Tag Archives: Venezuela

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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GOVERNMENT FOR THE PEOPLE

Margaret Thatcher defined socialism as “equal shares of misery for all,” the best definition I’ve ever read of the economic theory and subsequent reality.

The following is a more matter-of-fact explanation that I got when I googled “socialism,” looking for the exact definition.

“a political and economic theory of social organization that advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole;……

  • (in Marxist theory) a transitional social state between the overthrow of capitalism  and the realization of communism.”

Basically, what it’s saying is that government controls everything and it’s a stepping-stone to communism.  Keep in mind that Marxists believe that, when communism is achieved, everybody lives in paradise – although, of course, they don’t actually believe in paradise, heaven or any other nirvana.

The reality, of course, is that people actually live in hell.

The best example of communism today is North Korea, where everything is controlled by the government, even thoughts.

Another example is Cuba, where almost everything is controlled by the government.

China is not a very good example.  Not any more.  Whereas the government still controls every thought, the economy is more of a free for all.   So long as you keep your mouth shut, you can be a millionaire!

Until the latest British election, many people thought socialism was dead.   Mrs. Thatcher herself had rolled back socialism in the UK and helped the nations of Eastern Europe send the communists packing. But the latest election in the United Kingdom showed that socialism is alive and kicking – and may even be the next government.

Why the appeal?  Because when people feel the inequities of capitalism, they naturally favor the opposite, thinking everything will be put right by the firm hand of government.

Somebody once said that “conservatives believe in the exploitation of man by man; while socialists believe the exact opposite!” Think about it before moving on!

Venezuela has been in the news a great deal over the last few days. There, an incompetent socialist government has destroyed the nation’s economy.  An attempt was made by a member of the country’s military to overthrow the government.  The sight of the helicopter flying over the capital city of Caracas brought back memories of a similar situation in Ghana almost 40 years ago.

Ghana is a case study in the failings of socialism, well-meant but a disaster.

Ghana got its independence from Great Britain in 1957.  It was the first black African country to receive independence, first because it was the most promising, with the greatest number of highly educated citizens and the most money in the bank.   Within four years, it was bankrupt and a dictatorship.   Eventually, the military had to take over to save the country.

A second attempt was made at democracy, which also failed; the military then took over again.   Whereas the politicians were generally well educated, military men were not well-versed in running an economy.   Soon, there was a high rate of inflation and serious shortages.   These led to a coup on June 4th, 1979, a coup my wife and I experienced first-hand.

The helicopter flying overhead, filmed by somebody on a balcony, reminded me of how Diane watched a similar scene during Ghana’s coup.   In Ghana, the helicopter opened fire and she quickly went indoors.   At the time, I was trying to get back to the house using side roads to avoid the fighting.   At one point, I was held up at gunpoint by rebel soldiers who wanted to take my car.

The coup was successful.   A new government came to power led by Flight Lt. J.J. Rawlings, an avowed socialist who was enamored by the way things were done in Eastern Europe.   The people said the “J.J.” stood for “Junior Jesus.”

He immediately started setting things right, freezing the price of eggs at 8 cedis a dozen and controlling the price of beer, two priorities!   The problem was that farmers could not produce eggs to sell at that price as chicken feed was too expensive; with beer, there was a shortage of hops.   I thought that a national shortage of beer would lead to revolution fairly quickly, but I was wrong.   Ghana remains the only African nation I know of that did not experience civil unrest when the beer ran out!

Serious shortages became a major problem.   Supermarkets had next to nothing on their shelves.   Basic commodities could only be obtained through barter – I remember bartering shirts for gasoline and toilet paper for rice!

As the economy went into freefall, so the government was made more oppressive.   Foreigners were blamed for just about everything – in August, we were told to leave the country.

Elections had been scheduled before Rawlings took over.   Under pressure, he allowed them to go ahead and a new, still socialist, government came to power, led by a nice man who was also an alcoholic.   At least beer was now available!

Eventually, he was overthrown and J.J. was back, followed by even greater economic disaster.   It wasn’t until Rawlings started to reverse socialism and encourage free enterprise that things started to improve.

