Posts Tagged ‘1929 Market Crash’

God’s Judgment in One Hour (excerpted from Revelation 18, Chapter 13)

August 24, 2015

Therefore her plagues will come in one day—death and mourning and famine. And she will be utterly burned with fire, for strong is the Lord God who judges her. . . .

. . . standing at a distance for fear of her torment, saying, ‘Alas, alas, that great city Babylon, that mighty city! For in one hour your judgment has come.’

Revelation 18:8, 10

In Revelation 18 it is stated that Babylon’s judgment will come swiftly—“in one hour”—and is mentioned twice in verses 8, 10 and 17.  But is that possible in this day and age?  The simple, direct answer is, yes, but first let us take a look at America’s financial foundation and the financial stability of the world before reaching any conclusions. 

United States of America’s National Debt.  On October 18, 2013 America’s National Debt was rapidly advancing past $17 trillion or 107 percent of GDP (Gross Domestic Product).  To gain a perspective on the significance of America’s debt one should look at the history of America’s indebtedness as well as compare the current national debt to that of some other countries.

At the end of 1929 America had just suffered a major financial collapse.  The national debt was a mere (by today’s standards) $17 billion or 16 percent of GDP.  By the end of 1933 and with advent of President Franklin Delano Roosevelt’s “New Deal” Great Depression recovery plan, the United States was $23 billion in debt or 40 percent of GDP.  At the end of 1941 and just after the country entered into World War II against both Germany (and the Axis powers) and Japan, the national debt stood at a manageable $49 billion or 39 percent of GDP.

The same prudence which in private life would forbid our paying our own money for unexplained projects, forbids it in the dispensation of the public moneys.

Thomas Jefferson, Letter to Shelton Gilliam, June 19, 1808

When World War II ended in 1945 at a cost of $296 billion for the United States, by the end of 1946 America’s national debt had soared to $269 billion and a historical high of 121 percent of GDP.  During the post-war recovery the debt remained relatively stable from 1946 to 1960, ranging from $252 billion in 1946 to $286 billion in 1960.  During the same period the debt to GDP ratio steadily declined from 121 percent to 54 percent.  During the decades of the 1960s and 1970s the debt grew steadily, but the GDP growth rate exceeded the debt growth rate so that the debt to GDP ratio dropped further to a post-World War II low of 31 percent by the end of 1981 but just before the recession of 1982 hit.

We must not let our rulers load us with perpetual debt.

Thomas Jefferson, Letter to Samuel Kercheval, July 12, 1816

Just before the start of Ronald Reagan’s first presidential term, the national debt had risen to just under one trillion dollars—$908 billion or 33 percent of GDP by the end of 1980.  During the Reagan presidency of two terms the national debt more than doubled to $2.6 trillion or 51 percent of GDP by the end of 1988.

During the two presidential terms of William Clinton the debt grew modestly from $4.4 trillion to $5.674 trillion while the debt to GDP ratio fell from 66 percent to 57 percent.  From 2001 to the end of 2008 (the George W. Bush presidential years) the debt climbed significantly to a little over $10 trillion or 70 percent of GDP.  Although this increase in indebtedness was dramatic, America was about to become shell-shocked.

With the election of Barack Hussein Obama in 2008 as the country’s president, America would witness the reality of a big-spending government behemoth like never before.  By July 4, 2013, less than six months into his second presidential term, President Obama has overseen the growth of the country’s debt to $16.9 trillion or 107 percent of GDP.  By the end of his second term (if the taxpayers allow him to get there), the national debt could well exceed $20 trillion.  If so, he will have accumulated more debt than all 43 presidents before him and the United States will be on the verge of financial ruin (if not before then).

Everett Dirksen, the former Republican who represented the state of Illinois in the U.S. Senate from 1951 until his death in 1969, when reflecting on the national debt in 1965 (which was $317 billion), told this humorous story, which he labeled “cat in the well”:

One time in the House of Representatives (a colleague) told me a story about a proposition that a teacher put to a boy. He said, ‘Johnny, a cat fell in a well 100 feet deep. Suppose that cat climbed up 1 foot and then fell back 2 feet. How long would it take the cat to get out of the well?’

