Tag Archives: hard Brexit

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)

I LOVE PARIS IN THE SPRING TIME

The second round of the French presidential election takes place on Sunday.   Polls (!) show that the centrist candidate, Emmanuel Macron, is leading with 62% of the vote.   Madame Marine LePen, of the National Front, is not doing so well.   Reports say that she is already looking to what is often called “the third round of the presidential election,” voting for the Legislative Assembly, in June.   She has the potential to lead the opposition to Macron, who has no party support.   A future crisis (financial or terrorism), could lead to a major upheaval that would be to her benefit.

Mrs. LePen’s support comes mainly from rural areas and France’s rust-belt; Mr. Macron has all but 5% of the vote in Paris and the more affluent regions of the country.

The French political system, with three elections in just a few weeks, is rather complicated and, certainly this time, quite suspenseful.   For the first time since the birth of the Fifth Republic in 1958, the major parties are not involved in this second round – their candidates did not garner the necessary support.

It’s not just the political system that is different in France. Mr. Macron, married to his former school-teacher, 25 years older than himself, laughed off an accusation that he has had a gay relationship with a prominent radio personality; but now is issuing frequent denials about an overseas bank account!

In a heated televised debate on Wednesday evening, Madame LePen made the best prediction of the evening.   She said that seven days from now, France will have a female leader – either her or Angela Merkel, Germany’s Chancellor.   Mr. Macron is a committed European, whereas she would like the French people to have a Brexit style referendum on the country’s future membership. Under pressure,   M. Macron is talking about the need for Europe wide reforms, but he would keep France in both the EU and the single currency, the euro.

A victory for Emmanuel Macron would mean the 27 remaining members of the EU will stand together against the United Kingdom in the Brexit negotiations.   A win for Mrs. LePen would actually help London, though no politician in the UK is going to say anything to that effect!

So Sunday’s second round is not just about France, but Europe.   We should know the outcome sometime Sunday evening, Eastern time.

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MORE MIGRANTS COMING

  • Turkey appears determined to flood Europe with migrants either way:  with Europe’s permission by means of visa-free travel, or without Europe’s permission, as retribution for failing to provide visa-free travel.
  • The migrants arriving in Italy are overwhelmingly economic migrants seeking a better life in Europe.   Only a very small number appear to be legitimate asylum seekers or refugees fleeing war zones.
  • The director of the UN office in Geneva, Michael Møller, has warned that Europe must prepare for the arrival of millions more migrants from Africa, Asia and the Middle East.   (Gatestone Institute, 5/5/17).

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DIVORCE EUROPEAN STYLE

Yanis Varoufakis, the former Greek finance minister who negotiated with the EU during the financial crisis a few years ago, is warning the United Kingdom NOT to negotiate with the bureaucratic nightmare known as the European Union.   In effect, Mr. Varoufakis was saying that nobody wins against the undemocratic EU.

Wolfgang Munchau, a German contributor to the London-based Financial Times, is also warning the Brits that they cannot win against Brussels.

The alternative for the UK is simply to leave and face the consequences, what is called a “hard Brexit.”   There are plenty of other countries wanting trade agreements with the UK, so there’s definitely a case for this.   But the British government is hoping for a trade deal with the EU post-Brexit.   They have also re-committed themselves to closer military ties, reaffirming their commitment to Europe.

A hard Brexit could be a better choice.   It would certainly be quicker as Brexit talks will last two years – and that time frame only covers the actual exit, not talks on a new trade pact.

It’s like a divorce – after over 40 years together, the UK and the EU are now talking to divorce lawyers about a divorce settlement.   As with a divorce, the only people who will benefit are the lawyers.   And, as any divorced people know, divorce never ends – the animosity (and the financial costs) just go on and on.

Footnote:   Mr. Varoufakis, who cannot vote in France, has called on people to support M. Macron, in spite of the way he and his country were treated by the EU!

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PRINCE PHILIP TO RETIRE AT 96

Britain’s Prince Philip is retiring after seventy years of public service.   His wife, Queen Elizabeth II, will continue with royal duties, but will no longer be accompanied by her husband.

Shortly after the announcement, the prince was at a function when an older man came up to him and expressed his sorrow that the prince was “standing down” from his responsibilities; the prince consort quipped back that his problem was not standing down, but rather standing up!

