameful point. It is now recklessly pursuing inflationary monetary policies.

The U.S. government at the time of this writing had already committed to over $12 trillion in expenditures, bail-outs and contingent guarantees in its effort to forestall further financial collapse. This is an almost unfathomably large amount, equating to almost $40,000 for every man, woman and child in America. According to estimates, this is 10 times the intervention of any other post-war recession period. Such policy responses can surely not lead to sustainable prosperity. It leads to even higher debt … ever higher burdens for future generations.

Without a doubt, policymakers — both in America and around the world — are choosing to outrun their problems with monetary manipulation. That must lead us to conclude that any economic and financial recoveries must be considered temporary and will certainly not be sustainable. The options chosen are monetary manipulation, deception and cronyism. It will lead to even greater impoverishment forAmerica and certain other nations relative to the rest of the world.”

This overview clearly alerts readers to future realities. Let’s next discuss a current issue that continues to act as “ball & chain” to North American households and starkly illustrates the trap into which much of the middle class… indeed the entire nation … has fallen.

Deep Destruction and Desperation

The biggest “cement shoes” for the financial system and a factor that still suppresses economic growth these years later, is sinking real estate values. This remains the primary real asset that collaterizes the asset side of the balance sheet for the entire financial system. Residential and commercial real estate values continue to fall. That means that the balance sheets of financial institutions will continue to be under pressure. If house prices do not soon stop falling, you can be sure that there will be another round of government bail-outs.

The S&P/Case-Shiller U.S. National Home Price Index – which covers all nine U.S. census divisions – recorded a 19.1% decline in the 1st quarter of 2009 versus the 1st quarter of 2008, the largest decline in the series 21-year history. (See graph below.) To date, from its recorded peak level of July 2006, the median house price has declined 32%. Futures markets as well as some forecasters anticipate further housing price declines (for a total of 40% to 50% and more from the previous high).

It goes without saying that this is a disastrous slump, having represented “ground zero” of the GFC from the beginning. It is already over 5 years ago that we wrote our first warning of an impending real estate bust and its potential impact upon America (and Israel) (A Warning That Hits Home – May 2004). Whether or not real estate values fall further, the true reality of this disaster to date is not yet fully acknowledged. A quick review of the facts reveals a possibly mortal blow to America … to its very core foundation, the family and home.A record 12% of homeowners with a mortgage are behind on their payments or in foreclosure as the housing crisis now spreads to prime mortgage borrowers. According to the Mortgage Bankers Association (who, by the way, have no incentive to exaggerate this statistic) do not expect this wave to crest until the end of next year, nearer 15% of all mortgages. (2/3 of all homeowners have a mortgage.)

These statistics, stunning as they are, still do not provide a sense of true scope of the crushing reality of falling real estate prices. Consider these facts: Residential mortgages total $10.6 trillion in the U.S.The total value of all homes peaked at $21.7 trillion in 2006, and has now fallen to an estimated level of $15 trillion. To illustrate, should house prices fall further as some expect, overall housing value will sink further … say to $12-$13 trillion. That would mean that the average home equity portion would fall to 12% – 18% (the other 88% to 82% being debt). This the implications of such a situation would likely be so disastrous, no wonder many commentators use apocalyptic language describing it.

But, even this is not yet the worst of it. Remember that one-third of all households do not have a mortgage. That implies in this scenario that the average home with a mortgage would be worth only 75% of the mortgage outstanding! As long as housing prices continue to deflate, the financial system is not yet in the clear by a country mile. Of course, policymakers are aware of this scenario and are desperately wanting to engineer an upside trend.

However, we still have yet to broach the worst situation of all. A study by the Center for Economic Policy Research surveyed the wealth effect of the GFC for older American households.4 It included the effects of the declines in real estate values as well as financial markets to the end of 2008. The results are chilling as they reveal the potential for severe desperation.

Many people between the ages of 45 and 64 have not yet paid off their houses. In fact, though perhaps owning their residences for more than two decades, a large number of households do not have positive net equity in their homes. Imagine: “Nearly 30% of the households headed by someone between the ages of 45 and 54 will need to bring money to their closing (to cover their mortgage and transactions costs) if they were to sell their home. Technically, they have negative equity in their home. For people between the ages of 55 and 64 the percentage is 15%.” The authors of this report state that the median household between the ages of 55 and 64 experienced a drop in wealth of 50% since 2004.

