Some great observations from North:
The politicians of Northern Europe buckled. The PIIGS chuckled...
You may remember how well shock and awe worked in Iraq. We are still there.
Already, columnists are writing articles about the possibility that this bailout will not be enough.
The Establishment has only two policies: deficits and monetary inflation. This is basic Keynesianism...
Bankers trust governments. They trusted the Greek government to meet its next interest payment on May 19. On April 23, the Greeks began playing the Hank Paulson card. The banks saw the possibility of a default. Bank shares started falling. So, bankers got to work. They, too, played the Paulson card. The S&P downgrades added credibility to the scenario. There was a threat of a systemic breakdown.
The bankers' solution is the tried and true strategy of moral hazard, described by Walter Bageot in the late 19th century. The banks are bailed out by politicians and central banks. Losses are transferred to the taxpayers by way of bailouts and currency depreciation. The day of reckoning is postponed.
For the first time in Western history since the late nineteenth century, a few million voters are beginning to catch on. They don't understand fractional reserve banking, but they understand when politicians raise the national debt to bail out people who cannot pay their interest on time.
Voters in Germany resisted. This accomplished nothing. As they were going to the polls, Merkel was selling them out to the PIIGS and the banks that trusted the PIIGS, especially French banks, which own a third of Greek debt.
It is beginning to dawn on a minority of voters that the political game is rigged in favor of big banks. It has taken a century for this to begin to register. This is a threat to Establishments everywhere. This was the #1 secret that the Establishments have attempted to conceal...
The Establishments for a century have used the greed of the voters to create a money tree for bankers. Here is how it has worked, ever since the years just prior to World War I.
The politicians promise the voters revenue from the rich. The voters are promised government jobs, government support for labor unions, and old age pensions. The welfare state grows.
The politicians refuse to raise taxes enough to meet these commitments. They use "pay as you go" accounting.
The governments run debts. Investors buy these debts, because they are guaranteed by the government. The debts are seen as risk-free.
Wars break out. Governments then run larger deficits. These debts are never repaid. They always increase. Old debts are rolled over.
The governments keep selling promises to voters. The voters keep believing they will be paid off someday.
When tight times hit, central banks buy government debts with fiat money. They roll over these debts. The debts grow.
Any threat of default threatens the commercial banks. When a crisis arrives, governments and central banks bail out the largest commercial banks.
The voters do not revolt because they are up to their elbows in personal debt. They have no savings. They rely on government promises. They do not want a default.
Keynesianism is an economic system that praises government debt as the source of stability and long-run prosperity. Original Keynesianism argued that government debt could be reduced in boom years. It has never happened anywhere. Politicians raise the debt load, year by year. The debt grows.
The voters dare not stage a tax revolt, because they might threaten the solvency of the government. The government might cut back on welfare spending for the aged and for the unemployed.
This is a daisy chain of promises (debt), all resting on taxation.
Government writes IOU's. Banks and insurance companies buy these IOU's. The government writes more IOU's. In a crisis, the central bank buys these IOU's. The voters grouse, but they do not revolt.
Whenever the voters say no to bailouts, the politicians ignore them. They know that the voters do not really want to cut spending.
Banks want more government debt to buy. Governments want more debt to buy more votes. The voters want to believe that the promises will be kept.
It's a ménage à trois of seduction. Each participant promises to love two others forever. Bankers promise to buy the government's IOU's. Governments promise not to default. Bankers promise depositors they can withdraw their money at any time. The government guarantees the depositors that their deposits are insured (in the United States – not Europe). Voters promise to keep voting for the party that forks over the most welfare to their special interest groups.
As the madam in charge, the central bank promises the governments to serve as lender of last resort. It promises bankers low interest rates. It promises voters to act in the interest of voters to keep down inflation and keep employment high.
The arrangement is now breaking down. The level of debt is creating opportunities for currency speculators to expose the lies of governments and central bankers. There are huge profits at stake in this showdown...
