More and more economists, policymakers and investors are becoming ever more certain that the good times are here again. Not even the crises in Japan, the Middle East, Europe and China can quell the prevailing mood of resolute complacency. Apparently, the effects of the Global Financial Crisis (GFC) are long past. However, this couldn’t be further from the truth. The soothsayers are unable to discern cause from effect; artifice from reality; wisdom from folly. Time will judge today’s policymakers and opinion leaders.

The stark reality is really this: Conditions are not getting better, Actually, the long-term outlook is becoming darker. The Global Financial Crisis is not over; only shifting and morphing into new forms. An unprecedented mix of factors is playing out at present around the world (geopolitically, socially, economically and financially). Whether these factors may be disastrous or not, they surely do not warrant an attitude of complacency.

One key difference is that a “balance sheet depression” is unfolding inAmerica and several other countries … though admittedly in fits and spats. What is meant by this term is the phenomenon whereby falling asset values (i.e. residential and commercial real estate) and high debt levels collide, causing debt levels to be reduced (either through default or repayment). These are usually long-running adjustments requiring many years to complete at best, provided that governments and monetary authorities do not interfere in this essential process.

Just where do we see debt levels declining today? Actually, policymakers are doing their dastardly best to frustrate responsible debt loads. By slashing interest rates to near-zero levels they frustrate savers, making debt even cheaper (provided lenders are willing to lend and that the borrower’s credit rating qualifies). Secondly, governments have turned to massive and unprecedented borrowing, so to counteract the decline in consumer confidence and spending. All in all, seen in the aggregate, debt levels are not declining. Overall debt levels are still rising as increases in government and corporate borrowing are out-running the debt decline in the household sector. This is what is playing out in many nations (certainly the U.S., the UK and perhaps soon such nations as Spain and others).

In the meantime, the average household continues to be squeezed. Income growth remains low, unemployment extremely high, house prices are still falling, and the cost of living rising. After adjusting for the effects of inflation—this including the impact of rising food and energy prices—the average American household is now experiencing negative “real” income growth. And, even as property prices have declined by a third since 2006, property taxes have risen by 27%. Yet, Wall Street economists are more confident than ever since the GFC struck, that a “solid” recovery is underway. Financial markets have again become frothy, as financial speculation is being encouraged by policymakers who believe that a “wealth effect” will help to get economies rolling again.

The strangest spectre to observe—tempting rational people to apoplexy—is that apparently very few policymakers and economists seem to have learned any lessons over the past several years. The very same conditions that led to the big financial bubble burst in the first place—overpriced houses, mispriced asset-backed paper, speculative financial and commodity markets, carry-trade lending, high borrowing and debt levels … etc. — are now being promoted in the hope of reigniting the financial good times (i.e. bubble).

Do they really think that these policies will somehow not lead to yet another crisis? It certainly will. Of course, this is known, and therefore reveals the deep corruption at work. The intent is to perpetuate what is unsustainable (this evidencing dishonesty) for a while longer, pushing off the inevitable costs to others in the future. We can indeed expect a much bigger crisis … and possibly very soon! (No doubt, we will then experience the usual clamour for our books. But unfortunately, much too late!)

All of this folly reminds us of several Bible accounts. The coarsest is found in Proverbs 26:11: “As a dog returns to its vomit, so a fool repeats his folly.” In the Old Testament we read of Jeremiah who had long warned the people of Judah of the dire consequences to their excesses, idol worship, and sinful carousing. They instead chose complacency rather than fearing sin and God’s authority; to live it up and live according to their lusts. Eventually, God did allow the Israelites to be punished. Then the bad times hit. What was the response of the people? It was not remorse. Instead, they pined for what they still regarded as the former “good times.” They chose to blame Isaiah for depriving them of their former hedonism.

“We will not listen to the message you have spoken to us in the name of the LORD! We will certainly do everything we said we would: We will burn incense to the Queen of Heaven and will pour out drink offerings to her just as we and our fathers, our kings and our officials did in the towns of Judah and in the streets of Jerusalem. At that time we had plenty of food and were well off and suffered no harm. But ever since we stopped burning incense to the Queen of Heaven and pouring out drink offerings to her, we have had nothing and have been perishing by sword and famine” (Jeremiah 44:16-18).

According to the New Testament, the same type of response is to be expected again. We conclude that the basic character of human beings has not materially changed these last 3000 years. Despite the many travails that come about in the Tribulation period, on at least three occasions we read in Revelation that mankind still refuses to forfeit their idolatries. For example: The rest of mankind that were not killed by these plagues still did not repent of the work of their hands; they did not stop worshiping demons, and idols of gold, silver, bronze, stone and wood—idols that cannot see or hear or walk. Nor did they repent of their murders, their magic arts, their sexual immorality or their thefts”(Revelation 9:20-21).

