Tag Archives: Franco-Prussian War

GLOBAL OUTLOOK BLEAK FOR 2019

There have been an increasing number of articles warning about the global economy.   The latest predicts a depression worse than the Great Depression.   None are specific, in terms of “when” but all say the signs are there.

The most common problem cited is debt.   Governmental debt is already over $22 trillion in the US.   This is the highest amount any country in history has ever owed, so it’s difficult to predict what will happen.   In addition, there’s also corporate and private debt.   The figures given do not include mortgage debt, which is also extremely high.   Nor do they include the annual commitments for Medicare, Medicaid, Social Security and other government programs, the so-called entitlements.

The 2008 financial crash started as a mortgage failure.   So did the 1873 crash.   It began in Austria-Hungary and spread around the world.   This particular crash was known as The Great Depression, more than fifty years before the depression of the thirties.   It would be a mistake to think it cannot happen again.

In fact, depressions have been a regular feature in America’s history.   There have been as many as 47 recessions and depressions since independence.   After the end of the Revolutionary War, there was a depression, in which the economy slumped by 50%.   The depression of 1873 lasted 25 years, on and off.   Unemployment was at 50% in the 1896 election, resulting in the highest turnout ever – a full 80% of voters participated that year.

Not every year saw the economy in deep depression.   It came in three waves.   It finally ended with the Spanish-American War, which got the economy moving again.

PANIC OF 1873

The 1873 depression in the US started with the collapse of Jay Cooke & Co., then a major component of the American banking establishment.   Contributory failures were the post-Civil War inflation, rampant speculative investment and losses in the Chicago and Boston fires (1871 & 1872).   Bank reserves plummeted in the first two months from $50 million to $17 million.

“The failure of the Jay Cooke bank, followed quickly by that of Henry Clews, set off a chain reaction of bank failures and temporarily closed the New York stock market.   Factories began to lay off workers as the United States slipped into depression.   The effects of the panic were quickly felt in New York, and more slowly in Chicago, Virginia City, Nevada (where silver mining was active), and San Francisco.

“The New York Stock Exchange closed for ten days starting 20 September.    By November 1873 some 55 of the nation’s railroads had failed, and another 60 went bankrupt by the first anniversary of the crisis.    Construction of new rail lines, formerly one of the backbones of the economy, plummeted from 7,500 miles (12,070 km) of track in 1872 to just 1,600 miles (2,575 km) in 1875.    18,000 businesses failed between 1873 and 1875.    Unemployment peaked in 1878 at 8.25%.    Building construction was halted, wages were cut, real estate values fell and corporate profits vanished. ”  (Panic of 1873, Wikipedia)

GRUNDERKRACH

I single out the 1873 depression because of the similarities in the global situation today.   The depression in German speaking countries is known as the Grunderkrach, or Founders Crash.   When Germany was united following the Franco-Prussian war, a lot of money flowed into the country, mostly from French war reparations. Loans were then made, mostly for mortgages.   When people couldn’t pay them, the banking system collapsed.   This spread to the US and Britain.   It was the beginning of the end of Britain’s global supremacy.

The Great Recession of 2008 began as a housing crisis.   It actually began two years earlier when housing prices started falling.   For years previously house prices had been rising fast.   Millions of people bought homes, homes they could not afford.   The banks loaned to people who should not have had loans.   It was a recipe for disaster.

The same thing is happening again.   Bad loans and speculative investments are pervasive.   Student loans are so high they could be the cause of a collapse by themselves.   Government debt is at an all-time high as are corporate debt and consumer, non-mortgage debt (credit cards).

I am reminded of what the late President of France, Charles de Gaulle, said over 50 years ago.   He did not want Britain to join the EU (he had incredible foresight!).   He dismissed the US and the UK as “the Anglo Saxon debtor nations.”   The British-American economic systems have been built on massive debt.   It works well . . . for a while!   Eventually, there comes the day of reckoning.

That may be this year.

We should never have borrowed so much money, especially after the Crash of 2008.   Often it’s been encouraged by government, when it makes little sense.   Social engineering has boosted the value of homes and increased the number of loans (more profits).   A government decree made under the last administration was that all neighborhoods should be 25% minority; the only way to achieve that was to give 100% loans to people who had never owned a house. Additionally, 100% loans have been made to immigrants, who have had little time to learn how the economy works in the US.

Remember, at stake here is America’s global leadership role.   A serious set-back for the economy would weaken the US.

It’s interesting here to note that the euro is set up very differently, with government borrowing limited to 3%.   The euro has its own problems, but could emerge as the greater currency in the event of a global depression.  It’s already used by more people than the US dollar.

Debt can mean the borrower ends up in servitude to the lender. Note the following warning from scripture:   Proverbs 22:7 7  “The rich rules over the poor, And the borrower is servant to the lender.”

This is a far cry from the promised blessings for obedience:

Deuteronomy 15:6 says:  “For the Lord your God will bless you just as He promised you; you shall lend to many nations, but you shall not borrow; you shall reign over many nations, but they shall not reign over you.”

