David Westerfield

Gospel. Culture. Technology.

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US in Depression and What it Means for the Church in America

The ‘D’ word is being uttered in the mainstream now. Despite whatever the media says concerning the ‘jobless recovery’ we’re in (which is a complete oxymoron) or the ‘summer recovery’ we’ve begun that Obama touted as truth last month, all indicators are pointing to the fact that the US is officially entering an era of economic depression, something not seen in my or my dad’s generation.

The numbers tell the story. A couple of articles in particular are pointing to this fact. One on CNBC, the other by Ambrose Evans-Pritchard of the Telegraph. In addition, even liberal, Keynesian economist Paul Krugman from the New York Times is calling this the beginning of the Third Depression, as I talked about in my last entry. He is dead wrong on how to fix it, but his diagnosis is correct.

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Credit Crisis Was a Gigantic Ponzi Scheme, on the Scale of Enron x1000

It seems this message is becoming more mainstream these days. It’s about time. Max Keiser is right to call this financial terrorism, especially in light of the fact that we, the tax payers, have bailed them out while everyone else is suffering from their dealings, and as a result, they have had record profits this past year. Unbelievable. I’m pro-profit, pro-free-market, pro-conservative, but Max Keiser is also right to call this Rigged Market Capitalism. I can’t think of a better term for it.

Anyone else find it odd the “flash crash” (1000 point dow drop within a matter of minutes) happened right when Congress was negotiating rules regulating derivatives? Oh and oddly enough now, the rules around derivatives have been completely gutted as I understand it. There is rampant corruption and looting going on within the government and the larger corporate world, particularly the monolithic banks. This is not a free market but an oligarchy.

More generally, here are Davidowitz’s views on the economy at large. Even Paul Krugman from the New York Times is calling the Third Great Depression, though he’s completely wrong about the remedy (even more spending).

Situation Vastly Worse Than Two Years Ago in the Global Markets: Taleb

http://www.cnbc.com/id/37610064

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GM Soy Linked to Sterility, Infant Mortality … DuPont Just Approved to Begin Distributing New Type

This kind of makes me sick at my stomach. Just as a study is released within the past several months indicating genetically modified soy has been linked to sterility and infant mortality in hamsters (and thus likely humans as well), DuPont has been approved by the USDA to begin production of soy with yet another genetic modification.

Seeing how inept the government is at managing, well, anything these days, you can imagine my concern for what this means when the USDA claims to have vetted genetically modified food that we all will consume at some point in the near future. Read on and be prepared …

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European History Repeats Itself

“Europe’s fiscal Fascism brings British withdrawal ever closer” – Ambrose Evans-Pritchard – Telegraph

“Just when you thought the EU could not go any further down the road towards authoritarian excess, it gets worse.” – Ambrose Evans-Pritchard

Things are spinning out of control in Europe, economically, fiscally and socially. German Chancellor Angela Merkel said today that “Europe is in a ‘very, very serious’ situation and that success is not yet guaranteed.” And no amount of money thrown at the situation can fix the structural cracks that are now emerging in the very fabric of the continent.

And what do these things have to do with the US? We face a very similar situation in the near future when compared in parallel to Europe with states versus the federal government. The only difference is the federal government is well established. Certainly there are differences that cannot be overlooked. Yet the situation sounds all too familiar with the federal government over-stepping its reach on several different fronts since Obama took office.

Ambrose Evans-Pritchard from the Telegraph hits on the historical nature of what is happening (history repeating and history being made) as well as the tyrannical nature of what the EU is proposing to alleviate problems. As one commenter said in response to the article, “I’m getting a very bad feeling about how matters economic and social are going to pan out over the next 3 – 5 years. There’s trouble blowing in the wind.”

Below are some of the summary quotes from the article above.

“Fonctionnaires and EU finance ministers will pass judgement on the British (or Dutch, or Danish, or French) budgets before the elected bodies of these ancient and sovereign nations have seen the proposals. Did we not we not fight the English Civil War and kill a king over such a prerogative?”

“Yet again we are discovering the trick played on our democracies by Europe’s insiders when they charged ahead with EMU [European Monetary Union], brushing aside warnings by their own staff economists that monetary union was unworkable without fiscal union. Jacques Delors knew perfectly well that this would lead inevitably to a crisis, but it would be the ‘beneficial crisis’ that would force sovereign parliaments to submit to demands that they would never otherwise accept.”

