- 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
- bruceport@xtra.co.nz
|
