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Wall
Street in Crisis
by Gary Kah
On
September 15th, Lehman Brothers, one of this nation’s
oldest and most prestigious banking firms filed for Chapter
11 bankruptcy. This represents the largest financial failure
in U.S. history and will produce enormous ripple effects.
It will impact our economy and markets more than any of the
other negative financial developments of the past year. Why?
Lehman owed its creditors a staggering $613 billion. Those
parties will now be unable to regain their funds, nor spend
or invest them elsewhere in the economy. The money has evaporated!
The Feds balked at rescuing the financial giant. They didn’t
have the funds available. They had just bailed out Fannie
Mae and Freddie Mac to the tune of $200 billion the week before.
Our government has also stepped in with $85 billion to save
AIG (American International Group) – America’s
largest insurer – which was nearing bankruptcy. After
helping AIG the Feds may have few resources left to channel
elsewhere. The pot is drying up!
 The
government only has three options. It could raise our taxes
in order to pay for these bailouts, which would extract money
from the economy at a time when it needs more. It could print
more currency, which would lead to hyper-inflation and an
eventual collapse. Or, it could borrow even more from foreign
entities – if they are willing to loan us the money.
This last option would further increase our colossal debt
(currently over $10 trillion) and lead to our government’s
eventual bankruptcy.
The fact is our government is almost as broke as the institutions
it is trying to assist. It is in no position to help. The
obvious next question is, “Who will bail out the U.S.
Government when it goes broke?”
Once the current system has become completely undone, I believe
a new system will be proposed as the solution. It will include
some form of global government based on regional economic
arrangements, similar to the European Union and the proposed
North American Union. Global planners have long understood
there can’t be a new one-world system until the old
order has failed. Developments in the U.S. will most certainly
impact the entire world.
Make no mistake, the current situation is very serious and
will get worse. Former Federal Reserve Chairman Alan Greenspan
today warned, “This is a once-in-a-century crisis.”i
The only “good” news this week has been that Bank
of America agreed to buy out financially troubled Merrill-Lynch
so that it would not have to declare bankruptcy. The price
tag: $50 billion (an all stock trade).
At present, I am only aware of a few major national banks
that are still relatively sound: JP Morgan Chase, Bank of
America, Wells Fargo, Goldman Sachs and possibly Citigroup.
The impact of our banking crisis is already being widely felt,
as it has created a significant credit shortage. Businesses
rely on credit to fund inventory and expansions. No credit,
no economic growth, no way to overcome the downward-trending
recession!
This summer, small business optimism fell to 88.2 (1986=100),
establishing one of the longest strings of recession-level
readings in the history of the survey.ii The credit crunch
has been affecting these businesses most severely. A long-time
friend and supporter recently wrote:
We
are trying to sell the business. This past year I realized
that even though we had paid down our original start up
debt to half of what it was, the banks still aren’t
going to loan any more money. Everything is unsecured because
the banks are so gigantic. Therefore they only will loan
half the money you should be getting. Everyone with a small
business I know of says the same thing.
What happens is, when my company grows, it gets pulled back
down because there is no operating capital…The banks
will only loan us $100,000. That’s a joke.
Every small business today should be on notice…The
giant centralization going on could eventually swallow us
up and make our business worthless…Everything is slowly
forcing small businesses to sell out to larger ones, or
wealthy individuals.
Consumers
have begun to feel the crunch as well, as consumer credit
is dwindling. Credit card companies, affected by the impending
financial crisis, are drastically increasing their lending
rates – sometimes with little or no advance notice.
Suddenly a growing number of consumers are paying substantially
more interest on their monthly payments. With less money to
spend, what will move our consumer-driven economy forward?
Then, there are the oil prices, remaining stubbornly high
at the pump in spite of temporarily lower prices in global
markets. Here in the U.S. the high prices are due in part
to the damage caused to oilrigs and refineries by Hurricane
Ike. Early estimates have the storm damage in the Texas/Louisiana
area exceeding $15 billion – another drain on an already
strained insurance industry. The U.S. has now been hit by
every sort of natural disaster in 2008, except for a major
earthquake/eruption/tsunami. All of this is taking a toll
on the economy, forcing us into a deeper recession.
As people increasingly feel the pinch in their pocketbooks
they will look for someone to blame for their hard times.
So far, the federal government is getting the most heat. The
Federal Reserve, which is responsible for many of our economic
policy decisions, is especially feeling the pressure. The
last two Fed Chairmen have been Alan Greenspan and Ben Bernanke
– both Jews. And some of the individuals overseeing
our largest remaining banks are also Jewish. One can see the
“handwriting on the wall.”
I fear that with 8 million Muslims now in America, outnumbering
the 5.7 million Jews, and with anti-semitism on the rise among
the general public, the Jewish people could once again become
the scapegoat. History has a way of repeating itself. What
is happening in America today is very reminiscent of what
happened in Germany preceding the rise of Hitler. I believe
it may be just a matter of time before Jews are persecuted
and forced to return to Israel. The persecution of true Christians
could follow on the heels.
From a financial standpoint, I have two recommendations: Get
out of debt; and stay out of debt! If this means selling off
some of your investments in order to pay down debt, you are
urged to do so. Purchasing at least some gold and silver or
other precious metals is recommended as it could provide a
short-term hedge. Keeping some cash on hand is also strongly
advisable. Your goal should be to prepare for the worst, even
while hoping for the best. Always, before doing anything,
seek the Lord for guidance; then do as He leads.
From a spiritual standpoint, draw near to Christ and get on
His agenda. Being in step with Jesus and serving Him faithfully
is all that will ultimately matter. Love Him wholeheartedly
and serve Him with integrity – living blamelessly among
those around you.
Remember that God is still in control and is aware of all
your needs. Pursue Him, work hard, plan wisely – leave
the rest in His hands. Expect Him to do great things even
under difficult circumstances.
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