If there is such a thing as a ‘reverse miracle’ the global economy these last five years is it. In 2008 when the global crash startled the world and the housing bubble imploded, and jobs went away, it seemed that the house of cards that is world finance and commerce would collapse. It didn’t. And all these five years, it hasn’t. This defies logic, tradition, and all economic principles. (Above, A crowd gathers at New York City’s Federal Hall opposite the Stock Exchange at the news of the crash – 1929 AP / Wide World Photos Time – 75 Years)
Or does it?
What has to change is our perception of what an economic crash is. If you live in America like I do, we have a notion that economic crashes suddenly occur, like the October Wall Street stock market crash of 1929. We often think of the crash happening in October and then immediately of the lines outside banks to get disappearing deposits and right away the Okies traveling away from the Dust bowl states. But it all unfolded much more slowly than that.
|Oct 10, 2008, Source|
But what most people do not know is that the 1929 crash was similar to the 2008 crash in that it was but one marker of an ailing, upside down economy. Bankers and Brokers didn’t realize the depth and extent of the crash and that it would spark a 10-year Depression.
Time Magazine reported on the 1929 October crash, “As the story goes, the opening bell was never heard on Black Tuesday because the shouts of “Sell! Sell! Sell!” drowned it out. In the first thirty minutes, 3 million shares changed hands and with them, another $2 million disappeared into thin air. Phone lines clogged. The volume of Western Union telegrams traveling across the country tripled. The ticker tape ran so far behind the actual transactions that some traders simply let it run out. Trades happened so quickly that although people knew they were losing money, they didn’t know how much.”
And that is what we remember of the most devastating and terror-ridden moment in America’s financial and economic history. But the crash continued-
As a matter of fact, the Market recovered on October 30, regaining 12% of losses. Time reported, “In total, $25 billion — some $319 billion in today’s dollars — was lost in the 1929 crash. Stocks continued to fall over subsequent weeks, finally bottoming out on November 13, 1929. The market recovered for a few months and then slid again, gliding swiftly and steadily with the rest of the country into the Great Depression. Companies incurred huge layoffs, unemployment skyrocketed, wages plummeted and the economy went into a tailspin. While World War II helped pull the country out of a Depression by the early 1940s, the stock market wouldn’t recover to its pre-crash numbers until 1954.”
After the crash of 1929 it wasn’t until 1932-1933 that the economy hit rock bottom. This timeline has the facts about why 1933 was the worst year of the Depression for the common man. So you can easily see that the crash was not a one-day event but took years to unfold, rebound and for the stock market to recover..
Like 1929, the 2008 economic crash followed a speculative boom. The era was so speculative and the attitude was so optimistic, that the entire era is called The Roaring Twenties. The era was dynamic, vibrant, creative, and was undergirded by sustained economic prosperity. This attitude was not prevalent just in America, but also Europe. France’s name for the era was The Crazy Years. Britain called it the Golden Twenties.
The president of the Chase National Bank said at the time of the crash, “We are reaping the natural fruit of the orgy of speculation in which millions of people have indulged. It was inevitable, because of the tremendous increase in the number of stockholders in recent years, that the number of sellers would be greater than ever when the boom ended and selling took the place of buying.” (Wikipedia)
Economist Albert Scardino said in 1987, “The panic of October 1929 has come to serve as a symbol of the economic contraction that gripped the world during the next decade.”
As an aside, when economists say “contraction”, I think of the contraction of a woman in labor. (Matthew 24:8).
The same conditions that sparked the crash of 1929, wild speculation and bloated spending, sparked the 2008 crash, but like the unfolding Depression of the 1930, it unfolds slowly. The crash is actually a long period of decline, not a one-day event. We have been ‘crashing’ since October 2008. We are in a crash right now. Let’s take a look at the present-day facts.
Wal-Mart is undergoing a silent sales disaster. The Daily Beast reports, Wal-Mart customers have disappeared, will they take the economy with them?
“Where are all the customers?” asks an internal Walmart email published by Bloomberg last week. “And where’s their money?” Another email states “In case you haven’t seen a sales report these days, February [month to date] sales are a total disaster . . . the worst start to a month I have seen in my ~7 years with the company.” Brad Plumer notes that Walmart sales are often a bellwether for the rest of the economy. Should we be freaking out?”
Yes. Yes we should.