The game is the rollover of debt. In 1980, there was a low-budget movie, Rollover, with Kris Kristofferson and Jane Fonda. It dealt with the rollover of Arab oil money. It had the basic scenario correct. The threat really did exist in 1980. But the Federal Reserve let interest rates climb, and the prices of oil and gold fell. The day of reckoning was deferred.
The threat has reappeared. This time it is not Arab oil money. This time it is the unthinkable: sovereign debt defaults. The stakes are far higher. The agencies of the bailout now need bailing out.
Because the entire credit structure rests on the continuation of the rollover of sovereign debt, the Greek crisis, which began on April 23, escalated into a trillion-dollar guaranteed bailout within three weeks. The ECB said "no problem" on April 26. On May 9, it completely capitulated.
Compare this with the United States, from the first weekend of September to the middle of October. Paulson nationalized Fannie Mae and Freddie Mac in early September. A week later, Lehman Brothers went bankrupt. On October 3, Congress voted the $700 billion bailout. That was three weeks.
If the system is reliable, why do these crises keep happening? If there was a solution to the bad debt problems in late 2008, why did there have to be a $960 billion bailout this week?
It is the rollover problem. That was what took down Bear Stearns. That was what took down Lehman Brothers. In just days, these two giants could not find buyers for their debt. They had leveraged themselves by 30-to-one on the assumption that the rollover would continue forever. It didn't.
This is the threat to the European banking system. When a sovereign nation defaults, it calls into question the continuation of the rollover. That calls into question the entire world economy.
Everything rests on lines of credit: promises. These promises can be broken at any time, for any reason. The debtor just stops paying. When a national debtor stops paying, the dominoes begin to fall.
The dominoes were ten days from the first toppling: May 19. The politicians, the central bankers, and the IMF decided on Sunday that the risk was too great. They paid off the G-PIIG. They sent a message to the other PIIGs that the trough would be filled up with euros, just as every PIIG knew it would be.
The voters can protest, but if they are unwilling to get their snouts out of the government troughs, they can expect no relief. I do not think they are ready to do this. So, the rollovers will continue. The level of sovereign debt will rise.
As for cutbacks in Greek spending, ho, ho, ho. As for austerity in Southern Europe, ha, ha, ha. Once you owe the banks up north a trillion dollars, you will get the politicians up north to sell more debt, so that you can meet your interest payments to their banks, and then sell more debt at low rates.
Debt will rise. That is the inescapable reality of moral hazard. Bank profits will go on, because bank losses are transferred to sovereign governments. Nothing has changed. The same old system rolls on...
It has come to England. It is about to come to Germany. In 2011, it is likely to come to the United States. At that time, there will be no spending cuts, but there will be resistance to any further expansion of programs. The debts never fall lower. The built-in spending will be sufficient to keep the deficits high.
The United States annual budget deficit to GDP ratio is around 10. In Greece, it is 14. It has been around 6 in northern Europe, excluding Ireland and Great Britain. It will now rise because of the bailouts. The Greek debt disease has spread to the north. That was the price of keeping the Greek default disease from spreading through the south.
The gridlock will slow down the extension of the debt a little, but the built-in increases in old age spending are enough to guarantee another crisis. The banks in Europe are still highly leveraged. They are not writing down these debts. The result is continuing vulnerability.
The speed of the crisis indicates that the next crisis will take even more money to paper over. Political gridlock will make it harder next time to persuade the politicians to put their careers on the line for the sake of the banks. The ECB will have to intervene as the lender of last resort. It will resist, but its job is to save the large banks. The large banks will again need saving.
The size of the bailout indicates that the leaders really did panic over the weekend. The markets moved higher on the assumption that an extra trillion dollars of government debt will be no problem. There will be buyers. The PIIGS will get their rollover money from the banks, because the banks have gotten the go-ahead guarantees from the more solvent north.
CONCLUSION
We see no solution. We only see political kick-the-can. The politicians believe that rising government debt is forever. It can rise without meaningful cost. There will always be buyers. The banks and insurance companies trust the promises of the politicians, who write IOU's on behalf of the voters.
When the voters resist, the central banks come to the rescue. They play demure briefly. They say "this time, but never again." But they always capitulate.
The day a major central bank really does stabilize money is the day that the dominoes really will fall. The rollovers will at last end....