Consider that these estimates do not include the effects of price declines in real estate and financial assets since the end of 2008. Quoting further from the study, “The baby boom generation for the most part has insufficient time remaining before retirement to accumulate substantial savings. Therefore, they will be largely dependent on social insurance programs to support them in retirement.”

The most worrisome aspect of the massive declines in household net worth is that it has impacted the middle class disproportionately and comes at a time that many baby boomers are approaching retirement years. As such, the disaster that has befallen American households couldn’t have come at a worse moment domestically.  Also geopolitically.

A Demographic Bomb On Top

Viewing the high debt levels in America and other nations, some people may well ask: “Debt levels have been high before in America’s history, and yet in these instances the nation has recovered to even higher levels of prosperity. Can’t this happen again?”

No, this is not likely this time. High debt levels indeed occurred in the early 1930s and then again in the late 1940s. However, the prognosis in these cases was entirely different, as the causality was not the same. The 1940’s debt obligations were the result of a world war. As such, it was government debt that soared (to over 100% of GDP), in turn driving real spending in the production economy. This was then followed by a post-war population boom, helping to boost economic growth.

In a very short period of time, government debt levels fell to low levels as new households saved, raised families, paid their houses off and invested. Household debt throughout this entire period remained relatively low.

In the early 1930s, high debt-to-GDP levels also occurred. However, at the start, the main cause of this rise was not government debt, but rather in the private sector (businesses and households). Then as the economy collapsed in the 1930s, government debt soared. Here the denominator (the economy) shrunk as debt continued to rise after the onset of economic crisis. To think that today’s debt levels in the U.S. are far higher than at any other time, already even before an economic depression, is a sobering realization.  And now, we have slowing population growth and a “baby boom” cohort that will soon retire.

There can be no doubt: The legacy of the current GFC will be radically higher government debt levels. As mentioned, non-financial debt-to-GDP was already at an all-time high before the crisis period began. Indeed, this itself was an important enabler and catalyst to the crisis in the first place. But as the choice has been to outrun problems, the U.S. government is now plunging into even more debt. It would not be an outrageous forecast that U.S. government debt will triple relative to GDP over the next 7 years to 10 years.

Quoting Frederich Hayek, a well-known Austrian School economist, “[…] to combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection — a procedure which can only lead to a much more severe crisis as soon as the credit expansion comes to an end.” 5

In a desperate attempt to restart the previous asset price manias, to again inflate up stock markets and real estate so to forestall the devastation of the net worth suffered by the average middle-class family, the solution is more debt. It is a response similar to that of a drug addict. Progressively, an addict requires ever increasing doses to maintain a similar level of euphoria, until finally the veins do collapse.

While globalists might think the current crisis wasted, this need not be true for Christians. We should not abandon the chastenings of the GFC so quickly. Our riches are elsewhere.

Notes:

1. Timothy F. Geithner, U.S. Secretary of the Treasury. Statement to the Senate Banking Committee, May 20, 2009.

2. Chairman Ben S. Bernanke, The economic outlook:Testimony Before the Joint Economic Committee, U.S. Congress, Washington, D.C., May 5, 2009.
3. Jean-Claude Trichet, President of the European Central Bank, Wall Street Journal, May 11, 2009.

4. David Rosnick and Dean Baker, The Wealth of the Baby Boom Cohorts After the Collapse of the Housing Bubble, Center of Economic and Policy Research (CEPR), February 2009.

5. Friedrich Hayek, “Monetary Theory and the Trade Cycle”, London,1933.

Christian Prosperity Crisis :: by Wilfred Hahn

Published on: by RR2

Researchers point out that one of the main differences between the U.S. financial crash and others — for example, that of Japan in the 1990s — was that it was households (individuals and families) that became heavily overindebted. This was not the case in Japan, nor the Asian crisis of the late 1990s, nor those in Scandinavia in the early 1990s. There, it was more the actions of companies and governments that led to these crises. But why in the case of America’s situation, did people became so easily seduced to take on such huge amounts of debt and to accept the vain predictions of perpetual prosperity? Responsibility of stewardship was thrown to the wind and the idea that prosperity and wealth was both eternal and effortless was the common belief.

