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THE NEXT GLOBAL ECONOMIC CRISIS.

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  • Bruce Porteous
    *_THE NEXT GLOBAL ECONOMIC CRISIS._* Will the world experience a new economic crisis that will be even more serious that the one that we have just been through
    Message 1 of 1 , Oct 31, 2010
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      *_THE NEXT GLOBAL ECONOMIC CRISIS._*

      Will the world experience a new economic crisis that will be even more
      serious that the one that we have just been through or enter a period of
      sustained economic growth?

      It is now becoming clear that the Anglo-Saxon and some European nations
      have not recovered from the recent economic crisis as was expected a
      year ago, and will slide back into a double-dip recession.What has gone
      wrong? Why has not the economic stimulus packages worked?Many economists
      had expected that by now that the USA would be in economic recovery, not
      facing high unemployment and a faltering economy.Now, out of desperation
      the USA and UK are planning to print even more money in an effort to
      revive their faltering economies.

      Meanwhile many other economies have recovered strongly from the recent
      recession.In Europe the Germany economy is recovering strongly, as have
      most of the Asian economies.Why have the Anglo-Saxon and some European
      nations not been able to do likewise?

      The reasons are simple.It does not require an economist with a PhD to
      figure out that if a country spends more than it earns year after year,
      eventually they will be in trouble. While often economists disagree with
      one another on the causes and solutions, the fundamental problem why the
      English speaking nations are in the mess they are today is because for
      years they have lived beyond their means on borrowed money. Sadly,
      nothing has been done to correct this, which was the cause of the recent
      recession; rather the current economic policies of the Anglo-Saxon
      nations are only made the situation worse.

      The reasons for the economic crisis were:

      1.Large trade deficits -- the Anglo-Saxon nations have been importing
      far more than they export.

      2.To finance their imports they have borrowed money from creditor
      nations with trade surpluses, which they now need to repay along with
      the interest.

      3.Much of the GNP growth up to 2007 in these nations was in consummation
      of imported goods, housing and the service sector, while manufacturing
      declined.

      4.The cost of servicing this debt has escalated while government
      revenues have declined.

      5.Over generous welfare programs which have drained financial resources
      from the productive sectors of the economy.

      6.A break-down on the moral fabric of society and poor work ethics

      7.Costly wars and expensive defense budgets.

      In an effort to revive their economies from the recession governments
      have operated large deficits by creating stimulus packages with borrowed
      and printed money.They have continued to borrow off their creditor
      nations, increasing their international debt which is making long-term
      recovery even more difficult.

      The UK and some European Governments have recently slashed Government
      expenditure, acknowledging they can no continue to borrow to finance
      their deficits.The UK is now insolvent, struggling to pay the interest
      on their enormous national debt, while still incurring further debt. The
      cut-backs have been so drastic that the UK economy will remain
      economically depressed for years.

      Rather than accept responsibility for the financial mess many countries
      are now in, politicians have blamed bankers and speculators, instead of
      admitting it was their own fiscal policies that created the crisis in
      the first place.Bankers make their money by lending -- if loose monetary
      policies create too much money in circulation then bankers will find new
      customers to lend money -- the result being the prime-housing bubble and
      banking crisis.Existing loose monetary policies have continued, putting
      more fuel on the flames, with this time the governments themselves
      taking the risk, not the bankers.

      Governments are like any business or household -- if they spend more
      than earn they will eventually face bankruptcy. We now have a situation
      where some governments face the prospect of not being able to repay
      their debts, much in the same way many corporations failed during the
      recent recession.To add to their woes, to prop up the failing banking
      systems, governments have printed money to either lend to these
      insolvent institutions, invested in them, or have provided loan
      guarantees.As the US and UK economy continues to weaken, many of the
      institutions that their governments have propped up will fail, dragging
      down the governments themselves.

      The next economic crisis will be bought about when nations default on
      their loans, rather than a banking crisis as was bought about with the
      last crisis.Governments around the world have recklessly borrowed
      excessively to prop up their collapsing financial institutions;
      transferring much of the debt from these failed institutions to
      governments own balance sheets.While some of this debt has been financed
      by printing money, a considerable amount has also been financed through
      borrowing on international money markets.Governments around the world
      now owe over 57 trillion dollars in debt, not including local government
      and pension debt.Managing this debt will soon become unsustainable --
      governments will simply not have the money to repay the interest let
      alone repaying the loans.There will be a chain-reaction of sovereign
      bankruptcy.

      Many nations outside the Eurozone have resorted to printing money to
      inflate their economies, injecting funds into propping up their banking
      systems and spending on infrastructure projects.The USA, Japan and the
      UK have been among the countries less able to afford such increased
      spending because of the level of their national debt, but other nations
      have also resorted to the same practice, including India and China.The
      consequence of this global printing of money will result in debasing the
      value of most currencies -- we are already seeing a flight to gold by
      canny investors.

      Already in Europe Portugal, Greece, Spain and Ireland their Governments
      face the possibility of defaulting.Other EU countries are being forced
      to live within their incomes, creating depressed domestic economic
      conditions. The Eurozone countries have not been able to print money and
      have had to slash government expenditure in an effort to balance their
      budgets.Such dramatic cut-backs in government expenditure has resulted
      in the contraction in their economies, rising unemployment, and the
      growing danger of political instability.