It will not be because debt is too big to roll over. It is never too big to roll over. It will end only because central bankers see that monetary inflation will undermine the national currency through hyperinflation. That will threaten their pensions. Their pensions are funded, for the bank has the power to fund them. But if the money is worthless, the central bankers will lose. If they cease inflating, they will win. They will have money to spend in a time of depression and deflation.
That is not today. With short-term rates under 1%, and consumer prices not rising, the central banks are not facing an immediate crisis. When the next one arrives, they will do whatever is necessary to keep the rollovers going.
The welfare state is going bust. The level of sovereign debt guarantees this. The politicians will take on as much debt as it requires to keep the rollovers going.
Gary North is the author of Mises on Money. Visit http://www.garynorth.com. He is also the author of a free 20-volume series, An Economic Commentary on the Bible.
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Showing posts with label GaryNorth. Show all posts
Showing posts with label GaryNorth. Show all posts
Wednesday, May 12, 2010
Saturday, March 20, 2010
Ferris Geithner's Day Off
by Gary North
(Note to future historians. If you want to understand how and why the United States collapsed, read this article.-RW)
In my previous report, "Why Should Your Children Pay for My Retirement?" I went through the logic and economics of Social Security and Medicare. I made the point that, at some point, the bill-payers are going to resist the payments that previous generations have legislated. What one generation can legislate, a subsequent generation can repeal.
The main political question is this: In which form will this repeal manifest itself?
The statistical facts of Social Security and Medicare make it clear that the funding of both programs has hit a brick wall. They are no longer funding 100% of the recipients' benefits. The money is coming out of the general fund, which is $1.5 trillion in the hole this year. So, the benefits are being paid by lenders. There is no way that they will get their money back. In the long term, they will get stiffed. They refuse to consider the statistical evidence. They believe they can get out of this obvious Ponzi scheme before it collapses. They stay in the program.
In the short run, U.S. Treasury debt is no-risk, or close to it. It sets the standard for financial economists on what constitutes zero risk. In the long run, it is a guaranteed loss.
Everyone knows this debt will not be paid off. Everyone knows that it will grow. Everyone knows that the only reason for buying U.S. Treasury debt today is to park money where it is safe. The debt is liquid. The long-term future is irrelevant for present decision-making, they believe.
The rate of return is close to zero. On T-bills, it is as close to zero as it has ever been. During the Great Depression, rates got to a tenth of a percent, but prices were falling. A tenth of a percent was, in some years, a tax-free rate of return of close to 10% in terms of rising purchasing power (falling consumer prices). Today, the rate of return may be negative, depending on whether the CPI is the standard, which has been rising, or the Median CPI, which has been flat for months.
The enormous size of the debt's monthly expansion indicates that there are not good opportunities for capital growth. No one would lend money to the Treasury for a tenth of a percent if he thought he could get a safe 4% in private markets. Bankers would not turn their depositors' money over to the Federal Reserve for 0.15% per annum if they thought they were not facing horrendous losses over the next year: commercial real estate losses, defaults by businesses, and a possible secondary recession.
Let us face reality: the Treasury is getting free money because Federal Reserve policies have produced an economic crisis that refuses to go away. The Treasury is the lender of last resort to the banking system through a $500 billion line of credit to the FDIC. It is the lender of last resort to home owners who are underwater in their mortgages. But it is the lender of last resort only because it is the borrower of last resort. To write checks, it must borrow an additional $1.5 trillion in fiscal 2010.
What do I mean, "borrower of last resort"? I mean that the Treasury is there to take lenders' money whenever they cannot think of anything else worth lending to. Because of the Federal Reserve, the economy is in such bad shape that lenders depend on the Treasury to park their money for them.
GEITHNER AS A VALET
Think of Timothy Geithner as a valet in some downtown parking lot. You drive your car to the little booth. You hand him the keys to your car. He says he will park it for you. He says you can get it back at any time. He holds the keys to your car, and you trust him. He hands you a ticket. It is an IOU to your car.