A second cause of financial concern is impending TRADE WARS.   These will slow down the global economy.   Once again, uncertainty is an issue here.

A third reason the global economy is at risk is BREXIT, now less than two months away.   This could seriously affect inter-European trade.

A fourth factor, increasingly seen, is the economic Rule of Inequality. This is an economic law that predicts the likelihood of revolution based on the gap between the rich and the poor in any country. China is very concerned about this.   There is only one country with a greater gap and that’s the US.   Trump’s election was our “revolution” – if he is not able to deliver, there will be trouble ahead.

There are many countries around the world with a similar gap. France is going through weekly demonstrations about the rising gap between rich and poor; Venezuela and Zimbabwe are on the brink of revolution.

Other factors to watch are China’s slowdown and even the weather. Both can impact economies.

The above are all the predictables.   There may be other factors, unpredicatables, such as war, that can add to economic woes.

It remains to be seen.   But the warnings are there.   The only question is “When?”

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RUSSIA & CHINA POSE BIGGEST THREATS TO US

“Former national security adviser Zbigniew Brzezinski warned in 1997 that the greatest long-term threat to US interests would be a “grand coalition” of China and Russia, ‘”united not by ideology but by complementary grievances.”   This coalition “would be reminiscent in scale and scope of the challenge once posed by the Sino-Soviet bloc, though this time China would likely be the leader and Russia the follower.”

Nobody listened back then, but now it’s becoming clear that the two countries are cooperating to deal with what each perceives as the American threat.   The latest development is in Venezuela, where they are supporting President Maduro and condemning the US for backing the “usurper,” Juan Guaido.

In the past, the US has thought a Sino-Russian entente outlandish. Only now it’s happening.   As Mr. Brzezinski warned, it’s not that they have a lot in common, but rather they share a common enemy.

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UK TO CRASH OUT OF THE EU

Now, nothing can stop Brexit from happening.   Even many supporters of remaining in the EU see that.   The way Europe has treated the UK will make it impossible to avoid a hard Brexit.   (This assumes no change of heart in the EU.)

The facts are that British incompetence has led to Europe just wanting to get it over with.   Looking back on almost 50 years of membership there is a realization that Britain has never been a good fit, either, so why try to keep the British in?

A third reason is NATO.   Most of the other European countries sense that the US is pulling out of NATO, that it doesn’t want the responsibility or cost of defending the other members.   This is why Europe is trying to put together its own military force.   Britain, more pro-American, would only get in the way of this.

So, expect a full Brexit on March 29th.

This will not prevent Mrs. May running around Europe like a chicken with its head cut-off!

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BOOK QUOTE

“From July 1780 until the end of the year, the Catawba River Valley and the adjacent northern districts were the scenes of some of the most brutal warfare ever fought in what is now the United States.   It was a civil war, with all its horrors, as neighbors and families turned on one another with a vengeance.”   (page 140, Partisans and Redcoats, by Walter Edgar, 2001)

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COULD SEVENTY BE “IT” FOR THE US?

flags-collage-of-three-flags-flags-of-eu-uk-and-usa-together

Tuesday February 21st marks a special anniversary that will most probably be overlooked.

It happens to be the 70th anniversary of the United States replacing Great Britain as the world’s number one power.

After fighting two world wars, Britain was faced with three major international crises all at once.

The new British Labour government had already announced plans to give independence to India, after two centuries of British rule.   This led to turmoil on the sub-continent between Hindus and Muslims.   British troops tried to keep the peace.

At the same time Palestine exploded.   In 1946 Jewish nationalists blew up the King David Hotel in Jerusalem, British military headquarters in the mandated territory, killing 91 people.

The first two problems occurred on British territories; the third was in Greece, where communists were trying to take over the country.

At the same time, Britain was broke, following the two major global conflicts of the first half of the twentieth century.   Early in 1947, economic problems at home meant that Britain could no longer allocate funds to the conflict in Greece.   They decided to inform Washington to see if America wanted to take over.

“On Friday, February 21st” the Secretary of State General George C. Marshall, left the State Department early to attend the bicentennial celebrations of Princeton University and receive an honorary degree.   Then the British Embassy telephoned to say it had two urgent notes.”   As these notes were urgent, Dean Acheson, the Under-Secretary of State, asked the Embassy’s first secretary to deliver them rather than wait until the Monday.   “Recalling this episode in later years, Acheson wrote, “They were shockers”.”

“It was not being asked to provide aid to Greece that was shocking. The State Department was already preparing a plan for aid.   It was the fact that Britain was pulling out and proposing to hand over responsibility.   After all, the US Joint Chiefs of Staff had advised the previous year:   ‘The defeat or disintegration of the British Empire would eliminate from Eurasia the last bulwark of resistance between the US and Soviet expansion . . .  Our present position as a world power is of necessity closely interwoven with that of       Britain , , ,

“This was a momentous change.   For two centuries Britain had been the dominant power in the eastern Mediterranean.   Now it seemed to be surrendering that role in two key countries.   It is often said that Americans lack a historical sense that Europeans have, but on this occasion it was the Americans who saw the historical significance of that moment.   To British ministers, battling from day to day to keep the country’s head above water, this seemed to be just a temporary retrenchment in one area.   None of them appeared to see any larger implications in the decision.   The American view was put in grandiloquent terms by Joseph M. Jones, who was in the State Department at the time:   ‘Reading the messages, Hickerson realized, as had Henderson before him, that Great Britain had within the hour handed the job of world leadership, with all its burdens and all its glory, to the United States.” (“Picking up the reins,” Norman Moss, 2008, page 64, italics mine).