Why? The higher payroll tax kicked in this January. Higher payroll taxes mean less money for consumers and less money for consumers means, well, they spend less. The Economic Collapse blog says “The Big Dogs of Wall Street are starting to get very nervous“.
And according to a CNN article, corporate insiders are now selling nine times more of their own shares than they are buying… These corporate insiders have one word for investors: sell. Insiders were nine times more likely to sell shares of their companies than buy new ones last week, according to the Vickers Weekly Insider report by Argus Research. We wonder why corporate bigwigs like Google’s Eric Schmidt is selling nearly half of his stock in the company.
The crashing economy is seen not just in consumer spending, stocks, and retail, but in government. The United States has not passed a budget in years. Heritage reports, “The House and Senate have not agreed on a budget resolution since April 29, 2009 (though the House has passed budgets the past two years). If current trends continue, the end of the 113th Congress will mark five straight years without a congressional budget. … The temporary tax policies of recent years, the debt ceiling debacle of 2011, and the short-term “solution” of last year’s fiscal cliff have only worsened the budgetary dysfunction. Congress now faces across-the-board spending cuts (sequestration) on March 1, another deadline March 27 for funding government operations, and another debt ceiling vote in May. Halfway into the fiscal year, major budget decisions remain in flux. These incoherent practices have yielded no entitlement reform—indispensable for getting deficits and debt under control—but they have produced a $618 billion tax increase.”
Caption- Some of the 6,000 men who queued up for jobs offered by a New York employment agency – 1930 (135 found jobs; by 1932 almost 30% of the American workforce was unemployed) Corbis / Bettmann – UPI
Pentagon informs Congress of plans to furlough 800K civilian workers
“The Pentagon notified Congress on Wednesday it will be furloughing its civilian workforce of 800,000 employees if sequestration goes into effect March 1.”
Sequestration defined: “Under sequestration, an amount of money equal to the difference between the cap set in the Budget Resolution and the amount actually appropriated is “sequestered” by the Treasury and not handed over to the agencies to which it was originally appropriated by Congress.”
As we already know, there is trouble everywhere. The UK lost its credit rating yesterday. Forbes reported, “Moody’s Investors Service downgraded the sovereign credit rating of the U.K. on Friday, stripping its coveted triple-A status one notch to AA1. The agency blamed U.K.’s rising debt levels, adding that there was “a deterioration in the shock-absorption capacity of the government’s balance sheet, which is unlikely to reverse before 2016.” Forbes asks the $64 question, ‘Is the US next?’
Imagine what the loss of pay for 800,000 workers would do to our economy, already staggered by loss of jobs and cash flow. In other words, under sequestration, all money flow comes to a forced halt and during a depression voluntary money flow comes to a halt. Like retail spending–
CBS News reports, “The entire economy is headed for trouble in just eight days — when massive across-the-board cuts in the federal budget are scheduled to kick in automatically. The cuts were designed to be so deep and harmful, that they would force the president and Congress to find a better way. But they haven’t. Just for example, there would be $46 billion cut from the Defense Department and benefit cuts for 4.7 million long-term unemployed.”
Retail is failing, and this is a marker of the crash.
Best Buy is forecasting 200 to 250 store closings
Sears Holding Corp. forecast store closings: Kmart 175 to 225, Sears 100 to 125
J.C. Penney, forecast store closings: 300 to 350
Office Depot, forecast store closings: 125 to 150
Barnes & Noble, forecast store closings: 190 to 240, per company comments
Gamestop, forecast store closings: 500 to 600
OfficeMax, forecast store closings: 150 to 175
RadioShack, forecast store closings: 450 to 550
In addition to closings, we hear about layoffs.
Blockbuster recently announced that this year they will be closing about 300 stores and eliminating about 3,000 jobs. Toy manufacturer Hasbro recently announced that they will be shrinking their workforce by about 10 percent. And we already heard about the Walmart email that said February was the worst month, ever.
So what does this all mean? It means God is doing a work! Did you know that the bible has a lot to say about finances and economy? There are verses which instruct us on personal level and on a national level. For example, Proverbs 22:16 says,
“Whoever oppresses the poor to increase his own wealth, or gives to the rich, will only come to poverty.” The NLT makes it even clearer. “A person who gets ahead by oppressing the poor or by showering gifts on the rich will end in poverty.” Tell that to the Occupy Wall Street people…
But now I am going to contradict myself. The Great Depression seems to have begun in October 1929 and the stock market did not recover until 1954. These things take a long time to set up, to occur and to recover from. They are long cycles. (Kondratiev wave). The one exception to the slow cycle of up and down will be the Tribulation. Why? It will be a time like no other before or since, (Matthew 24:21).