When I think of Tim Geithner, I think of the valet in Ferris Bueller's Day Off. It's joy ride time! He climbs into the car, and his buddy leaps in beside him. Off they go! The buddy, of course, is Ben Bernanke. Think about this situation. The lenders of the world are lending trillions of dollars to an agency that has a AAA rating, yet this agency is the most indebted organization on earth. It is on the hook off-budget for at least $75 trillion that it does not have for Social Security and Medicare. It is on the hook on its on-budget budget for $12.6 trillion. This will be $14 trillion before we know it.
Our government is not alone. All Western governments are on the hook for similar percentages. It is just that the United States is larger than the other governments. They, too, are lenders of last resort only because they are borrowers of last resort.
Asian governments are not on the hook to this extent. They have not set up retirement programs. They have not indebted future generations of workers in the name of retirees. Yes, they face debts. They will have to do something with their families' oldsters at some point. China will face this in about 15 years. But this is not a new problem in the history of families. It has been inherent from the beginning. What is different is the West's policy, begun in Germany in the 1880's by Bismarck, of politicizing this family obligation. This experiment in government debt is about to end in the greatest default in man's history: a domino effect of broken promises that will undermine the West's capital structure.
When the promises are finally broken to long-term lenders (oldsters), they will also be broken to short-term lenders.
Think of that parking lot again. A long line of car owners has formed. Each of the people in line has a valid parking ticket.
The lot is empty. The cars are missing. But everyone has an official parking ticket.
The valet is nowhere to be found. It's Ferris Geithner's day off.
Of course, it's more complex than this. It is a gigantic system of parking tickets, with tickets against tickets. Ultimately, it's the derivative system. There are IOU's by the hundreds of trillions of dollars' worth. Maybe it's a quadrillion dollars' worth. The system is more complex than anything in man's history.
Occasionally, it blows up. It blew up in 1998: Long-Term Capital Management. That took about three billion dollars of additional bank loans to fix. Then came 2008, just a decade later. That took over $3 trillion to clear up, just in the United States. This was a thousand-fold increase in lending. It was ticket-shuffling on an unprecedented scale.
There will be another crisis, but much bigger. There is nothing to stop it. Geithner and Bernanke want us to believe that this cannot happen again, that the government and the central bank have fixed the problem. Why should we believe them?
We were told by the previous valet, Henry Paulson, that the problem in October 2008 was toxic assets on bank balance sheets. They are still there, except for the assets that the Federal Reserve swapped for T-bills at face value. This and other bailouts saved Citigroup, J. P. Morgan, and Bank of America. They did not save Wachovia.
The Treasury can sell its 90-day debt for a small fraction of a percent per annum. It pays a little more for bonds. The buyers line up. They have nothing better to do with their money. This tells us that the recovery is a mirage. When the Treasury sells $229 billion in debt in one month, as it did in February, this sends a message to anyone who is not living in la-la land: there is no sustainable recovery. When investors think that a tenth of a percent per annum is the best available investment opportunity, they are in disbelief mode.
Who will finance the capital outlays that are necessary to produce sustainable recovery? If the smart money – bank money – is in excess reserves at the FED at 0.15% per annum, and not in the private markets, financing small businesses that provide most of the job growth, why should anyone believe that the job market is ready to add 150,000 jobs a month, which is what the United States needs to provide jobs for young adults entering the job market for the first time? Where will another 8 million jobs come from to put back to work those who have lost their jobs from early 2008 to the present?
THE CONFIDENCE GAME
In September 2001, Americans' confidence in the U.S. government's ability to protect them was shattered by the coordinated attacks. The government was exposed as utterly helpless. So completely implausible were the details of that attack that the public has never come to any agreement as to how or why it took place.
The media dismiss anyone who points to the impossible aspects of the government's vague account of what happened. Such people are called "truthers," due to their call for the truth about 9-11. There are millions of Americans who do not believe the government, and never will. The Web will keep doubts alive. The media want the Web to go away, but it is not going away. What is going away is the audience share for the networks and subscribers to day-old news printed on paper.