Loosely interpreted, despite the punishments, people continued to prefer to hold on to their idolatries and lusts (i.e. financial, corrupt monetary systems, and otherwise). Moreover, once the hard times came about (these being a direct consequence of the prior excesses) rather than wanting to change their ways, they instead longed for bacchanalian revelry of former times.

Looking ahead, what is wrong with this picture? Would you need to be a highly-paid economist working on Wall Street to draw a correct conclusion?

• Food stamp usage in America continues to climb (with almost 50% more people qualifying for their use since the Fall of 2008).
• Long-term unemployment is at a record high.
• Sales in low-price stores such as Wal-mart are lagging … even declining on a same-store basis in some months. However, the sales of high-end retailers such as Saks and Macy’s are growing strongly.
• The U.S. labor market participation rate has declined sharply (by 2 percentage points). Does this normally occur in a recovery period?
• The sales of luxury goods manufacturers such Louis Vuitton, Burberry … etc. are strong and the auction prices of rare art never really having suffered a downturn.
• As mentioned, real income growth for the average U.S. household has turned negative in the past few months. The same is now true in theUK.
• Corporate profits are now higher (as a share of national income and partially at the expense of household incomes) than before the GFC began.
• The U.S. banking sector is now more concentrated than before (this being a major complication should bail-outs ever be required again).
• The FAO (Food and Agricultural Organization, a division of the United Nations) reports that food costs around the world have soared to all-time highs.
• Profits for the entire financial sector have returned to prior highs, and multi-billion dollar bonus payouts are at new highs.
• Many countries, including the U.S, are heading towards plutocracy (that meaning to be ruled and controlled by the rich). The top 1% of households now control over 44% of income … the highest since prior to the last Great Depression.

From these few facts, what should be the diagnosis? Why, of course, economic conditions are improving! But for whom?

The biggest death knell of all is this: With interest rates having plunged (and still remaining relatively low at this time) the cost of retirement has soared. This is a catastrophe that is rarely discussed in the public arena.

Were one to invest one’s pension in a 5-year treasury bond, you would today need a pension fund that is more than twice the size of 3 years ago to generate the same amount of income. (Please see Figure #1 inApril 2011 issue of Eternal Value Review) “Yes,” say the quantitatively-trained economists who know relatively little about causal economic theories, “but that is not inflation.” Of course it is. For the middle class household, a retirement next egg (whether a pension or other forms of savings) is the biggest purchase they will make in their lifetime. Now, to a large extent, the future purchasing power of retirement savings has been pillaged. Unfortunately, this fact has not yet sunk in with many people.

The second biggest household purchase is a home. The collapse of home values (combined with a senseless increase in mortgage debt) obliterated the net worth of a large number of households headed by members of the 45 to 64 year cohort. Overall, home net equity has plunged to an all-time low. (Please see Figure #2 in April 2011 issue of Eternal Value Review, this being the most disastrous event for America—and Israel—in our view.) These two wealth devastations for middle class America really amount to a sucker two-punch. What to do next?

History suggests that there are only a few outcomes possible. Over-indebtedness can be dealt with in one of three ways: 1. Default. 2. Massive inflation, thus shrinking the size of historical debts (though this leading to ultimate bust, as well); 3. Or the hard way—by saving and slowly paying down debts. However, if the situation is also marked by a condition of an extreme wealth distribution imbalance (as it most always is), much more volatile outcomes are likely. Indeed, as mentioned, wealth distribution today in many nations (also the U.S.) is the most extreme since the 1920s, if not at an all-time record. A thought for reflection is this: The bloody French Revolution was instigated by the very same conditions.

Finally, in dealing with these perplexities, we must not forget where to keep our focus.

“So I tell you this, and insist on it in the Lord, that you must no longer live as the Gentiles do, in the futility of their thinking. They are darkened in their understanding and separated from the life of God because of the ignorance that is in them due to the hardening of their hearts. Having lost all sensitivity, they have given themselves over to sensuality so as to indulge in every kind of impurity, with a continual lust for more” (Ephesians 4:17-19).

One of the signs indicating the “beginning of sorrows” that Jesus Christ outlined (Matthew 24, also called the Olivet Discourse) was “earthquakes in various places” (verse 7). Do recent earthquakes signify that these “beginning” times are already here? If so, is it possible then to better pinpoint our time in terms of Biblical endtime prophecy? Certainly, earthquakes have been front page news this year. The most widely reported include New Zealand (6.3 on the Richter Scale, February 11) and the catastrophic 9.0-scale quake inJapan on March 11.

