Monday, August 31, 2009

The Ultimate Bailout - Aug 31

"Fallen! Fallen is Babylon the Great! She has become a home for demons and a haunt for every evil spirit, a haunt for every unclean and detestable bird. For all the nations have drunk the maddening wine of her adulteries. The kings of the earth committed adultery with her, and the merchants of the earth grew rich from her excessive luxuries."
(Revelation 18:2-3)

Who will come to America's aid when the money runs out? I do not believe this will happen during the Church Age. However, once Jesus comes for His bride (the church) America's preeminent global reign will cease. Not something I personally wish for, yet this must happen in order to facilitate the rise of the Antichrist and a one world government. The link to the original Front Page Mag article is here.

Johnny Cash

The Worst is Yet to Come
By: Vasko Kohlmayer
Monday, August 31, 2009

"Today, we're pointed in the right direction... While we've rescued our economy from catastrophe, we've also begun to build a new foundation for growth,” said President Obama recently.

Unfortunately, the president's declarations and all the talk about the green shoots by his acolytes in the media are merely wishful thinking. Far from rescuing it, the Bush/Obama stimulus has dealt a damaging blow to the economy, and one which will exert its harmful effects for years to come. We only need to take a quick look at the big picture to see why.

Last year the American economic system experienced major trauma as more and more banks, companies and individuals were brought to the verge of bankruptcy. In most cases their plight was caused by their inability to service their liabilities. Buoyed by the easy availability of cheap credit and loose monetary policy of preceding years, government, commercial entities as well as private persons had taken on unprecedented levels of debt. Paul Craig Roberts, formerly Assistant Secretary of the Treasury in the Reagan Administration, correctly points out that we lived in “a debt economy.” Writing in Journal Sentinel, John Torinus, a banker with experience in leveraged buyouts, described the astonishingly lax mindset that had come to dominate the whole sphere of borrowing:

The investment banks that crashed and burned were leveraged as high as 35 to 1. Their 3% equity base disappeared in a sinkhole of excessive debt... The excessive leverage went far beyond the investment banks. Home buyers could get insured or federally backed mortgages with 5% down or sometimes less. They were leveraged 20 to 1 or more. Credit checks were loose.

The cheap credit – which was made possible by artificially low interest rates – brought on the borrowing frenzy to a feverish pitch. Paul Craig Roberts observes:

The debt economy caused Americans to leverage their assets. They refinanced their homes and spent the equity. They maxed out numerous credit cards. They worked as many jobs as they could find. Debt expansion and multiple family incomes kept the economy going.

Toward the end of 2008 the overall debt level – public, commercial and personal – in the American economy was well over $50 trillion. This was three and a half times the size of the country's total economic output (around $14 trillion) and more than double the debt level of 2000. At over 350 percent, this made ours the most over leveraged economy in history. To put it bluntly, all of us – individuals, businesses and especially government – lived beyond our means. The American economy was over-leveraged through and through.

The racket held while the economy boomed. But once it seized, the over-indebtedness became unsustainable and things began falling apart. Describing this process, Nouriel Roubinini, one of America's leading financial commentators, wrote in Forbes:

Americans lived in a "Made-off" and Ponzi bubble economy for a decade or even longer. Madoff is the mirror of the American economy and of its over-leveraged agents: a house of cards of leverage over leverage by households, financial firms and corporations that has now collapsed in a heap.

Painful as the impending bankruptcies tsunami would have been, it would have ultimately delivered a remedy. In order for an economic system to remain viable, excessive indebtedness must be corrected and those responsible chastised for their misjudgment. It is for this purpose that the market evolved the institution of bankruptcy. Had it been left to unfold unimpeded, the process would have reduced the overall leverage and the economy would have eventually found itself on a sound footing once again.

The government, however, resolved not to allow the market do its work. In a misguided attempt to avert the necessary pain, it began propping up failing enterprises and individuals with more easy credit and direct cash injections. And even though it was initially advertised as a relatively short-term and targeted effort, the operation has been ongoing for nearly nine months while continually expanding in scope.

This approach is fundamentally flawed on a number of levels. To begin with, the government's actions interfere with the market's corrective forces. But the most obvious problem is that the government simply does not have the money to do this. It is ironic that even before it embarked on its “rescue” effort, the government itself was already more deeply indebted than the companies it sought to save. With some $65 trillion in total obligations, the federal government was, in fact, the most over-leveraged institution in America.

The rescue has unsurprisingly turned out to be a singularly expensive undertaking. So much so that the government's deficit at the end of this fiscal year will exceed the previous record by nearly a factor of four. At some 11 percent of GDP, this is also the highest peacetime deficit in American history when measured as a portion of the overall economy.

If the government's strategy – bailing out debt-ridden companies and individuals by enlarging its own astronomical debt – seems misguided, it is. There is an old truism that says you cannot get out of debt by running deeper into debt. And yet this is precisely what the government has been trying to do. This is why its approach will ultimately fail.

The authors of the latest Comstock Partners special report put their finger on the crux of the matter. Countering the conventional wisdom of the spend-and-stimulate Keynesians, they write:

We, however, don't believe that the U.S. massive stimulus programs and money printing can solve a problem of excess debt generation... If this were the answer Argentina would be one of the most prosperous countries in the world. This excess debt actually resulted from the same money printing and easy money that we are now using to alleviate the pain.

The bailouts reward bad management and irresponsible businesses practices and forestall the remedy the market is trying to administer. Contrary to what we have been told, all those injections of credit and capital do not contain a cure. Instead they are filled with the noxious serum of public debt whose toxic effects are slowly poisoning the whole system. The festering sores of the economic crisis have been only temporarily masked with government made bailout band aids, but those are no thicker than a dollar bill. The sickness will eventually break out again, but next time it will hit with greater intensity.