In September 2008, the quasi-private mortgage market collapsed in the United States. The government nationalized it. There is no suggestion in Washington that it can be, or should be, returned to the free market. Yet we are assured that the housing market is the largest and most important sector of the American economy.
The public thinks that the government can restore the pre-2008 world. The public is wrong. That world is gone for good.
Read the rest here.
(Note to future historians. If you want to understand how and why the United States collapsed, read this article.-RW)
In my previous report, "Why Should Your Children Pay for My Retirement?" I went through the logic and economics of Social Security and Medicare. I made the point that, at some point, the bill-payers are going to resist the payments that previous generations have legislated. What one generation can legislate, a subsequent generation can repeal.
The main political question is this: In which form will this repeal manifest itself?
The statistical facts of Social Security and Medicare make it clear that the funding of both programs has hit a brick wall. They are no longer funding 100% of the recipients' benefits. The money is coming out of the general fund, which is $1.5 trillion in the hole this year. So, the benefits are being paid by lenders. There is no way that they will get their money back. In the long term, they will get stiffed. They refuse to consider the statistical evidence. They believe they can get out of this obvious Ponzi scheme before it collapses. They stay in the program.
In the short run, U.S. Treasury debt is no-risk, or close to it. It sets the standard for financial economists on what constitutes zero risk. In the long run, it is a guaranteed loss.
Everyone knows this debt will not be paid off. Everyone knows that it will grow. Everyone knows that the only reason for buying U.S. Treasury debt today is to park money where it is safe. The debt is liquid. The long-term future is irrelevant for present decision-making, they believe.
The rate of return is close to zero. On T-bills, it is as close to zero as it has ever been. During the Great Depression, rates got to a tenth of a percent, but prices were falling. A tenth of a percent was, in some years, a tax-free rate of return of close to 10% in terms of rising purchasing power (falling consumer prices). Today, the rate of return may be negative, depending on whether the CPI is the standard, which has been rising, or the Median CPI, which has been flat for months.
The enormous size of the debt's monthly expansion indicates that there are not good opportunities for capital growth. No one would lend money to the Treasury for a tenth of a percent if he thought he could get a safe 4% in private markets. Bankers would not turn their depositors' money over to the Federal Reserve for 0.15% per annum if they thought they were not facing horrendous losses over the next year: commercial real estate losses, defaults by businesses, and a possible secondary recession.
Let us face reality: the Treasury is getting free money because Federal Reserve policies have produced an economic crisis that refuses to go away. The Treasury is the lender of last resort to the banking system through a $500 billion line of credit to the FDIC. It is the lender of last resort to home owners who are underwater in their mortgages. But it is the lender of last resort only because it is the borrower of last resort. To write checks, it must borrow an additional $1.5 trillion in fiscal 2010.
What do I mean, "borrower of last resort"? I mean that the Treasury is there to take lenders' money whenever they cannot think of anything else worth lending to. Because of the Federal Reserve, the economy is in such bad shape that lenders depend on the Treasury to park their money for them.
GEITHNER AS A VALET
Think of Timothy Geithner as a valet in some downtown parking lot. You drive your car to the little booth. You hand him the keys to your car. He says he will park it for you. He says you can get it back at any time. He holds the keys to your car, and you trust him. He hands you a ticket. It is an IOU to your car.
When I think of Tim Geithner, I think of the valet in Ferris Bueller's Day Off. It's joy ride time! He climbs into the car, and his buddy leaps in beside him. Off they go! The buddy, of course, is Ben Bernanke. Think about this situation. The lenders of the world are lending trillions of dollars to an agency that has a AAA rating, yet this agency is the most indebted organization on earth. It is on the hook off-budget for at least $75 trillion that it does not have for Social Security and Medicare. It is on the hook on its on-budget budget for $12.6 trillion. This will be $14 trillion before we know it.
Our government is not alone. All Western governments are on the hook for similar percentages. It is just that the United States is larger than the other governments. They, too, are lenders of last resort only because they are borrowers of last resort.