Johnny worked assiduously with his slate and slate pencil for quite a while, and then when the teacher came down and said, ‘How are you getting along?’

Johnny said, ‘Teacher, if you give me another slate and a couple of slate pencils, I am pretty sure that in the next 30 minutes I can land that cat in hell.’

If some people get any cheer out of a $328 billion debt ceiling, I do not find much to cheer about concerning it. (Congressional Record, June 16, 1965, p. 13884).

In the world of American politics and financial mismanagement, the way to deal with the ever skyrocketing debt is not to restrain spending but just to raise the level of the amount one is allowed to spend.  A similar philosophy followed by the American taxpayer would soon land them in prison.

Debt to GDP Ratios Around the World.  The one most commonly used measure of a country’s economic health is the Public Debt to GDP (Gross Domestic Product) ratio or percent of public debt a country owes compared to their GDP.  Public Debt is the amount of money the federal government owes itself and other creditors.

With America’s debt to GDP ratio at 107 percent and rising daily, how does the country measure up to other developed countries, as well as third world or undeveloped countries? Global Finance reported on the Public Debt to GDP projections for 2014 for OECD (Organization for Economic Co-operation and Development) countries.  The OECD includes just about every developed and developing country in the world.  The debt to GDP for all OECD countries is projected to be 113 percent.

The worst country by far is Japan at 246 percent.  Japan is followed by the European Union countries of Greece (200%), Portugal (135%), Italy (131%), Ireland (128%), United Kingdom (114%), France (110%) and Spain (105%).  All of these Euro countries are in significant financial trouble and turmoil.  The United States is projected to be at 114 percent debt to GDP, the same as the UK.

Other European Union countries, such as, Switzerland (39%), Germany (85%), Sweden (47%), Norway (43%), Finland (54%), Denmark (48%) and the Netherlands (72%) are looking much better.

By comparison, how do some of our non-European allies and adversaries look financially?  Of the United States’ clear allies, Canada appears to be in the worst shape but still healthier than the U.S.  Canada’s projected 2014 debt to GDP is 86 percent.  Australia, a long term U.S. ally, on the other hand, is far healthier with only a 28 percent debt to GDP.  However, two of America’s long term antagonists and adversaries are also very healthy financially.  China has a 2014 projected meager debt to GDP of only 17.3 percent and its neighbor to the north, Russia, at merely 10.8 percent.  Ironically, the United States has not been near that level of debt to GDP since the financial crash of 1929 when debt to GDP was at 16 percent.

Clearly, the majority of America’s long-standing allies in Europe are battling tremendous financial pressure, while its two largest and most bellicose decades-long enemies are financially strong and in a much better position to threaten the United States at every level of diplomacy or future military confrontation. . . .

The Derivative Financial Volcano.   Men around the globe in general and Americans in particular, in their greedy quest for wealth and more wealth, have been led and known to do some very foolish things.  It was greed that led, in part, to the “Crash of ‘29” and the ensuing “Great Depression”.  It was greed that led to the real estate and banking collapse in 2008.  The only question is not if another financial collapse will come, but how soon?

In the Bible there is a stark warning to all those who make money their god.  In his first letter to his disciple, Timothy, the Apostle Paul wrote: “But those who desire to be rich fall into temptation and a snare, and into many foolish and harmful lusts which drown men in destruction and perdition” (1 Timothy 6:9; author’s emphasis). Paul knew human nature and that the temptation to be rich was more than most men could deny. “For the love of money is a root of all kinds of evil,” Paul continued, “for which some have strayed from the faith in their greediness, and pierced themselves through with many sorrows” (verse 10; author’s emphasis).

It is not money that destroys men’s lives—we all need a form of money to live—it is the love of money that draws men to do all kinds of evil.  “But you, O man of God,” Paul warned, “flee these things and pursue righteousness, godliness, faith, love, patience, gentleness” (1 Timothy 6:11).

Because of modern man’s lust for money and more and more of it, there is one foolish financial move over the decades that could come back to haunt him and financially destroy the big and small fortunes of millions of people and the hopes and dreams of current and future generations for years to come.