Our over-leveraged government can give out those lavish bailouts only because it can still borrow at low interest. But bond investors have been growing increasingly vocal in expressing their doubts about the government's ability to make good on its debts. It is only a matter of time before they start demanding higher bond yields. When that happens, borrowing will become prohibitively expensive. Saddled with an enormous debt and with no one to advance easy cash, the government will find itself in the same position as the companies it is trying to save today. When that moment finally arrives, there will be no one to finance the ultimate bail out. If you thought that letting a couple of big banks fail would have been bad, wait what happens when the federal government itself goes under.

Make no mistake: The worst is still yet to come.

Monday, August 17, 2009

Do You Believe In Angels? - Aug 17

Before you answer, read this scripture first:

That night the angel of the LORD went out and put to death a hundred and eighty-five thousand men in the Assyrian camp. When the people got up the next morning—there were all the dead bodies! So Sennacherib king of Assyria broke camp and withdrew. He returned to Nineveh and stayed there. One day, while he was worshiping in the temple of his god Nisroch, his sons Adrammelech and Sharezer cut him down with the sword, and they escaped to the land of Ararat. And Esarhaddon his son succeeded him as king.
(2 Kings 19:35)

Look at the above passage. Just one angel put to death 185,000 Assyrian soldiers in one night. Here's another passage to ponder:

When the LORD goes through the land to strike down the Egyptians, he will see the blood on the top and sides of the door frame and will pass over that doorway, and he will not permit the destroyer to enter your houses and strike you down.
(Exodus 12:23)

The Perception (and Purpose) of Angels is Far Removed From Current Thinking!

They are sent by the LORD to do His will which bodes ill for those under His judgement. Christians and non-Christians alike have a very 'fluffy' and benign view of angels. Popular theology makes angels out to be as sweet creatures who wouldn't hurt a fly. The (Biblical) truth is radically different. Angels can deliver but they can also be incredibly lethal as one angelic destroyer was on that first Passover night. Angels (and demons) are immensely powerful creatures - well beyond our human capacities. Sennacherib's army couldn't resist one. Neither could a mighty Egyptian kingdom. The angels I believe in come from a big God, not a little one!

Johnny Cash

Saturday, August 15, 2009

Is Climate Change For Real? - Aug 15

I've always been a big fan of the Aussies. People of uncommon common sense, they see through the emotion and rhetoric and get down to the heart of the matter. Here Professor Bob Carter 'torpedoes' the global warming theory. Video runs 36:25.

Johnny Cash

Sunday, August 09, 2009

The Perfect Lie - Aug 9

I've written about this before but I figured it was time to revisit and improve upon the idea.

First Things First

So what's this 'perfect lie' that I write so dramatically about? It is this: That we can please God through our own efforts. Do you want to know the heart of the gospel? Here it is:

Unless you repent, you too will all perish.
(Luke 13:5b)

In the gospel of Luke, Jesus refers to a lost sheep (Luke 15:3-6), the lost coin (Luke 15:8-10) and the well known parable of the prodigal son (Luke 15:11-32). What do all these stories have in common? That which is of great value has been lost only to be found again.

Unless A Man Repents He Will Surely Die

For some strange and inexplicable reason this sentence has been vexing me recently. It is glaringly obvious that 'I'm a good person' is the reigning pop-culture theology of the day. I often hear such lame excuses as these:

  • No need to repent. I'm a good person!
  • No need for a Messiah (on a cross). I'm a good person!
  • No need to reconcile my faith with the Bible. I'm a good person!
  • No need for a (Holy) Spirit-led life. I'm a good person!
  • No need to radically change my lifestyle. I'm a good person!
  • No need to change my worldly attitudes. I'm a good person!
  • No need for holiness in word, thought or deed. I'm a good person!
On and on it goes. Seven points have been listed here for your consideration. Truth is there are literally thousands of excuses people employ. The devil loves nothing more than to tell how good a person you are. The Biblical truth is far more sobering:

As it is written:

"There is no one righteous, not even one; there is no one who understands, no one who seeks God. All have turned away, they have together become worthless; there is no one who does good, not even one."

"There is no fear of God before their eyes."
(Romans 3:10-12,18)

This is not a popular message. Never has been and never will be. All those who dare preach it will face all manner of persecution and (sometimes violent) opposition. This corrupt world will hate all those who faithfully remind us of our fallen nature. Yet it must be taught if we are to count ourselves as Christ's disciples.

The Faith of the Foolish

Why does this lie work so effortlessly? For one very simple reason: It appeals to our pride and our overwhelming sense of self-importance. Hell will be filled with good people who've substituted their own piety and religious observance ahead of the sufferings of Christ. Only through Him can we approach the Father:

I am the way and the truth and the life. No one comes to the Father except through me.
(John 14:6)

Johnny Cash

Wednesday, August 05, 2009

Hypernova - "Fairy Tales" - Aug 5

Here's a classic rags to riches story coming from Iran of all places. The song is about a deeply flawed relationship with an under-aged female. The video has bare bones production look to it but I enjoyed it nevertheless. I hope you do too.

See Wall Street Journal video here.

After playing clandestinely in Iran, Hypernova is now being welcomed by U.S. audiences. Arriving in the U.S. with only $400 and a guitar, Hypernova, which was formed in Iran in 2000, was asked to play at the South by Southwest musical festival in Austin, Texas.

Johnny Cash

Saturday, August 01, 2009

The Battle For Pakistan - Aug 1

From stratfor comes a video about the troubled state of Pakistan. Marla Dial and Kamran Bokhari give us the gritty details. Enjoy!

Johnny Cash