Government control of the economy = disaster.   Mrs. T got it right!

So why is socialism “in vogue” again?   The rising gap between rich and poor is one answer; another is the youth vote – most young people have no memory of when Europe was largely socialist.   As Winston Churchill once said:   “If you’re not a socialist at 20, you’ve got no heart; if you’re still a socialist at 30, you’ve got no head”.

In I Samuel 8 we read an account of how Israel wanted a human leader like all the other nations around them.   God warned the people that it would mean greater financial hardship, as government would constantly expand and the people would have to pay for it.  The warning was of 10% taxation.  Today, taxes run much higher.

10 So Samuel told all the words of the Lord to the people who asked him for a king. 11 And he said, “This will be the behavior of the king who will reign over you: He will take your sons and appoint them for his own chariots and to be his horsemen, and some will run before his chariots. 12 He will appoint captains over his thousands and captains over his fifties, will set some to plow his ground and reap his harvest, and some to make his weapons of war and equipment for his chariots. 13 He will take your daughters to be perfumers, cooks, and bakers. 14 And he will take the best of your fields, your vineyards, and your olive groves, and give them to his servants. 15 He will take a tenth of your grain and your vintage, and give it to his officers and servants. 16 And he will take your male servants, your female servants, your finest young men,[a] and your donkeys, and put them to his work. 17 He will take a tenth of your sheep. And you will be his servants. 18 And you will cry out in that day because of your king whom you have chosen for yourselves, and the Lord will not hear you in that day.”

Don’t just assume that this only applies to kings and kingdoms.   In the last century, new nations have come into existence, most of them with a president rather than a king.   It turns out the kings were cheaper.   Note the following from Ecclesiastes 10:16-17:

“Woe to you, O land, when your king is a child,
And your princes feast in the morning!
17 Blessed are you, O land, when your king is the son of nobles,
And your princes feast at the proper time—
For strength and not for drunkenness!”

Elected politicians think they have an automatic right to take everybody else’s money and spend it how they want.   Again, Margaret Thatcher put it well when she observed:  “the trouble with socialism is that eventually you run out of other people’s money!”

That’s exactly what Jeremy Corbyn of Britain’s Labour (socialist) party is promising the people – more taxes to help government expand.

That’s what Venezuela got with Hugo Chavez, the socialist president who presided over the collapse of the country’s economy.   His successor, Nicolas Maduro, has not been able to improve things.

The great lesson here is: there’s a lot of evils in capitalism, but don’t think government will make things better!

Just ask the Venezuelans….!

 

 

 

INTERNATIONAL NEWS THIS WEEK

Putin and Syria

Here’s an interesting paragraph from German-Foreign-Policy.com, February 15th:

“German military personnel are beginning to consider Russia’s intervention in Syria as having prevented IS/Daesh from taking power in Damascus and carrying out offensives against other countries – including Israel.”

While the western media concentrates on exposing Russian air attacks as potential “war crimes,” it may be that, overall, Russia’s intervention has been a good thing, stopping the spread of ISIS and thwarting a greater threat to Israel.

The key words are “may be.”  We may never know.

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Russia’s intervention in Syria may have, inadvertently, helped Israel.  President Obama’s occupancy of the White House certainly has not.   US unreliability has led Israel to seek alliances elsewhere. Bret Stevens wrote yesterday in the Wall Street Journal:

“On Sunday, Israeli Defense Minister Moshe Ya’alon publicly shook hands with former Saudi intelligence chief Prince Turki al-Faisal at the Munich Security Conference. In January, Israeli cabinet member Yuval Steinitz made a trip to Abu Dhabi, where Israel is opening an office at a renewable-energy association. Turkey is patching up ties with Israel. In June, Jerusalem and Riyadh went public with the strategic talks between them. In March, Egyptian President Abdel Fatah al-Sisi told the Washington Post that he speaks to Mr. Netanyahu “a lot.”