So, what exactly is a derivative?  They were at the center of the 2008 real estate and banking collapse. A derivative is a type of options contract—a gamble that some underlying investment will go up or down in the future. Derivatives are largely “imaginary” investments with little or no intrinsic value.  In essence, rather than a true tangible investment, they represent more of a “crap-shoot”—a horrific gamble by men driven by an insatiable appetite for wealth and more of it.  The future impact, when the derivative market unravels, will be catastrophic and unfathomable.

Steve Denning, in an article for Forbes, in an explanation for the financial collapse of 2008, wrote “the warning signs were everywhere: too much borrowing, foolish investments, greedy banks, regulators asleep at the wheel, politicians eager to promote home-ownership for those who couldn’t afford it, and distinguished analysts openly predicting this could only end badly.

The worldwide derivative estimate: $600 trillion to $1.5 quadrillion (that is $1,500 trillion or 1.5 followed by 15 zeroes). At the upper estimate, the financial risk is 20 times the entire global GDP, which was estimated to be around $75 trillion in 2012.

“. . . The root cause wasn’t just the reckless lending and the excessive risk taking,” Denning explained. “The problem at the core was a lack of transparency” [among financial institutions].

The worldwide exposure to derivatives is anyone’s guess.  Estimates range from $600 trillion to $1.5 quadrillion (that is $1,500 trillion or 1.5 followed by 15 zeroes).  At the upper estimate, the financial risk is 20 times the entire global GDP, which was estimated to be around $75 trillion in 2012.  No one really knows what the world financial markets exposure is to these worthless financial “investments”.

The Current Problem:  Many financial analysts and financial writers like Denning are warning that the next financial crisis, which they see as imminent, will make the burst of the financial bubble of 2008 look like a blip on the financial radar screen.

Denning points out that one financial institution alone, JPMorgan, at the end of the third quarter of 2012, had a “notional” (that is, “imaginary” or “speculative”) exposure to derivatives of $72 trillion or about five times the world economy at that time.  According to the United States Controller of the Currency office, at the end of 2012, American banks held an astounding $223 trillion in “notional” derivatives with only four of the nation’s largest banks holding 93 percent of the total.

The Flash Crash and Electronic Meltdown—In One Hour.  So, is it possible, in this day and age, for America’s financial system and that of the world to collapse in one hour?  Absolutely!  Not only in one hour, but perhaps in a matter of seconds. With absolutely everything tied together by computer systems, electricity and electronics it would not take much to create havoc with a nation’s or the world’s financial system and life in general.

On July 29, 2013 a panel of experts convened in Washington, DC to consider the level of the threat on the U.S. infrastructure via an electromagnetic pulse (EMP) attack, whether naturally occurring or via terrorists or a nation-state.  The panel included R. James Woolsey, former Director of Central Intelligence under President Bill Clinton; former Speaker of the House, Newt Gingrich; Ambassador Henry Cooper, former Director of the Strategic Defense Initiative Organization under President George H. W. Bush and Dr. Peter Vincent Pry who served on the Congressional EMP Threat Commission.

They assessed America’s vulnerability to a natural or enemy attack by means of an electromagnetic pulse coming from the sun or a nuclear device.  They concluded that the U.S. is extremely susceptible to EMP disruptions whether natural or from a lone terrorist or a rogue government.

On a smaller, local scale, many people have had the experience of a temporary interruption in electrical power or use of electronic devices due to a powerful thunder (electrical) storm.  On a grander scale, such interruptions can be caused by the electromagnetic pulses sent from the sun as a result of solar flares or solar storms.  Such natural EMP events can be regional or wide spread; can be minor inconveniences or devastating.

Mr. Woolsey pointed out that an EMP event originating from the sun struck the electrical grid in Quebec, Canada on March 13, 1989.  The solar geomagnetic storm resulted in the blackout of eastern Canada and billions of dollars in economic losses.  Within two minutes the entire Quebec power grid was shut down and millions thrown into darkness and winter cold.  Schools, businesses and transportation hubs were closed.  The impact affected some northeastern U.S. power grids as well.  The energy released during the event was estimated to be like thousands of nuclear bombs exploding.  The geomagnetic storm that it created resulted in spectacular “northern lights” being seen as far south as Florida and Cuba.  Over 200 power grids from coast to coast in the United States experienced disruptions.   Even some satellites were affected, tumbling out of control for several hours.

