Commentary on world events that relate to Bible prophecy and on Rapture Ready issues world events.

Apr 30, 2012

Europe Back to the Boiling Point

The global debt crisis is back in the headlines. Right now, red flags are popping up all over Europe, with Spain being the most-watched nation. Last Thursday, Standard & Poor's cut its credit rating on Spain by two notches, citing the government’s growing budget deficit as a result of economic contraction. A day later, the Spanish government released data showing a record 5,639,500 people are unemployed in that nation, with the unemployment rate hitting 24.4 percent.

Spain may need to pump around $200 billion into its ailing banks. Amazingly, bad loans now make up 8.15 percent of all loans on the books of Spanish banks. That is the highest level in eighteen years. The official debt-to-GDP ratio for Spain is 79 percent, but the actual total is around 130 percent.

Italy is not far behind Spain. Its massive $2.5 trillion outstanding public debt has become a daunting risk for Italian banks. While banks are not obliged to purchase domestic government bonds, they are doingso for a very clear reason. They have purchased so many already that if they don't buy more, a collapse in the bond market would wipe them out.

The banking system in Europe is so critical, the U.S. Federal Reserve, the European Central Bank, and the International Monetary Fund have stepped forward with bailouts totaling $7 trillion.

Egon von Greyerz, a partner at Matterhorn Asset Management out of Switzerland, recently noted how desperate efforts to sustain the current global financial system have become, “So they (the IMF) raised 400 billion from various nations, but where is the money coming from? The majority is coming from Europe and the EU. (They are) all bankrupt. They have no funds. They have to print money. Japan, which has the biggest debt to GDP ratio of most industrialized nations, they are a major contributor of about 60 billion. So it’s ridiculous. Here is the bankrupt helping the bankrupt."

The task of controlling the banking crisis is like someone trying to stop a large vat of liquid from boiling over. Each time the vat begins to bubble, governments have poured cold water into the mix to lower the temperature. As they pour more water into the vat, the water level rises closer to the top, and the increased volume makes it harder to manage the brew.

One only needs to look at the results of the recent Long Term Refinancing Operations to see how quickly the debt crisis has returned to the boiling point. In December, the ECB made $1.3 trillion in three-year loans to several European banks to lower the bond rate that had reached unsustainable levels. Once the money became available, the rates on bonds dropped by several basis points. Now that the last portion of the money has been handed out, interest rates have quickly risen back up to dangerous levels.

Several nations have tried to bring their budgets under control by implementing austerity measures. Politicians in France, Italy, Spain, the UK, and Greece have approved spending cuts totaling over $600 billion. European leaders are starting to find that austerity has its own dire economic consequences. When you reduce government spending, the economy will naturally contract.

Austerity may already be doomed at the ballot box. This coming Sunday, France and Greece will hold elections, and the anti-austerity parties have the upper hand. French President Nicolas Sarkozy will likely lose to socialist Francois Hollande, who has attacked government cutbacks. Greece's socialist party leader Evangelos Venizelos has promised no new taxes, or across-the-board wage and pension cuts, if his party participates in a coalition government.

Every time a major central bank like the U.S. Federal Reserve and the European Central Bank gets together for a meeting, the financial press is always speculating about whether there is going to be more money printing. With Western governments running annual shortfalls of nearly $4 trillion, of course, there will be more printing of currency. It's the only way to maintain what has become history's greatest Ponzi scheme.

At some point, the law of mathematics will kick in, and we will reach a flashpoint where the financial rupture will be so quick and overwhelming in scale that the central banks will be powerless to stop the meltdown. With such a huge percentage of the population dependent on the government, the failure of the system will create massive social unrest.

The rise of the Antichrist could dovetail perfectly with this crisis. The Beast is predicted to gain total control over the global banking system. Some type of crisis would be very helpful in setting the stage for such a vast shift in economic power.

"And he causeth all, both small and great, rich and poor, free and bond, to receive a mark in their right hand, or in their foreheads: And that no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name” (Revelation13:16-17).


China’s Patience

One of the literary descriptions of the Chinese people is often wrapped in one word–inscrutable. Among that word’s synonyms are the following: incomprehensible, unexplainable, unfathomable, impenetrable, inexplicable, ambiguous, and difficult. I think of the nation of China, in general terms, as one thing more–extremely patient.

One of the most validating proofs of the patience of the Chinese is found in, I think, the matter of the debt it has purchased and maintained on its financial books–especially the debt of the United States of America. It is estimated that China holds U.S. Treasury bonds and other debts totaling approximately $1 trillion. The Chinese nation holds indebtedness of other nations, also, to the approximate tune of $2 trillion. It is a troubling matter that this is the case, when one considers that China has been, since the revolution that brought communism to power, America and the world’s most dangerous adversary. It is the most dangerous because of the synonyms above that define the Chinese communist leadership since, particularly, the time of Mao Zedong. They have been all of those things: incomprehensible, unexplainable, unfathomable, impenetrable, inexplicable, ambiguous, and difficult.

And now they hold the wealth of America and the world in the palms of their inscrutable hands. The question arises: Why do they keep purchasing debt, when they might never collect, seeing as how all nations are headed, obviously, toward the fiscal abyss?

Is it just that they, like most of the world’s economic gurus seem to think, believe that no matter how bad it gets, a solution will magically be found, and the indebted nations will make good on their restoration to financial health? They have been, since that communist revolution, the most bellicose of enemies in terms of threatening anyone who crosses them. Why the patience now, gladly holding the debt of their enemies, who by any stretch of the imagination have no hope of repaying the debt that is growing exponentially?

Now, I know the Chinese have made protests and even threats of fiscal action if their debtors don’t straighten up their economic acts. But, for the most part, the Chinese leadership’s patience is…well…inscrutable. Add to all of this perplexity another piece of the Chinese puzzle. The following brief excerpt from a recent news story is interesting to consider:

North Korea has almost completed preparations for a third nuclear test, a senior source with close ties to Pyongyang and Beijing told Reuters, an act that would draw further international condemnation following this month's failed rocket launch which the United States and others said was a disguised missile test. ‘Peace and stability on the Korean peninsula and in Northeast Asia bears on China's national interest and also bears on the interests of all relevant parties,’ Chinese Vice Foreign Minister Cui Tiankai told a news briefing. ‘China will oppose anything which might jeopardize peace and stability on the Korean peninsula and in Northeast Asia, as this would damage China's national security interests and the interests of the relevant parties as well,’ he said, when asked about the possibility of a new nuclear test by North Korea. (Reuters, "China makes veiled warning to North Korea not to carry out nuclear test," 4/25/12 –My thanks for the source to Jonathan Stettin.)

This is the same China that threatened to bring its hordes into the Korean peninsula in support of the North Koreans during the Korean conflict. It was even willing to go to nuclear war with the West if the North Korean regime looked to be losing, according to reports back then. Now China is acting like the peacemaker, even set to discipline its rabid North Korean pet, if necessary to preserve world stability.

Why the present level of civil comportment?

To my way of thinking, the answer is China is exerting extraordinary patience for very special reasons. We are paying to outfit the army of 200 million we read about in Bible prophecy and in accounts from news sources that tell us China and its Asian allies could easily outfit such a military juggernaut today.

They are confident–I believe their patience shows—that they will recoup their losses when they one day have enough, in terms of superior military assets, to become bill collectors on an unprecedented scale. We begin to see how even the kings of the East–as inscrutable as that part of the world is—fit into the end-times prophetic puzzle. --Terry

***Terry James' Book Just Released!***

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