August 11, 2007
Readers are no doubt aware of the increased volatility and the large drops in the financial markets the last few weeks. These drops in global stock markets and the credit squeeze which has developed in world financial markets have been attributed to the meltdown of the subprime mortgage market in the USA. This meltdown is very real, and it does explain the growing problems in the financial markets this year. To illustrate how bad it is, I suggest you see the videolink below which was sent to me by a reader in Georgia. It is a clip of Jim Cramer’s “Mad Money” on CNBC-TV in which he said “Armageddon'” was nearing in the financial markets, and in an unusual outburst of candor for a TV commentator, he said there were major differences in what financial insiders tell him privately and what they say in their public statements.
The housing mortgage crisis is bad enough; however, something much worse happened this week. As bad as the subprime lending woes have been, there has been no previous need this year for the US Federal Reserve Bank and other Central Banks to intervene with massive infusions of liquidity to save the markets. Few realize how bad things were this week. The US Federal Reserve Bank injected $62 billion into the financial markets and banking system on August 9th and 10th. It has not had to take such action since the panic caused by the attacks on the World Trade Center on 9/11/01. Indeed, the Fed had to intervene in the markets three different times on Friday. When it “injects liquidity,” the Fed creates money “out of thin air” and loans it into existence to its borrowers who then use the new money to prop up Wall Street and other financial markets.
As bad as it was in the USA, the European situation must have been worse. American media briefly mentioned the problems of a French financial institution, Paribas, but most media said no more on the subject. A front-page story in the Minneapolis Star-Tribune on August 11, 2007 (“Banks step up efforts to steady markets” by Vikas Bijaj) reported that “The European Central Bank injected into the system for a second day, adding another $84 billion, after providing $131 billion the day before.” This means the European Central Bank injected $215 billion (!) in two days to save the European financial markets from an apparent collapse. Combining the European and US Fed actions, $299 billion had to be injected into the financial markets in just two days to prevent their collapse. This was an historic financial emergency! One wonders if we would have witnessed a 1929-scale panic if the Central Banks had not intervened as aggressively as they did to essentially become “buyers of last resort.”
What caused this sudden “heart attack” in the financial markets of the Western World? It seems apparent it was a threat by Communist China against the US dollar and Western financial markets in general. In a London Telegraph article entitled “China threatens ‘nuclear option’ of dollar sales” (which I have seen dated both August 7 and August 8, 2007), Ambrose Evans-Pritchard wrote about the twice-made Chinese threat. Xi Bin, A Chinese official with cabinet rank in China, indicated that “…Beijing’s foreign reserves should be used as a ‘bargaining chip’ in talks with the US.” Evans-Pritchard’s article indicated further that this action was being considered by China to prevent the US Congress from acting in America’s own interests in doing something about the undervalued Chinese currency which is causing much of the US trade deficit. A second Chinese official, He Fan, “let it be known that Beijing had the power to set off a dollar collapse if it chose to do so” (see link below).
I think we have a clear “cause and effect” relationship here. On August 7-8, China publicly threatens to collapse the US dollar and on August 9-10, the European and US markets avoid a cascading set of financial collapses only because of incredibly large interventions by Central Bankers to stabilize the markets. China’s threats are now hanging over all Western markets like a Damocles sword, and every month that the US Government spends more than it takes in increases China’s leverage over both the US Government and the U.S. financial markets. China wins and America loses under the current policies of the US Government and US global corporations. China’s threat was apparently made to ensure that the US Government and Congress do nothing to rescue American interests in what is now a dire situation with Communist China. China is “calling the tune” and it expects President Bush and the US government to “do what they are told.” China is simply exercising the inevitable power that “lenders” always have over “borrowers” (Proverbs 22:7). China’s threat stops just short of an open declaration of financial war against the USA.