Although such solar geomagnetic events are relatively rare, Mr. Woolsey warned . . .

For more on America’s financial crisis, read Revelation 18 and the fate of America.

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Will America Survive?

April 6, 2015

(Excerpted from the Introduction to Revelation 18 and the fate of America.)

BookCoverPreview.Revelation 18.front

Will America survive?  That is the question that is becoming more frequent in the minds and on the tongues of Americans at home and abroad and also non-American observers worldwide.  Can the United States of America survive the unyielding assaults on its constitution, morals, economy, justice system and religious foundation—not only from without, but also from within its own borders?  Can America survive and regain its traditional strength and leadership when its own leaders are becoming more radical and anti-American?  America’s survival and re-establishment of its God-ordained greatness will depend on the response of the people of America in general and the Christian church in particular—not ten years from now; not in five years; not even one year from now, but NOW!

America’s Enemies Wait in Queue. Enemies of the United States are lining up and strengthening their resolve to take America down.  Islamic jihadists—who adhere to the letter of the Qur’an (the Muslim holy book)—are bent on destroying America and all that she originally stood for and they have established a significant foothold throughout the world and particularly within the borders and government of the United States of America.  While the news media casts the jihadists as a small, but irritating group of “freedom fighters”, in reality they are an estimated ten percent of the total world Muslim population, making them a formidable force of well over 100 million adherents to the violent overthrow of America and Western society.

Then there is the burgeoning political, economic and military giant, China.   Chinese businessmen, politicians and military are feasting on the hundreds of billions of dollars from Chinese-exported goods made on the cheap for largely American and western European companies and business moguls willing to sell their corporate and patriotic souls in exchange for quick riches at the expense of the economies and security of their fellow citizens at home.

All this wealth accumulated by the Chinese at the expense of the Western world has allowed the Chinese to become the economic bully and military might of the world.   Emboldened by her wealth and the overwhelming indebtedness to her by the United States and other Western nations, the Chinese are now extracting their pound of flesh from those who were foolish enough to jump in bed with her.

America’s Early 20th Century Struggles.  During the first half of the 20th century America had to battle a quintet of disasters that would test the resilience and fortitude of the country and the American people for almost 50 years.  After struggling to find its equilibrium after a brutal world war, the United States found itself engulfed in a nationwide financial collapse and the ensuing years of economic depression that followed.  The economic collapse was further exasperated by the dust bowl years of 1931-1939 in most of the farmland of the Great Plains region of the country.  This added to the already high unemployment and caused the dislocation of thousands of families seeking refuge from the ravages of nature and financial deprivation way beyond their control.

World War I (1914-1918; 1917-1918 for America).  This “Great War” or “the war to end all wars” pitted Germany and Austria-Hungary against France, Great Britain and Russia (a.k.a., the Allies).  The incident that sparked the regional European war was the assassination of the Archduke of Austria, Franz Ferdinand and his wife on June 28, 1914 by a Serbian nationalist.  A month later, Austria-Hungary declared war on Serbia with the support of Germany with whom they had a treaty.  Shortly thereafter Germany joined their treaty partner in the conflict.

            America’s survival and re-establishment of its God-ordained greatness will depend on the response of the    people of America in general and the Christian church in particular . . .

The war was a very bloody battle fought primarily in the field trenches of Western Europe.  It quickly became a war of attrition for both sides and by 1917 allied troops were dwindling.  While the United States saw no need to get involved at the beginning, the resolve of the country was tested on May 7, 1915 when the British luxury passenger ship, RMS Lusitania, was sunk by a German U-boat (submarine) just off the coast of Ireland.  The liner was carrying 1,959 people on board, including 159 American civilians.  In the sinking 1,198 (128 Americans) perished.  This event enraged the American public and set the stage for the United States to eventually enter the war against Germany.