Asian governments are not on the hook to this extent. They have not set up retirement programs. They have not indebted future generations of workers in the name of retirees. Yes, they face debts. They will have to do something with their families' oldsters at some point. China will face this in about 15 years. But this is not a new problem in the history of families. It has been inherent from the beginning. What is different is the West's policy, begun in Germany in the 1880's by Bismarck, of politicizing this family obligation. This experiment in government debt is about to end in the greatest default in man's history: a domino effect of broken promises that will undermine the West's capital structure.
When the promises are finally broken to long-term lenders (oldsters), they will also be broken to short-term lenders.
Think of that parking lot again. A long line of car owners has formed. Each of the people in line has a valid parking ticket.
The lot is empty. The cars are missing. But everyone has an official parking ticket.
The valet is nowhere to be found. It's Ferris Geithner's day off.
Of course, it's more complex than this. It is a gigantic system of parking tickets, with tickets against tickets. Ultimately, it's the derivative system. There are IOU's by the hundreds of trillions of dollars' worth. Maybe it's a quadrillion dollars' worth. The system is more complex than anything in man's history.
Occasionally, it blows up. It blew up in 1998: Long-Term Capital Management. That took about three billion dollars of additional bank loans to fix. Then came 2008, just a decade later. That took over $3 trillion to clear up, just in the United States. This was a thousand-fold increase in lending. It was ticket-shuffling on an unprecedented scale.
There will be another crisis, but much bigger. There is nothing to stop it. Geithner and Bernanke want us to believe that this cannot happen again, that the government and the central bank have fixed the problem. Why should we believe them?
We were told by the previous valet, Henry Paulson, that the problem in October 2008 was toxic assets on bank balance sheets. They are still there, except for the assets that the Federal Reserve swapped for T-bills at face value. This and other bailouts saved Citigroup, J. P. Morgan, and Bank of America. They did not save Wachovia.
The Treasury can sell its 90-day debt for a small fraction of a percent per annum. It pays a little more for bonds. The buyers line up. They have nothing better to do with their money. This tells us that the recovery is a mirage. When the Treasury sells $229 billion in debt in one month, as it did in February, this sends a message to anyone who is not living in la-la land: there is no sustainable recovery. When investors think that a tenth of a percent per annum is the best available investment opportunity, they are in disbelief mode.
Who will finance the capital outlays that are necessary to produce sustainable recovery? If the smart money – bank money – is in excess reserves at the FED at 0.15% per annum, and not in the private markets, financing small businesses that provide most of the job growth, why should anyone believe that the job market is ready to add 150,000 jobs a month, which is what the United States needs to provide jobs for young adults entering the job market for the first time? Where will another 8 million jobs come from to put back to work those who have lost their jobs from early 2008 to the present?
THE CONFIDENCE GAME
In September 2001, Americans' confidence in the U.S. government's ability to protect them was shattered by the coordinated attacks. The government was exposed as utterly helpless. So completely implausible were the details of that attack that the public has never come to any agreement as to how or why it took place.
The media dismiss anyone who points to the impossible aspects of the government's vague account of what happened. Such people are called "truthers," due to their call for the truth about 9-11. There are millions of Americans who do not believe the government, and never will. The Web will keep doubts alive. The media want the Web to go away, but it is not going away. What is going away is the audience share for the networks and subscribers to day-old news printed on paper.
In September 2008, the quasi-private mortgage market collapsed in the United States. The government nationalized it. There is no suggestion in Washington that it can be, or should be, returned to the free market. Yet we are assured that the housing market is the largest and most important sector of the American economy.
The public thinks that the government can restore the pre-2008 world. The public is wrong. That world is gone for good.
Read the rest here.
Friday, September 5, 2008
Behind Sarah Palin's Support of Israel
A picture has been circling on the internet which highlights the fact that John McCain's running mate, Sarah Palin, has a flag of Israel in her office.
The obvious questions then become "What is Palin doing with an Israeli flag in her office when there does not seem to be any natural Israeli or Jewish constituency in Alaska, since there are few Jews in Alaska?", " Why is AIPAC the first an only group she met with before her big speech?"
The answer is likely in Palin's religious beliefs.