It may have to do with another main difference. Namely America’s major religion—a post-modern, utilitarian aberration of the Biblical Christianity. This may seem a harsh statement, but I believe that the facts well support it. Most definitely, America is the most Christian-professing, major nation in the world. That religious belief and philosophy had an impact on economies and financial markets is a well established fact. Why do Chinese households save so much? Could it be that their Confusion culture is predisposed to such behavior? Max Weber (see The Protestant Work Ethic and the Spirit of Capitalism) and other social economists developed a framework for such religious/economic connections.

Crucially, only in North America do we find such a significant influence of the Prosperity Theology. It is a teaching that will have played an insidious and contributing (perhaps causal) role in America’s final slide into financial crisis and decline. We want to examine this connection further by investigating some of the doctrinal distortions behind this movement which merges Christianity and money into the eschatological timeline.

Deeply Rooted False Prosperity Beliefs.

While Prosperity Theology tends to be more associated with the charismatic segment of North American Christianity, it could be said that virtually all of North American Christianity has been infected with its influences. This perspective co-exists comfortably with the ideology of the American Dream. For centuries the “Christian nation” of America has been a land of opportunity, espousing upward mobility and success for all who seek it.

Prosperity thinking is therefore subtly imbedded in the psyche of Western Christians. It is almost considered an entitlement in some circles. Of course, most will perhaps not swallow the teachings and techniques of the likes of Benny Hinn, Kenneth Copeland, Creflo Dollar and Peter Popoff — he of the “divine transfer” — and many others. After all, some of these more extreme teachers in this community even go so far as to claim that if you have much faith that you can “get wealth.” Just send in your seed faith offering and you may get a “divine wealth transfer” or “100-fold” return.

In this bartering system with God, one is taught to expect that He may choose to reciprocate your seed offering with a monetary or material blessing of some kind. It could be a sizable check arriving in your mailbox from a mysterious source or some other lucky happenstance. Unfortunately, this erroneous teaching about money promotes the notion that God runs His kingdom on the principle of monetary and material incentive. How crass. God manipulates Christians to love Him and to obedience through the carrot of material wealth and well-being? They confuse the realm of Mammon for the Kingdom of God.

Theological Wealth Distortions Everywhere

False gospels are deadly, their heresies distorting virtually every doctrine, world view and eschatological perspective. In like manner, Prosperity Theology radiates its destruction into many doctrines and perspectives. If its destructive contributions to America’s recent demise were already not convincing enough, there is yet more to consider. A sure sign of all false gospels is their perspective on money.

Every single false teaching or heresy mentioned in the New Testament epistles was associated with greed or an inordinate affection with money and wealth. This is evident today as it was then. If anything is different, it is that some of these heretical perspectives have become much more systemized than they were in New Testament times.

Though beliefs held by certain Christian sects may appear rooted in scriptural teaching, it is disturbing to discover how subjective and unfounded these are. These beliefs simply do not hold up under the scrutiny of all Scripture. This theology even merits an entry on Wikipedia which points out that this “somewhat similar (yet strikingly different) belief appears in most “New Thought” religions, Unity, Religious Science, Divine Science denominations.” It should seem strange that such commonality is found with these other religions.

Moreover, Prosperity Theology does not even pass the test of common sense. If the promises of Prosperity Theology were legitimate and observable, then it should be discovered that its adherents indeed would be wealthier than the general population. Yet, the opposite is true.

According to the surveys of the Pew Forum on Religion & Public Life2, the average income level of all Christians is less than that of other faiths. For instance, the percentage of protestant Christians with incomes over $100,000 per annum is 15%. This is less than Muslims (16%), Jews (46%), Buddhists (43%) and Hindus (43%).