In his seventy years of public service, Prince Philip has attended over 25,000 public engagements and made over 600 overseas trips representing the United Kingdom.

He will end his official duties in August, by which time he will be 96 but will still take on a few as he feels up to it.. The Queen turned 91 two weeks ago. It is expected that Princes Charles, William and Harry will take on some of Philip’s commitments.

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INTERESTING QUOTE

( I cannot independently verify the following, but thought that some readers would find it interesting. It’s from a magazine called “Truth in History,” which comes out of Oklahoma.)

“…Bob travels to London quite often on business and from time to time has dinner with a very close friend of his, which is Queen Elizabeth’s personal secretary.   Bob told me that he asked his friend when the Queen was going to turn the throne over to Charles.   He replied, “she does not intend to ever give the scepter to Charles – possibly to William, but her desire is to present her crown, throne and scepter to the Lord Jesus Christ when He returns, whose rightful throne it is. This is her desire.”

Anyone who has read “The Servant Queen and the King She Serves,” published a little over a year ago, will know that the queen is a very religious woman.

“This tribute focuses on the Queen’s own words to draw out the central role of her trust in Jesus Christ in shaping her life and work, offering us an inspiring multi-faceted insight into a life well lived for others.” (Backcover, Google Books)

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DEATH OF OBAMACARE

I have mixed thoughts about the vote yesterday to abolish Obamacare.   The ACA went into effect on April 1st, 2014.   Before you marvel at my memory, I should add that I ended up in the hospital on April 2nd and spent over four months fighting for my life. I had one of those deadly infections that’s killing people all over the world.   I needed two major back surgeries and then fought nausea and vomiting while working my way through all the medications.   They gave up on me twice.

During this time period I was in two different hospitals. The bill from the second one was a million dollars; from the first, it was roughly half that.

Obamacare covered almost all my bills.

If it had not been in place, I would have died.   If I had gotten sick a month earlier, before it came into effect, I would have, likewise, died.

Having said that, I’ve also seen the negative side of Obamacare, of people having to spend a significant part of their income to get coverage, of a bureaucracy that has often failed beneficiaries, of a system that is too expensive to be maintained.

I do believe that the Republicans have made a mistake – they should have come up with another system first, before abolishing what the country already had.

I’ve been in the United States for 27 years, since 1990.   Health care (and how to pay for it) has been at the center of American politics during that time.   Whereas other, less affluent countries, have been able to put a workable system in place in months, the richest country in the world still cannot find a solution to the problem of healthcare.

Apparently, President Trump, who is in New York to meet with Australia’s Prime Minister Turnbull, made a favorable comment to the visiting prime minister about their country’s healthcare system. It’s a single payer system, so the president’s comment is of particular interest.

A possible solution lies in each state working out it’s own system,

But it’s embarrassing that, after decades of talking about it, Washington still has not come up with a sustainable medical system.   Perhaps America could start by looking at the medical systems in Australia, the UK and Canada, our next-door neighbor.   France, too, which the WHO claims has the best system in the world. You would think that one of our TV news programs would take a look at one or two of these other countries.

I might add that if a Conservative government in the UK, the closest equivalent to a Republican administration, abolished the medical system, they would not make it back into power for decades.   The same goes for the French, Canadian and Australian conservatives.

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FAVORITE SCRIPTURE

John Wycliffe (1320-84) was a major figure in what became the Protestant Reformation.

“John Wycliffe was an English scholastic philosopher, theologian, Biblical translator, reformer, and seminary professor at Oxford.   He was an influential dissident within the Roman Catholic priesthood during the 14th century.”  (Wikipedia)

His favorite scripture was Philippians 2:12 – “work out your own salvation with fear and trembling.”   This was heresy to the Roman Church, which dominated the country at the time. Later, the Church had Wycliffe condemned as a “heretic.”   It didn’t bother him – he was already dead and buried. But his bones were exhumed and burnt.

He did not just influence religion.   He also had a profound political effect.   Not long after the birth of the modern parliament in 1265, Wycliffe encouraged people to think for themselves, thereby encouraging democracy, an idea the church did not like at all.

The freedom to think for ourselves is seriously threatened today by universities that won’t allow conservative speakers to address students, citing security concerns.   This is unlikely to be a temporary phenomenon.