The whole world did not recognize the change immediately,   It was to be another ten years before it became clear to all.   At the end of 1956 the Suez Canal crisis showed that London could not do anything without American support.   Soon afterward, the US was encouraging Britain to dismantle its empire and then to join the European Union (then the European Economic Community).

US vs EU

It’s ironic then that, over the weekend, at the Munich Security Conference, “leading German foreign policy experts” called “on the EU to reposition itself on the world stage, replacing the United States as the West’s ‘torchbearer.’   Since Washington’s change of government, the United States no longer ‘qualifies as the symbol of the West’s political and moral leadership, according to Wolfgang Ischinger, Chair of the Munich Security Conference.   It is therefore up to Europe ‘to make up for this loss.’”   (GermanForeignPolicy.com)

That’s easier said than done.   But the EU could be the world’s dominant military power for the simple reason that it is the world’s biggest trading power.   That’s the main reason why the US took over from Great Britain.   Economic power = military power.   The US is struggling economically which is one reason why President Trump is demanding the Europeans pay more for NATO.   Of course, the Europeans have their own financial problems, but they have an urgent need to protect themselves from both Russia and Islamic terrorism.   If they are going to have to pay more for defense, why not go-it-alone?   Especially when they no longer have confidence in American leadership.

One of the first superpowers, Babylon, was predicted to last “seventy years” (Jeremiah 25:12 & 29:10), illustrating how seventy is a significant number.   In Psalm 90:10, Moses was inspired to write that “our days may come to seventy years,” the lifespan of many human beings. Perhaps more significantly in the rise and fall of nations is the fact that, after seven decades, most people have forgotten everything. Few today remember World War II.   Few remember that Baron Ismay, Secretary General of NATO from 1952-55, described the alliance as intended to “keep the Russians out, the Americans in and the Germans down.”   In the current debate on the future of the alliance, this has been completely forgotten.

Dismantle the alliance and two things will happen:   1) the American president will no longer be “the Leader of the Free World;” and 2) Germany will become the undisputed Leader of Europe (she already is economically).   On the 70th anniversary of America’s ascendancy, the Munich conference saw nations actively discussing the end of America’s pre-eminence.

President Trump in Washington and Vice-President Mike Pence, who addressed the conference, may see themselves as being in the lead, calling the shots, insisting on changes within the alliance; but the other member nations have the choice of forming their own military alliance, which will not be led by the United States.

As with the change seventy years ago, it may take a while to fully emerge, but this is the direction we are heading in.   On Sunday, Germany’s Chancellor, Angela Merkel, announced she is seeking closer ties with Russia to bring about the defeat of ISIS.

It might be good for Washington’s new leaders to take a lesson from the great nineteenth century German Chancellor, Otto von Bismarck, who once observed that a great power, to survive, must be “one of three” in a world governed by “five.”   Note the following:

“Of the five original great powers recognized at the Congress of Vienna, only France and the United Kingdom have maintained that status continuously to the present day, although France was defeated in the Franco-Prussian War and occupied during World War II.   After the Congress of Vienna, the British Empire emerged as the pre-eminent power, due to its navy and the extent of its territories, which signaled the beginning of the Pax Britannica and of the Great Game between the UK and Russia.   The balance of power between the Great Powers became a major influence in European politics, prompting Otto von Bismarck to say “All politics reduces itself to this formula:  try to be one of three, as long as the world is governed by the unstable equilibrium of five great powers.”   (“Great Power,” Wikipedia)

In 1914, the German and Austrian empires went to war with the British, French and Russian empires.   Germany was one of two in a world governed by five.   The Germans lost.  They repeated the same mistake in World War II, when Germany and Japan were the two, in a world still governed by five.   The three opposing powers were Britain, America and Russia.   Again, the Germans lost.

The five major powers right now are the EU, China, the United States, Japan and Russia (a great military power, but not so great economically).   The US remains in alliance with the countries of the EU and Japan, making it one of three in a world governed by five.   If the EU separates from the US, that will reduce America to being one of two.

This all may seem incredible with almost daily news of set-backs in the EU.   France and Holland may leave after elections early this year; Greece and Italy have serious financial problems, which may affect the euro.   But the fact remains that Germany dominates the continent and Germany is putting together a European military force to rival America’s.   The Munich security conference showed the will is there, boosted considerably by the change of administration in Washington.

Daniel 2:21 says that God is behind the rise and fall of nations.   “And He changes the times and the seasons; He removes kings and raises up kings.”   It could be, that after seventy years, the American Era is coming to an end. Munich this weekend showed that many want to see that happen.

Something to think about as the US passes its seventieth anniversary!