Also included below is an August 10,2007 analysis of the situation by J.R. Nyquist entitled “A Brief Commentary on Financial Crises.” The link to this article is provided below, but it is publicly available at; www.financialsense.com. He cites the growing “economic bloc” being created by Russia and China which is increasingly hostile toward the Western nations. Mr. Nyquist points out, presciently in my view, that “The West doesn’t seem to understand, as yet, that the emerging financial crisis isn’t merely a financial crisis. In Beijing and Moscow it is seen as something more. It is seen as part of a strategic sequence in which U.S. power is eclipsed…The Russians and Chinese want to replace America as the world’s dominant military and economic power.” Mr. Nyquist also notes that a severe economic crisis could easily lead to a political crisis in the Western world which could lead to new governmental and economic systems replacing our current ones.
This crisis is an example of biblical prophecy being implemented right before our eyes. As readers of my articles and this blog know, Ezekiel 38 prophesied over 25 centuries ago that in “the latter days” of this age, Russia and China, together with Iran, would lead an alliance which will be hostile toward, and will eventually militarily attack, the USA , Europe and their allies. While the Israelis and Jews are the modern “house of Judah” (in biblical terms), the USA and the European nations are the modern “ten tribes of Israel” (in biblical terms). As those who have read my books on this subject (see book links), this identification is not at all difficult to document and prove. My books reveal that God has been keeping his biblical promises and prophecies about the ten tribes of Israel from the time they went into exile in the 8th century BC until modern times. God challenges everyone in Isaiah 41:22-27 to acknowledge his sovereign reality by watching whether or not he can keep his promises and implement his prophecies concerning the nations! Readers of my books, articles and blogs know that God has proven his case. The world is largely blind to this fact, but even the widespread deception of the entire world was also prophesied to happen (Revelation 12:9).
Russia and China are flexing their muscles against the USA and the Western nations. As J.R. Nyquist notes in his article: “military power is built on an economic foundation.” If China “pulls the plug” on the US dollar (or if it crashes due to the mortgage market woes), the USA will not be able to afford even its currently-reduced level of military power. Today it was reported that a key military advisor to President Bush suggested that a reinstitution of the military draft needs to be considered. That may be a “trial balloon” for what America’s leaders know they will have to do soon: vastly lower the cost structure of the US military in order to afford even the current levels of American military forces. A draft would end the exorbitant costs of the “volunteer army.”
The stock markets have also had some very large up days in the last few weeks in spite of the on-going mortgage crisis. This can happen in times of high volatility, but the above-cited Minneapolis Star Tribune article offered another possibility for these up days. It cited an analyst named Richard Bove as saying that he has “trouble trying to figure out where [the sizable buying] is coming from.” One suggestion was that “the investment arm of the Chinese government” was responsible for buying up massive portions of the US stock market on the “up” days. If so, China is gaining even more control over the US markets by becoming a major force in the US equity markets as well as the US credit markets. China clearly is trying to force the surrender of the USA via economic and monetary warfare without Russia and China having to fire a shot. The endlessly foolish spending policies of the US Government and Congress play endlessly into the hands of Russia’s and China’s goals.
This problem is going to get much worse in the future. American politicians will do everything they can to find some way to blame some nation or group of nations for the inevitable financial melt-down which will actually have been caused by the witless policies of US politicians. If they had lived within the nation’s means all these years and had been faithful stewards of the USA’s currency and assets, today’s financial crises would not be occurring. The foolish decisions have been going on for so long, one does wonder if the collapse of America’s strength and power was planned. It would be a classic dialectic action to create a problem which allows the engineers of the crisis to implement a “solution” which was pre-planned all along. If a great financial crisis occurs in America and the Western world, it could usher in new political and economic systems which would have been unthinkable a few years ago. Those new systems could also fulfill biblical prophecies about the Beast Power arriving on the world scene.
Don’t envy the leaders of the this world. They have only a few more years to mismanage their nations as they pursue power and money for themselves. When Jesus Christ returns, he will appoint his saints to rule all nations and God’s wise rule will then last a very long time (Revelation 20:1-5).
Financial Meltdown: “We have Armageddon…will somebody come on TV and tell the truth about how bad it is”
Host Cramer on CNBC
Video at: http://www.youtube.com/watch?v=SWksEJQEYVU