However it would take another significant event before America would join the battle.  In January, 1917 the German Foreign Minister, Arthur Zimmermann, sent a coded telegram to Germany’s ambassador in Mexico.  In the telegram Zimmer- mann promised the Mexican government territory in the United States if they entered the war on Germany’s side.  The British were able to intercept the telegram, decode it and shared it with the U.S. government.  When the contents were disclosed to the American public, the thunderous outrage pushed the U.S. into declaring war on Germany on April 6, 1917.

America would mobilize over four million soldiers during the duration of their participation in the war.  Over 65 million men from numerous countries worldwide were involved in this world war at the cost of an estimated 37 million casualties—17 million dead (including 7 million civilians) and 20 million wounded.  Although the United States entered the war only 16 months before the armistice of November 11, 1918, America would lose nearly 117,000 men and almost 206,000 more wounded.

The Crash of 1929. The decade of the 1920s or “Roaring 20s” was a time of exuberant living for many, along with reckless financial dealings.  With the end of World War I Americans became confident as the industrial revolution of inventions that began at the turn of the century once again picked up steam and prosperity fueled a burgeoning stock market.  Investors, both seasoned and novice, threw caution to the wind and there seemed to be no limit to the upward movement of stocks.  Those that did not have enough money to gamble on the market or were too greedy and wanted more, borrowed “on margin”.  Brokers were more than willing to loan buyers up to 80-90 percent of the value of their stock purchase.  Buyers, believing that their stock purchase would only go up, could repay the loan when they sold at a higher price.

Even many banks ill-advisedly risked their customers’ savings in the market.  Stock speculators were flooding the market from all quarters.  Then, on March 25, 1929, the market suffered a mini-crash.  By spring, the economy was starting to fracture as steel production receded and home building and automobile sales contracted.  The stock market rebounded during the summer months with the Dow Jones Industrial Average closing at an all-time high for the period at 381.17 on September 3, 1929.  During September and into the first three weeks of October, the market bounced around with no new highs.

Then, without much warning, on October 24 (known as “Black Thursday”), stocks took a steep tumble.  Investors started unloading their stocks by the thousands.  Margin calls went out and thousands of stock holders were unable to meet their margin calls, i.e., pay back their loans.  By afternoon the panic selling had subsided and investors were encouraged when a group of bankers pooled their money and re-invested it back in the market, thus stemming the flow of losses. However, their enthusiasm was short-lived, when three trading days later, on October 29 (“Black Tuesday”), the stock market plummeted as panicked sellers ruled the day and margin calls plunged many into bankruptcy.

“The Crash” destroyed fortunes, businesses, banks and families overnight.  By early 1932, just two years afterwards, stocks were worth only 20 percent of their pre-crash value.  By mid-1932 the Dow Jones Industrial Average hit 41.22 or an 89 percent decline from its September 3, 1929 high.  The market would not recover its high until the mid-1950s or 26 years later.  By 1933, unemployment neared 30 percent and nearly half of the country’s banks had failed.

The Great Depression.  The stock market crash of ’29 ruined the hopes and dreams of millions of Americans and destroyed thousands of small businesses, corporations and financial institutions across the nation. . . .

The Dust Bowl Years (1931-1939).  As if this dual economic disaster was not enough to do the country in, a combination of poor farming practices and prolonged drought in much of the Great Plains from North Dakota south to Texas, plunged the “bread basket” of the country into a near decade-long dust storm of mega proportions. . . .

World War II (1941-1945). Before the United States had fully recovered from the devastating impact of these events, the rapid rise of German Nazism in Europe under the demonic leadership of Adolf Hitler and the surge toward world domination by the imperialist Japanese quickly drew America into another world war. . . .

Post-World War II Resilience.  After World War II America entered into an economic boom period or “Golden Age of Capitalism” that lasted into the early 1970s.  Although the National Debt to Gross National Product (GNP) ratio (now called the Gross Domestic Product or GDP) soared by the end of the war to 110 percent, by 1970 it had dropped to under 30 percent.  Now, in 2013, the National Debt/GDP ratio has reached record territory at 107 percent. . . .

The Precipitous Decline. Nonetheless, America’s ascendant post-war prosperity did not come without significant cost to its moral and spiritual fiber.  The “can-do” God-centered, patriotic spirit that carried the country through World War II and the challenging first half of the century was replaced by cocky and arrogant leadership and an evolving, but downward spiraling and rapid decline into a spiritual and moral abyss.