Sadly, few remember Wycliffe today.   When I visited Lincoln Cathedral in England some years ago, I asked after the man who served there for some years in the 14th century.   A senior member of the cathedral’s clergy had never heard of him!   I did find a very thin book on him in the bookstore, which I bought.

John Wycliffe (pronounced WICKCliff) is one of the greatest men in our common history, who made a big difference both religiously and politically.

TRUMP AND MAY’S BIGGEST MISTAKE

President Trump and British Prime Minister Theresa May have just made their biggest mistake.

The American president received Chancellor Angela Merkel at the White House last week.   At a press conference, he clearly made the German chancellor uncomfortable when he publicly called for Germany to bring its military budget up to the full 2% of GNP agreed on by NATO.   This would raise military spending from 37 billion euros a year to 60 billion.   It would also restore German military might.

Across the ocean, Mrs. May is seeking closer military ties to Germany at the same time as pursuing Brexit.   The idea is to keep Germany close.   It would also contribute to restoring German military might.

British war time leader Sir Winston Churchill promised at the end of World War II that Germany would never rise again; 45 years later British Prime Minister Margaret Thatcher opposed German reunification following the fall of the Berlin Wall.

Attitudes change.   It’s now over seventy years since the fall of the Third Reich.   Today’s leaders see Germany as a model democracy and think it will always be that way.

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LONDON TERROR

Mrs. May has other things on her mind right now.   A terrorist attack on Westminster Bridge on Wednesday afternoon left 5 dead, including the terrorist and an unarmed policeman; also 29 hospitalised, seven of them critically.   The terrorist was known to the police as a “radical Islamist.”   No surprise, there.

As the terrorist was “British born,” the implication is that somehow it’s Britain’s fault and that more can be done (costing more, of course) to avoid such incidents in the future.

What will not be considered is this – Islam means “submit;” it’s the exact opposite of “freedom” which is what Britain is all about.   Muslim children raised in Britain will inevitably struggle with internal conflict, unable to reconcile the two opposing ideals.

A few weeks ago the BBC interviewed Somalis on the streets of Minneapolis, asking them how they felt about life in America and related issues.   Clearly better off than they were in Somalia, nevertheless every single one of them said they would rather live in a Muslim country and that America would be a better country if it embraced sharia law!

I first heard the news of the terror attack when I was having lunch with a friend.   A man sitting alone at the next table was checking his mail on his phone and suddenly exclaimed “there’s been a terrorist attack in London.”   He had no idea I was from the UK.   When I told him, his first question was “why don’t they arm the police?   How can a policeman defend himself when attacked like this?”

I explained that one third of all the police are now armed and you see a lot of them in London, protecting the main tourist sights.   But Wednesday’s murder shows that every policeman needs to be able to defend himself, even if it’s only with a stun gun.

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BREXIT MOVING AHEAD

Mrs. May has also announced that she will invoke Article 50 of the Treaty of Rome on March 29th.   This will formally begin Britain’s exit from the European Union.   Failure to reach agreement on terms within a two-year period will automatically mean a “hard Brexit,” with Britain simply leaving the EU and signing trade deals around the world with other countries.   There would be no trade deal with the 27 remaining EU countries.

Such a failure would likely impact any military agreement between Germany and the UK.   It would be hard for the two countries to maintain a good friendship when they cannot even reach an agreement on future trade.

The formal triggering of Article 50 will put a dampener on celebrations in Rome, for the 60th anniversary of the signing of the Treaty of Rome.   All 27 leaders of the EU will be there – Mrs. May will not be attending.   Interestingly, all 27 leaders will also be meeting with the pope.

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SCOTTISH REFERENDUM #2

The Scottish leader, Nicola Sturgeon, continues to mimic a “Rottweiler.”   With her teeth firmly latched onto Mrs. May’s pants, she will not let go of her demand for a second referendum on Scotland’s independence.   (If the vote goes against her, she will ask for a third and a fourth, until she gets what she wants!)

Scotland depends heavily on subsidies from England.   Ms. Sturgeon should concentrate first on improving the nation’s finances, showing that Scotland can go it alone.   Then she could go back to the Scottish electorate and claim an independent Scotland would do better on its own.

But that’s not what’s happening.   Rather, Scotland is hoping Germany will come to its rescue.   Edinburgh has even opened a trade mission in Berlin (whisky for cars?).

