July 2, 2013

One of my favorite 'sarcastic' statements these days concerning the condition of the world's economy is ... "why worry? ... The stock market is up!" .... 

To the point ... some friends of mine handed me an 'Investment Advisory' from Porter Stansberry, a well-known financial guru who is involved on a moment-by-moment basis in today's financial world. ... I want you to bear with me for a moment while I share just a few of his comments concerning today's financial 'condition.' ... I will finish up by explaining why this stuff is important to us as Christians and how it relates to end-time prophecies ...

I quote Mr. Stansberry ..."On May 7, the yield on the Barclays U.S. Corporate High Yield Index fell to a record low of 4.97%. ... It was the first day in the history of the U.S. 'junk' bond market (where less creditworthy companies borrow) that the index yield fell to less than 5%. ... The next day, yields fell again to 4.96%.

"Watching the action that week, we simply couldn't believe our eyes ... General Motors issued new debt paying a return of only 3.75%. ... General Motors is a company that's sitting on roughly $100 billion in pension obligations. ... It went bankrupt less than five years ago, and it operates in a sector that's still suffering from massive overcapacity. ... To say GM's 5-year note isn't investment worthy could well be a punch line of a joke. ..... And yet, there it was! ... You should imagine us sitting at our desk, rubbing our eyes in disbelief.

"It is impossible to justify the high price of junk bonds (and their corresponding low yields). .. You must remember that the default rate on these bonds will soar, sooner or later. ... In March 2009, the default rate on this category of debt hit 14.9%. ... And of course, default rates rise when more bonds are issued. ... Issuance hit an all-time record in 2012. ... Through the beginning of May, the high-yield sector was on pace to beat that record this year. ... In other words, NEVER before in modern American finance have so many investors places so much capital in riskier assets with less compensation. ... It is a sure bet - a 100% guaranteed lock - these investments will end badly.

Be patient as he continues ... "Believe it or not, that's not even the worst sign that the debt market is headed for an enormous crash. ... Not only are investors no longer being compensated adequately for the risk of default, issuers of these debts have also succeeded in placing clauses in the contracts that allow them to repay investors with additional debt securities rather than cash. ... So-called pay-in-kind toggle notes allow corporate borrowers the option of issuing still more debt rather than payingbondholders interest in cash. ... These kinds of terms were invented during the last credit bubble, at the height of the market in 2006 and 2007. ... Needless to say, a borrower who requires the option to repay you with still more debt isn't likely to repay you. ... These investments are sure to end badly, too.

"So, we are saying to our listeners ... GET OUT OF BONDS. ... The defaults will soar.  This is certain. ... Bottom line? .. The U.S. bond market - particularly junk bonds - is going to crash. ... When this crash comes - and is certain to do so - it will be the largest destruction of wealth in history.

Just a few more points .... Stanberry goes on to explain that the coming collapse in the bond market will be far worse than it was last time (2008) .... The reason? ... The Federal Reserve's actions have driven forward the huge bull market all across the board. ... Why? ... The Fed is printing up to almost $100 billion per month and buying bonds. ... That has forced the other buyers of bonds to buy riskier debt that, historically, has offered much higher returns.  

Now all this goes along with what we've been saying for some time now ... these reckless policies of the Fed and the central banking systems around the world are creating immense new amounts of 'worthless' paper money and using it to buy TRILLIONS of dollars worth of financial assets. ... Simply put, this is a paper pyramid of wealth. ... and like the 'house built upon sand,' it will soon come tumbling down!

... To add to this financial fiasco, In addition to this gross monetary stimulus, nearly all of the world's major Western economies continue to run mountainous fiscal deficits. ... Governments of all types are spending huge sums of money they can't even begin to finance with their current tax revenues. ... Now these policies - monetary and stimulus - were supposed to "jump-start" the world's economy. ... Simply again, that is not possible ... It cannot happen! ... It is the same thing as you or me making payments on some credit cards with other credit cards ... eventually, they all will come due, but are maxed out! .... you get the picture ....  

There's so much more, but for the sake of 'length', I will share just one more of Stansberry's observations ... 
and I quote:  "It's no coincidence America's massive NSA spying program, which clearly violates the Fourth Amendment ... the targeting of conservative groups by the IRS ... or the harassment of bona fide journalists by the Justice Department, all occurredduring this period of economic upheaval. .. These are the political policies of a bankrupt and desperate state. ... Just as it has ignored the time-tested laws of economics, so will it ignore the time-tested laws of limited government embodied in the U.S.Constitution.
...THERE IS NOTHING MORE DANGEROUS THAN A COLOSSAL, BANKRUPT, AND WELL-ARMED GOVERNMENT.

He concluded with this statement ... "We know these overreaching political and economic policies will not create prosperity. .. What we don't know ... what we can't know ... is exactly when these policies will fail. ...... How long can the world's major central banks continue to print trillions to finance the vast expansion of governments around the world without causing a serious economic disruption and a collapse of the world's paper currency system of money and credit? .... Unfortunately, God does not whisper in our ear ... but the markets do."

Oh, but God DOES whisper in our ears! ... We just need to walk closely with Him to know that. .... And what He is telling us through Bible prophecy is that all this IS going to take place, but ... as even Mr. Stansberry 
understands, we are just not exactly sure as to when ... (Matthew 24:36) 

So what does this coming economic 'armageddon' mean for us? ... Again, as Bible prophecy tells us, the coming world ruler ... the Anti-Christ ... will come upon the scene and will take control of world politics, but not by means of war. ... We see in Revelation 6:1-2 (the 1st Horseman of the Apocalypse) where a ruler will come upon the scene riding a white horse and wearing a crown. ...  He will have a bow in his hand but there is an absence of arrows, which translates to power but not military aggression. ... In other words, he will take control of the world by another means .... and I believe that will be the soon-coming economic collapse. .... The world will be in utter chaos and will welcome someone ... anyone ... who seems to possess the answers to the massive problems of starvation and civil calamity. ... This world ruler, who will possess the power of Satan, will be the 'answer' to all who are doomed to destruction ... those who do not posses the discerning power of the Holy Spirit. ... Sadly, it will be the vast majority. ..... 

This commentary is getting lengthy so I will stop here for this week. ... Next week, I will attempt to answer a question that comes up quite often in the Christian world ... what should we be doing to prepare for this coming 'event'? .... Until then, may God keep you safe and also give you peace in these increasingly difficult times ....

Until next time,

Red