Although church attendance (while not a complete measure of spirituality) in America rose from 45% (around the beginning of the 20th century) to about 60% after the end of World War II, it began a steady decline.  Today, church attendance in the United States has plummeted to around 25% (or perhaps as low as 17-18% depending on the type of survey) on any given Sunday.  Although such a statistic is only a glimmer of America’s decline, it is a measuring rod of the slippery slope into godlessness that America and Americans now find themselves.

As I enter my eighth decade as a U.S. citizen and having lived under the leadership (good and bad) of 13 U.S. presidents, I am dismayed by how much the great United States of America has declined economically, morally, spiritually and in world leadership in my lifetime.

This tome is not an attempt to prophesy or predict America’s future.  It is not my desire or intention to prophesy “doom and gloom” over the United States of America or its people.  I do not wish to see any evil come upon the USA or any of its inhabitants, many of whom are family, friends, or fellow believers in Jesus Christ whom I deeply love.

However, I am deeply grieved at what I have seen transpire over my brief life on earth in America. How Americans have so rapidly fallen away from God; from justice and righteousness and how the professed church of Jesus Christ of many denominations have perverted the Gospel and fallen prey to the ways and beliefs of the world in which they live is baffling to me.

This decline, not only in faith and morals, but in all facets of life, started long before my birth, which was just after America’s entry into World War II.  But this falling away from God and His foundation of righteousness and faith has hit the slippery slopes during my lifetime and the downward spiral has accelerated at near warp speed.

I pray fervently for America’s recovery and return to God, but I cannot help but wonder: Have we gone too far? Is it too late to repent?  Have forces been set in motion that America can no longer prevent or overcome? 

America is at a Crossroads.  America is at a crossroads―a flash point―of ideologies: Old Guard Christianity vs. New Age Atheism and Nihilism.  It is hard to watch as a child of the 1940s-1950s generation and see America decline from the idyllic society of my youth to a morally debased society of greed, corruption and self-aggrandizement.

This work is meant to be a warning that America is on the verge of fulfilling biblical prophecy because of the corruption, sinfulness and arrogance of its people and its leaders in churches, communities, educational institutions and politics throughout the land.

There are some who say that America is not in the Bible as far as End Time prophecy is concerned.  Others say that it is not a factor in End Time prophecy because at the time it will no longer exist.  While others are adamant that America is, indeed, the “Babylon” of Revelation 18.  In the context of the entire book of Revelation it would appear that the term “Babylon” does not refer to either the historic Babylon of old, nor to any specific place or culture, but rather to any people that oppose God and become an evil power.

If one accepts the premise that the “Babylon” of Revelation 18 (and elsewhere) represents any society or group of people that turn away from God, then one could easily be led to believe that the current state of America fits to a tee the Babylon described in Revelation 18 of the Bible.  It is up to the United States of America, its people and its leaders―both in the Christian church and in society―whether it fulfills this prophecy.

This is meant to be a dire warning to the United States and its citizens that it is in grave danger of fulfilling this horrific prophecy of the Bible.

To whom shall I speak and give warning, that they may hear? Indeed their ear is uncircumcised, and they cannot give heed. Behold, the word of the Lord is a reproach to them; they have no delight in it. . . .

Thus says the Lord:

“Stand in the ways and see, and ask for the old paths, here the good way is, and walk in it; then you will find rest for your souls.  But they said, ‘We will not walk in it.’  Also, I set watchmen over you, saying, ‘Listen to the sound of the trumpet!’ But they said, ‘We will not listen.’. . .

Hear, O earth!  Behold, I will certainly bring calamity on this people—the fruit of their thoughts, because they have not heeded My words nor My law, but rejected it. Jeremiah 6:10, 16-17, 19

For more information on the book, Revelation 18 and the fate of America, go here.

A Financial History Lesson

February 24, 2009

Oh, the Yin and the Yang; the Dark and the Light of the stock market.  If your stomach hasn’t churned or your heart pounded through your chest, then my guess is that you have no market exposure.  If so, good for you.  If you are still invested get ready for more heart-throbbing days ahead. (more…)