The McCain campaign has said Gov. Palin was baptized as an infant in the Catholic Church. At some point she converted to fudamnentalist Christian beliefs and as a junior high schooler, Palin was baptized at a Pentacostal church, the Wasilla Assembly of God. She worshipped for more than two decades there. According to WSJ, the congregants speak in tongues and are part of a faith that believes humanity is in its "end times" -- the days preceding a world-ending cataclysm bringing Christian redemption and the second coming of Jesus.
For the last seven years she and her family have attended the Wasilla Bible Church ,a nondenominational church in Wasilla. The church is evangelical, though not Pentecostal or charismatic, and believers don't speak in tongues. While in Juneau, the state capital, Palin attends the Juneau Christian Center, an Assemblies of God church. The continued Assemblies of God connection is key.
What does all this have to do with Israel?
The Wasilla Assembly of God, the Juneau Christian Center and the parent denomination -- the three-million member General Council of the Assemblies of God -- espouse core beliefs not widely ascribed to by major Christian factions, accordng to WSJ. The denomination's Web site says some scholars believe that the "end times" to the Holy Land, fulfilling a Biblical prophecy. The Assemblies of God is part of a Pentecostal movement that numbers 80 million people world-wide.
"Historically, the Assemblies of God have been dispensationalists, which means they believe in 'the rapture' of Christians that takes them out of the world. Central to that position is a very strong support for Israel. It's integral to their view of both prophecy and politics. Denying Israel is almost like denying the faith, " Merrill Matthews, an evangelical Christian specialst told the Washington Times.
In 2000, Dr. Gary North wrote an article, The Unannounced Reason Behind American Fundamentalism's Support for the State of Israel. In part of that article, North wrote:
The dominant premillennial view says that Jews will suffer the Great Tribulation. Born-again Christians will have flown the coop – literally. This is the doctrine of the pre-tribulation Rapture.According to pre-tribulation premillennialists, who are known as dispensationalists, Jesus will come secretly in the clouds and raise deceased Christians – and only Christians – from the dead. Immediately thereafter, every true Christian will be transported bodily into the sky, and from there to heaven: the Rapture event...
The belief continues that all of the Christians, in the Rapture event, will have been removed from this world three and a half years prior to the beginning of a 42-month period of tribulation where two-thirds of all Jews will be killed. "The one third that are left will be refined and be awaiting the deliverance of God at the second coming of Christ," according to John F. Walvoord in his book, Israel in Prophecy.
North again:
The Rapture-based escape from history is now universally believed by fundamentalists to be imminent. Generations of fundamentalists have believed that they will escape bodily death. They will be transported into the sky, like Elijah, though without benefit of chariots...But when? That has been the great question. The answer: "Soon"...But how can they be so sure? Because of the events of 1948. In that year, the crucial missing piece of the prophetic puzzle – the restoration of the nation of Israel – seemed to come true. Critics of the dispensational system could no longer say, "But where is Israel in all this?" The answer, at long last: "In Palestine, just in time for the Great Tribulation."...It should be clear why they believe that Israel must be defended at all costs by the West. If Israel were militarily removed from history prior to the Rapture, then the strongest case for Christians’ imminent escape from death would have to be abandoned. This would mean the indefinite delay of the Rapture. The fundamentalist movement thrives on the doctrine of the imminent Rapture, not the indefinitely postponed Rapture...Fundamentalists really do believe that they probably will not die physically...The presence of Israel validates the hope of fundamentalists that Christians, and Christians alone, will get out of life alive.
UPDATE: Details emerge of the Palin/AIPAC meeting from WaPo:
Joe Lieberman, who was the 2000 Democratic vice presidential nominee but is now an independent, has helped introduce Palin to officials of the American Israel Public Affairs Committee, the leading pro-Israel lobby. In a meeting Tuesday, the day before she delivered her prime-time address at the Republican National Convention here, Palin assured the group of her strong support for Israel, of her desire to see the United States move its embassy from Tel Aviv to Jerusalem and of her opposition to Iran's aspirations to become a nuclear power, according to sources familiar with the meeting.
Saturday, July 26, 2008
Ben Bernanke's Hush Money
A must read essay on the current state of the banking system and the economy, by Gary North is here.
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