“This de facto Sunni-Jewish alliance amounts to what might be called the coalition of the disenchanted; states that have lost faith in America’s promises.  Israel is also reinventing its ties to the aspiring Startup Nations, countries that want to develop their own innovation cultures.” (“Israel looks beyond America, WSJ)”

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February 15th was an important date historically.   On that day, in 1942, the British surrendered Singapore to the Japanese.   It was a major turning point for the British Empire. It wasn’t until almost fifteen years later that the world could clearly see the Empire was no longer the major power it had been, but Britain’s defeat at the hands of the Japanese was disastrous.   Note the following from Stratfor:

The Beginning of the End of the British Empire — The humiliating surrender of Singapore on Feb. 15, 1942, was the first sign of decline for the British regional order.

“On Jan. 31, 1942, Allied engineers blew a hole in the causeway linking the island city of Singapore to the Malay Peninsula, hoping to slow the advance of Japanese Imperial troops down the coastline. The blast resounded throughout the city. As the story goes, 19-year-old university student and future prime minister of Singapore Lee Kuan Yew was walking across campus at that moment. When his British headmaster, passing by, asked what the sound was, Lee responded, “That is the end of the British Empire.”

Lee Kuan Yew was to lead Singapore for over three decades, presiding over one of the world’s greatest success stories.

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The US election has taken a worrying turn, again.   The two Democratic candidates are busy criticizing the police in order to get the African-American vote. They need to tread carefully.   The police are all that stand between the general population and anarchy. One day, one of these candidates may need a policeman or two to protect them. Undermining the police is not in anybody’s interests.

Christopher Marquez, an Hispanic decorated US Marine, was attacked and left unconscious by a gang of young African-American teenagers at a McDonald’s in Washington, DC, last week.   They had been taunting him along racial lines asking him if “Black Lives Matter,” the popular slogan started last year following the deaths of a number of young black men at the hands of white police.

“I believe this was a hate crime and I was targeted because of my skin color,” Marquez, who is Hispanic, told The Daily Caller. “Too many of these types of attacks have been happening against white people by members of the black community and the majority of the main stream media refuses to report on it.”

Of course black lives matter.  But white ones should, too.   No attention was given to this story of the white Marine until Fox News” put it on its website this morning.  No attention has been given either to the death of a 17-year-old white male a few miles from our home – shot by a white policeman who, some think, over reacted.  “Justice for Devon Guilford” is written on signs all over our neighborhood as investigations continue.   The issue has seriously divided Eaton County.

There is definitely a double standard in the media, where “black lives matter,” but white lives don’t!

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President Obama was shown on television this morning assuring people that Donald Trump will never be president.  Meanwhile, there’s increasing talk that Joe Biden will jump into the race if Hillary Clinton slips any further against fellow Democrat Bernie Sanders.

 

The Establishment clearly does not want outsiders like Trump or Sanders to lead the country!   Whatever happened to democracy?

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It’s not that different overseas.

In the United Kingdom, Prime Minister David Cameron has promised a referendum on Britain’s future in the European Union.   Referenda are easily manipulated.

If the majority votes against Europe, a second question could be asked phrased differently to try to get a ‘yes’ vote.   Even if both votes result in a resounding ‘No,’ other nations in Europe will retaliate making it difficult, if not impossible for Britain to break away. German leaders are already threatening a trade war at a time when global trade is already going through a rough period.

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Mr. Sanders claims that he wants “democratic socialism” and cites Denmark as his model.   He has wisely avoided any mention of Venezuela where socialism has brought the country to near-starvation.  Stratfor reported yesterday that the socialist President Nicolas Maduro may be around for some time:

“Maduro could maintain a political impasse with the legislature for a long time. He could also deal with a slowly mounting economic crisis, as former Venezuelan President Hugo Chavez did during the latter years of his presidency. But the Venezuelan crisis is rapidly becoming a social crisis. Maduro’s economic adjustments have focused on sharply cutting imports across the board, spurring rampant inflation that effectively places even basic food items out of the poor’s reach.  The situation is potentially explosive. With rapid consumer price increases on the black market, endemic shortages of food in public stores, failing public utilities and an intransigent president, the stage is set for a major wave of social unrest that could rival the 1989 Caracazo riots that killed hundreds of people.”

Margaret Thatcher got it right when she defined socialism as “equal shares of misery for all!”   Government is inherently incompetent.  That will never change.