Two questions beckon: 1. Just when are earthquakes prophesied to increase?; and 2. Has their occurrence  accelerated in recent times? Let’s turn our attention to prophecy first and return to Matthew 24. The entire 51 verses of this chapter are prophetic in character. As it happens, the section that we must address (verses 4 to 31) is much debated. However, in our narrow discussion of earthquakes, we are most interested in establishing a timeline and ascertaining any connections between Matthew 24 and  Revelation. We conclude significant alignments do  exist.

To begin, consider that at the time that Jesus spoke the Olivet prophecies to His disciples, there were yet no Christians (i.e. Spirit-filled converts; certainly very few that were Gentile followers). As such the Olivet Discourse is primarily directed to the Jews, though of course being of great importance to Christians, as well. (Otherwise, why would Matthew have included this account?) Taking this Jewish-centric perspective, we must then align this account with the timeline of the 7-year tribulation period that is the subject of the Chapters 4 to 20 in Revelation. Why? Because this 7-year period is expressly applied to the Jews by the prophets, (most notably by Daniel. See Daniel 9:27), this period being “a time of distress such as has not happened from the beginning of nations until then” (Daniel 12:1).

Events depicted in Matthew 24 are partitioned into three periods 1. Before “the end is yet to come” (verse 6); 2. During the “beginning of birth pains” (verse 8) and 3:   Thereafter (from verse 9). A number of scholars have shown the parallels between the events outlined in Matthew 24 and Revelation (for which we lamentably do not have the space to examine in this article). We will look at just one key, this being the term “beginning of birth pains.”

According to Matthew, these are the events that happen before the end of the “beginning of birth pains”: “Watch out that no one deceives you. For many will come in my name, claiming, ‘I am the Christ,’ and will deceive many. You will hear of wars and rumors of wars, but see to it that you are not alarmed. Such things must happen, but the end is still to come. Nation will rise against nation, and kingdom against kingdom. There will be famines and earthquakes in various places. All these are the beginning of birth pains.”

We learn here that earthquakes begin to take place in the period that is the “beginning of birth pains.” After this, the really terrible times of persecution and other catastrophes takes place and not before. As such, these two periods correspond and conform to two stages of the 7-year Tribulation period. The Bible splits it into two halves, each being of 3 1/2 years in duration, the latter period itself named the Great Tribulation. This last half is also referred to as “Jacob’s trouble” (Jeremiah 30:7). As such, the Jews and Jerusalem enjoy a period of relative peace during the first half. Then, the treaty with the Antichrist is broken and severe persecution of the Jews follows. Jerusalem is nearly annihilated and its denizens evacuated.

We conclude then that it is more likely that the world will see a sharp rise in earthquakes in the first half of the Tribulation and not before.

Has the incidence of earthquakes been increasing in recent years and decades? To be scientifically valid—not going beyond what can be ascertained from statistics—the answer is “probably not.” The chart we show on the front page (Please see the April 2011 issue of Eternal Value Review) will seem to validate a different conclusion. However, it is not. Why? Today, earthquake reporting is much improved.

Quoting the website of the United States Geological Survey (USG), “In 1931, there were about 350 [seismograph] stations operating in the world; today, there are more than 8,000 stations and the data now comes in rapidly from these stations by electronic mail, internet and satellite.” As such, statistics gathering and reporting has served to increase the earthquake counts as well as the perception of their incidence. In reality, occurrences have not risen, just the reporting of earthquakes of smaller size.  This is exactly the phenomenon depicted in the pg.1 graph. Earthquakes of magnitude 7.0 (on the Richter Scale) or greater—the ones that historically were noticeably cataclysmic, and most likely to be reported—have remained fairly constant. In fact, one earthquake per year exceeding 9.0 on the Richter Scale (as was the recent occurrence in Japan) is considered normal.

So what about prophecy? Is it invalidated? Hardly. We must conclude that much greater earthquake activity lies ahead for the world. If our interpretation of Matthew 24 and the corresponding accounts of Revelation are correct, a pronounced increase—conclusively noticeable for all of mankind to recognize—will occur during the first half of the Tribulation period. This also corresponds to the understanding that the Tribulation period is in fact a period of time where God himself intervenes in the physical order of the earth. It is a time of God’s wrath.

Finally, as disastrous and powerful as the recent Japanese earthquake may have been, it will pale in comparison to the worst. The biggest earthquake of all time has yet to occur. As is prophesied in Revelation, one very big one has yet to take place. “No earthquake like it has ever occurred since man has been on earth, so tremendous was the quake” (Revelation 16:8).