In my opinion, the fact that the global merging of all national economies into one economic force (Revelation 13:16-17) under the management of one man, (Revelation 13:5-8), bespeaks that something massive has to have happened for the people to accept such dramatic moves. And it has to happen fast, because the Tribulation is only 7 years, and since Revelation is mostly chronological, by the time Revelation 13 occurs, it is midway through the entire period. We read in Revelation 13:5 that authority is given to the antichrist for 42 months (3.5 years).
There will be an economy in the Tribulation, it will be vigorous and will trade in all the usual things like flour (Revelation 6:6) but there will also be a trade for luxuries (Revelation 18). There will be people rich enough to buy these luxuries. So much so, that the merchants selling them become incredibly wealthy.
WHAT will have happened that will reduce the world into an entire economic and financial restructuring within just 3.5 years? (first half of the Tribulation). Something terrible and dramatic. It only takes three and a half years for the global economy to be turned completely upside down, restructured and by the time the antichrist comes along, for the world to accept his proposal of a one world government- and enact it!
Of course, the beginning of the events that would cause the acceptance of the one world economy may begin prior to the Tribulation, but given the last five years of slow decline (despite warnings of the ‘fiscal cliff) I don’t think so. Personally I believe it will be one or more of the following that will cause the final and/or sudden economic collapse:
1. The rapture. If enough consumers who hold withhold their money from retail circulation could cause panic in Walmart execs during just one month, what will the sudden removal of all the Christians’ economic input cause the world economy?
2. War. And not just any war- but nuclear war and/or EMP. The coming wars of Isaiah 17, Isaiah 19, Psalm 83 and Ezekiel 38-39 may not occur just in the Tribulation. There is nothing about the prophecy that says these wars have to happen during the 7 years of judgment (except by the very end of the Ezekiel 38-39 Gog/Magog war the Tribulation will have begun, because the Jews are brought back to covenant with God, (Ez 39:7) and the world knows that God is judging the world. (Ez 38:16, 23). Those prophesied wars contain intimations that they will be nuclear. I wrote about that last week. With war often comes…disease.
3. Disease outbreak. The 1918-20 Spanish flu pandemic was an unusually deadly influenza pandemic which infected 500 million people across the world, including remote Pacific islands and the Arctic, and killed 50 to 100 million of them—1 to 3 percent of the world’s population at the time—making it one of the deadliest natural disasters in human history. (source). Most of the deaths in the US took place within only 9 months. The sudden removal of human capital, either through death or illness from which they later recovered, was dramatic. The Congressional Budget Office (CBO) has estimated that a pandemic similar to the 1918 flu would decrease annual U.S. GDP levels by 5% if it happened in today’s economy. There were mandatory closings of schools, churches, theatres, and places of public assemblage toward the end of the year in 1918. The entertainment industry was hit hardest.
For example, legal gambling in the US is a 90Billion dollar industry. Factor in other entertainment such as cable, internet, film, music etc and you have a trillion dollar industry. An outbreak of disease could put a severe dent on all that, just as it did in 1918. As a matter of fact, officials are worried about an outbreak of tuberculosis in LA. And yesterday it’s reported that a Long Island teen died of a mysterious illness while on a school trip to Disneyland
4. All of the above. All these events could happen simultaneously or nearly so. It is not possible to go through the removal of millions in the blink of an eye, and/or war, and/or pestilential outbreak on a global scale and not have other segments of the global infrastructure such as economy be impacted too.
5. Other. God is creative. I do not know what else He may have planned that will cause the world’s economy to fail or at least come to the point where the population of the planet accepts an entire restructuring. Who expected the 9.0 quake and tsunami in Japan? Who expected the Pope to resign? Who thought Obama would be re-elected for another 4 years? Who thought that a massive sinkhole in Bayou Corne or a BP multi-month oil breach would occur?
We Christians can look forward to the rapture and will escape all these things. We see the rapture in Revelation 4. The Church is seen in Heaven in Revelation 5. The wrath begins in Revelation 6. No matter how close the wrath is, the rapture is closer!