      *What will now unfold?*

      Many may not realise that the world is now awash with money.The increase
      in the money supply as a part of the economic stimulus package has
      resulted a weakening of the US dollar and now threatening to destabilize
      global trade. Other nations are now printing money to buy dollars in an
      attempt to prevent their currencies rising against the dollar.Eventually
      this will fail as printing money will not help in achieving sustainable
      economic growth, and will only cause a lack of confidence in the value
      of currencies, leading to inflation and financial collapse.Those nations
      that have linked their currencies to the dollar, especially the Asian
      currencies, will see the dollar reserves wiped out, and massive
      devaluation of their own currencies.This will create a new global
      economic crisis, much worse than what was experienced in 2008.

      The collapse of the US dollar will bring on a period of considerable
      political of social unrest around the world, with many governments
      collapsing. With the collapse of government there will be wide-spread
      political unrest, as people demand a return to prosperity, even if it
      means giving up individual freedoms.People will look for a strong leader
      who can restore world peace and prosperity.Already in Western Europe
      civil unrest is spreading, as their populations refuse to accept the
      reforms required to enable countries to restore their economies.

      *The reshaping of Europe.*

      The European Central Bank which has adopted a more conservative fiscal
      policy than other Central Banks, as a part of their mandate to maintain
      a stable Euro; requiring its member states in the Eurozone to live
      within their incomes.This will eventually see the Euro replace the US
      dollar as the world's reserve currency, because of sounder fiscal
      policies.It is also being dominated by Germany, leading the Eurozone
      becoming the dominant monetary power to restore a new world economic order.

      The EU now consists of one group of European nations showing strong
      economic growth under-pinned by a re-emergent German economy, and
      another other group weighed down with debt, experiencing economic
      stagnation.There is a growing unwillingness by those Eurozone countries
      that have recovered from the economic crisis to continue supporting
      those nations struggling with unsustainable debt levels. Rather than the
      wealthier nations continuing to prop up those EU nations facing
      insolvency, the Eurozone is expected to restructure, with the German-led
      coalition dictating the monetary and political policies for the
      Eurozone, something that will be difficult under the existing structure.
      Those nations that cannot get their economies back into balance could be
      either forced out of the Eurozone, or have their economies controlled by
      the ECB or similar body, in return to being bailed out.

      There has been a shift of power in the EU towards Germany, which is the
      largest and strongest growing economy (3.5% growth) and the leading
      exporter.The German economy has gone through several years of economic
      readjustment to where it is now one of the most competitive in the
      world, is the world's second largest exporter, and has benefited from
      adopting more conservative fiscal policies than other nations.Germany is
      experiencing a growing self-confidence and becoming much more assertive
      in reshaping Europe into a cohesive political and economic union.With
      the support of France, Germany is pushing for further amendments to the
      EU constitution to bring this about a more cohesive European Union

      Ireland, Spain, Portugal and Greece are being forced to restructure
      their economies in effort to recover.One option is to leave the Eurozone
      to allow their currencies to devalue and make the adjustments to their
      economies to enable them to recover.Other heavily indebted Eurozone
      nations such as Italy, Netherlands and even France could be threaten
      with expulsion unless they can get their budget deficits in order.

      Even those Eurozone countries that have recovering economies have large
      national debts which they need to reduce.They are not in a position or
      willing to support those Eurozone member countries facing insolvency.

      Meanwhile a number of the EU countries outside the Eurozone are being
      forced to make painful adjustments to their economies.In particular the
      UK and the Eastern European nations (with the exception of Poland) have
      to learn to live with falling taxation revenue, high unemployment, and
      stagnant economic growth. The UK is unlikely to recover.

      However it will not be till the collapse of the US dollar that the world
      will be thrown into the next economic crisis that will force the
      reshaping of the reshaping of a new economic and political landscape of
      the world.The dollar is expected to weaken significantly next year as
      the increase in the US money supply will stimulate consumer spending,
      creating inflationary pressures and widen the current account
      deficit.This will trigger off another global economic crisis.

      A new economic order will replace the failed Anglo-Saxon capitalistic
      model.A German-dominated Europe will install a new economic order upon
      the world, with the Euro becoming the world's only reserve currency. It
      is only from such crises will the Europeans be willing to accept a
      strong leader and provide the political support for such a leader to
      impose unity and reforms upon a politically fragmented EU.

      This new global economic order under a German-led EU will impose upon
      the world reforms to create a new regulated world economy to manage
      international trade, enforce social, environmental and religious
      standards upon the world under the pretense of maintaining world peace,
      protecting the environment, and maintaining prosperity.Many individual
      freedoms will be suppressed for the sake of the State in bringing about
      a new world order.Germany will be the one nation that can lead the world
      to economic recovery, but will only do so on its terms.

      Meanwhile the Anglo-Saxon nations will be forced to repay their debts,
      their assets sold off, and their people forced to live in poverty.They
      will be little sympathy for the plight of the bankrupt English-speaking
      world from their creditors, who will have lost much of their wealth
      because of Anglo-Saxon extravagance. The people of the UK, USA, Canada,
      Australia and New Zealand will be enslaved to their creditor nations,
      and will enter a time of great suffering and hardship.

      History is unfolding right before our eyes, as a new economic order is
      forced upon the world to replace the old failed model.It will be a
      regulated system in an attempt to avoid the distortions in the market
      that has happened over the last few years.While this new economic system
      will bring in a period of global prosperity for a short time, it will
      also fail.It will only be when a new world government is installed upon
      the earth based on the Law of God, under the rulership of Jesus Christ,
      that the world will experience peace and prosperity.

      Bruce Porteous

      31 October, 2010

      bruceport@...

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