Drilling down into comparisons between Christian denominations themselves, the same non-confirmation is evident.  If one assumes that prosperity teaching is to be most prevalent in evangelical Pentecostal sects, the falsehood of this teaching is found to be most fraudulent. The Pentecostal demographic is the poorest of all, with the exception of Baptists in the Historically Black Tradition.348% of Pentecostals have incomes less than $30,000; only 7% greater than $100,000 per annum. That compares to 31% and 18% in the Christian population overall, respectively.

Clearly, the promises of Prosperity Theology are a hoax. Much worse allegations could be made. It would be considered a financial sham were its promoters to be seen to be preying on the hopelessness of its congregants. In that sense, it would not be much different than the consumer credit business. Just which demographic has historically proven to be the most profitable credit market for financial institutions … at least up until the GFC? The poor. It is these people that are made to pay high loan fees and interest rates and tend to run high balances on their credit cards with exorbitant charges. This gospel is certainly not “releasing the oppressed” as was Christ’s mission. (Luke 4:18)

Why is it that Christians are so gullible? It may be for the same reason that the thickest complaint file of the Council of Better Business Bureaus in America is the category of religiously-associated fraud. When con artists or teachers imply a relationship with God or make a purported scriptural reference promising prosperity, the wallets are opened unthinkingly. Charismatic churches time and again have proven themselves most vulnerable to the flimsiest of Ponzi schemes. It is simply astounding.

This quote from an op-ed article published just recently in the Russian online news portal, Pravda, offers a disturbing perspective. The journalist, though somewhat irreverent and an apologist for the official Russian Orthodox Church, does make some connections between America’s economic slide and liberal Christianity:

“First, the population was dumbed down through a politicized and substandard education system based on pop culture, rather then the classics. Americans know more about their favorite TV dramas then the drama in DC that directly affects their lives. They care more for their “right” to choke down a McDonalds burger or a BurgerKing burger than for their constitutional rights. Then they turn around and lecture us about our rights and about our “democracy”. Pride blind the foolish. Then their faith in God was destroyed, until their churches, all tens of thousands of different “branches and denominations” were for the most part little more then Sunday circuses and their televangelists and top protestant mega preachers were more then happy to sell out their souls and flocks to be on the “winning” side of one pseudo Marxist politician or another. Their flocks may complain, but when explained that they would be on the “winning” side, their flocks were ever so quick to reject Christ in hopes for earthly power. Even our Holy Orthodox churches are scandalously liberalized in America.”4

In the populist mindset of prosperity and easy money, what Christian might not be tempted to think that God and country abandoned them should they experience hardships and trouble during an economic downturn such as the Global Financial Crisis (GFC)? What Christian would not be inclined to whine to God, as did Jeremiah: “Will you be to me like a deceptive brook, like a spring that fails?” (Jeremiah 15:18) Jeremiah figured that since he was walking with God and answering His calling, that he deserved special treatment. He bargained with God, saying “I never sat in the company of revelers, never made merry with them; I sat alone because your hand was on me, and you had filled me with indignation. Why is my pain unending and my wound grievous and incurable?” (Jeremiah 15-17-18)

How did God respond? He didn’t even acknowledge the complaint. He simply said this: “If you repent, I will restore you that you may serve me.” (verse 19)

No doubt, all 12 of the New Testament apostles settled this same issue in a satisfactory manner. They were doing the Lord’s will and were all blessed with rich robes and fine foods. Actually, directly to the contrary. 11 of them died an unnatural death. All of them physically suffered for their beliefs. Was this just? Said Paul, “Rather, as servants of God we commend ourselves in every way: in great endurance; in troubles, hardships and distresses; in beatings, imprisonments and riots; in hard work, sleepless nights and hunger; in purity, understanding, patience and kindness; in the Holy Spirit and in sincere love […]” (2 Corinthians 6:4-6).

Notes

1. Prosperity theology, http://en.wikipedia.org/wiki/Prosperity_theology, accessed April 25, 2009.

2. U.S. Religious Landscape Survey, The Pew Forum on Religion & Public Life, February 2008, Table: Income Levels of Major Religious Traditions, pg. 60.

3. Ibid, Income Level by Protestant Denominations, pg. 80.

4. Stanislav Mishin, Op-ed,  Pravda Russia, June 1, 2009