Don’t get me wrong.   I’m not trying to make light of a serious situation.   The United Kingdom is better with Scotland.   It would be a real shame if England’s northern neighbor pulled out after more than 300 years of unity within one nation.

It would also present a potentially serous security issue if Germany replaced England as Scotland’s benefactor.   Scotland’s independence would be compromised — the Irish parliament already finds it cannot agree on a budget without Berlin’s agreement.

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1400 YEARS OF SECTARIAN CONFLICT

There’s a big battle going on in Mosul between ISIS and government forces.   Optimism has been expressed on the imminent defeat of the terror organization.

Overlooked is the fact that Shia militias are operating in Iraq, without restraint.   The government is majority Shia.   Many Sunnis identify with ISIS.   If the terrorists are defeated, another organization (perhaps worse than ISIS) will arise to protect the Sunnis from the Shia.

Western countries, led by the US, have been sucked into the ancient Sunni-Shia conflict in the Middle East.   Whereas the West sees things ideologically, Middle Easterners see the situation from a sectarian viewpoint.   To us, ISIS is bad because it’s a violent terrorist organization; to Sunni Muslims living in a majority Shia country, ISIS is their protector.   To the Sunnis, this is also America’s fault – until the 2003 invasion of Iraq, the country was dominated by Sunnis. They lost out when America came in!

There’s two lessons here for the West – 1) Get out of the Middle East and stay out!   2) Stop importing the region’s sectarian conflicts through immigration policies that do not take into account national security.

In other words, let’s get back to the pre-1914 Middle East, before the war that brought down the Ottoman Empire and led to the fragmentation we now see in the region.   The war led to increased British dominance of the region, and now American domination.   It’s a mess.   It’s time to get out.

On another note – why is the US getting involved in Yemen, another territory witnessing increased fighting between Sunni and Shia?  A US Navy Seal was killed there last month in a raid by American forces.

The Sunni-Shia conflict has gone on since the 7th century, almost seven times as long as the United States has existed as a nation.   Do we really think that our involvement is going to end the conflict between the two major branches of Islam?   Do we really think that moving Shia and Sunni from the Middle East to the US (and Europe) will suddenly make them love each other?   After the London attack on Wednesday, one security expert interviewed mentioned that the UK knows of 850 British passport holders, fighting with ISIS in Iraq and Syria. If they are British raised, why are they still identifying with Sunni Islam and anxious to fight Shia Muslims?   It’s a question that needs to be addressed.

It’s just been announced that the perpetrator of the London attack was Kent-born and raised Khalid Masood, aged 52.   He was the son of immigrants and  a convert to Islam.

It should also be noted that the perpetrator was unusually old for a terrorist.

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If you can find it on pbs.org, this week’s Frontline examined the rise of the Shia militias in Iraq and the (Shia) government’s failure to address the problem.

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ANOTHER BLESSING OF BRITISH RULE

“Among some contemporary Israelis the British Mandate has come to be viewed nostalgically.  Although Palestine did not have the elephants, maharajahs and tigers of the Indian Raj, the same culture of Highland reels, polo and pink gins in the King David Hotel flourished.  So did an incorruptible civil service, possibly a novelty in the region.”  (‘Blood and Rage”, by Michael Burleigh, 2009, page 89)

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THE POWER OF FORGIVENESS

A few days ago a friend gave me a copy of the Seventh Day Adventist magazine, “Amazing Facts.”   The cover story was titled:  “The Power of Forgiveness.”   Forgiveness is sadly lacking, even amongst Christians.   Church organizations often find it hard to forgive, so how can they teach their members to forgive others?

Yet our eternal life depends on it.

When the Apostle Peter asked Jesus Christ how often should he forgive his brother, Peter suggested that seven times would be enough; the Messiah’s response was “seventy times seven”, meaning an unlimited number of times (Matthew 18:21-22).

Jesus expounded on one of the points in His model prayer, adding:

“For if you forgive men their trespasses, your heavenly Father will also forgive you.  But if you do not forgive men their trespasses, neither will your Father forgive your trespasses.”   (Matthew 6:14-15)

If Christians always practiced forgiveness, we would no doubt have more Christians.

Perhaps, given time, even the Muslims would follow and learn to forgive a 1400-year-old schism.