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Debt Contagion Picking Up Steam

And so the contagion spreads … first, Latvia’s economy (and government) collapses not that long ago, then Greece and Portugal’s ratings were cut by S&P yesterday, and now today, Spain was cut. And the question is, how much longer before we realize we’re a lot closer than we think to the same situation? Even more importantly is when will we realize that all the trillions in bailouts and stimulus bringing us to our knees in debt currently has done nothing to actually stimulate the economy (73% of economists agree to this effect, CNN Money)? And how much longer before politicians start feeling the effects of their poor decisions in the polls, as if the Scott Brown victory wasn’t enough of an indication? I wonder what this summer’s Town Hall’s are going to look like. To follow developments pertaining to this from a respected global economist, read Ambrose Evans-Pritchard at the Telegraph. History is in the making here.

Economic Predictions for 2010

Not pretty scenarios. Government spending has thrown free market mechanism’s into distortion and disarray. So it should shape up to be an interesting year.

There are various takes on how everything will pan out. The MSM (main-stream media) paints everything as a rosy picture: we’re coming out of the recession and things will only get better, we hear.

However, all of the realistic economists, the one’s who rightly predicted crashes in recent years, are predicting some hard events that will take place this year forward.

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The Real Issue with Dubai’s Debt

Dubai is just a harbinger of things to come for sovereign debt – Jeremy Warner

These are the exact things Peter Schiff and Gerald Celente were warning about a while back. The issue with this surprise Dubai news is not that they may default on $80-90 billion in debt (the news that came out today). Rather, looking into the near future, this event may be a foreshadowing of things to come with the large industrialized nations. That’s why there was a global sell-off.

In 2007 to 2008, a financial crisis came upon the private sector. And so what did governments do? They bought up the debt amounting to trillions of dollars ($15.3 trillion to be exact). So now governments around the world hold an unsustainable amount of debt. Now what? Jeremy Warner explains it well here:

“The fear is that threatened default in this tiny desert kingdom is just a harginger of things to come for government debt markets as a whole. According to new estimates by Moody’s, the credit rating agency, the total stock of sovereign debt worldwide will have risen by nearly 50 per cent between 2007 and 2010 to $15.3 trillion. The great bulk of this increase comes not from irrelevant little states like Dubai, but from the big advanced economies – America, Europe, and Japan.”

“Up until now, markets have assumed that the ruinous fiscal cost of addressing the financial and economic crisis was probably just about affordable to the major economies. That view may be about to be challenged.”

These issues here (amongst others) are exactly why the government should stay out of the free market. Let the companies crash that need to crash. Get rid of the entire category of “too big to fail” and let the market do what it needs to do. Governments, when they intervene, wind up distorting and elongating what should have been a two year economic meltdown at max, only for some form of short-term economic gain. Now, governments are looking like they can’t pay the bills. Lo and behold: Keynesianism in action!

Now we’ll have to see if the rest of Celente’s predictions and forecasting comes true, which is that governments, as a response to not being able to pay debt bills, will have to raise taxes, which will then in response cause some form of a tax revolt among the people. You think the tea parties were crazy? Just wait and see if they try to do this.

China Risks Moving World Into Greater Recession

China has now become the biggest risk to the world economy – Ambrose Evans-Pritchard, (bracketed insertions and emphasis mine)

These are headlines you won’t ever read, that to me are worthy of true news alerts.

“By holding the yuan to 6.83 to the dollar to boost exports, Beijing is dumping its unemployment abroad – ‘stealing American jobs’, says Nobel laureate Paul Krugman. As long as China does it, other tigers must do it too.

Western capitalists are complicit, of course. They rent cheap workers and cheap plant in Guangdong, then lobby Capitol Hill to prevent Congress doing anything about it. This is labour arbitrage.

At some point, American workers will rebel. US unemployment is already 17.5pc under the broad ‘U6‘ gauge followed by Barack Obama [the same gauge used to determine unemployment during the Great Depression if that is any indicator of where things actually stand]. Realty Track said that 332,000 properties were foreclosed in October alone. More Americans have lost their homes this year than during the entire decade of the Great Depression. A backlog of 7m homes is awaiting likely seizure by lenders. If you are not paying attention to this political time-bomb, perhaps you should.”

It’s worth noting that Evans-Pritchard is known for making overstatements, though he has been right most of the time to be sure. However, these numbers are not overstatements.

Russia Today with Gerald Celente on the Economy

Gerald Celente discusses the current status of our economy with Russia Today. In posting this, it is not an attempt at fear-mongering, but simply to point out what needs to be heard so we elect leaders who know what they’re doing to get us out of this. Frankly, even most Republicans don’t seem to understand what to do either. As one guy said recently on a blog I read, “First we need to elect competent leaders who know how the machine of politics and economics works, and then we’ll talk about issues.”

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