Posted: 05 Feb 2017 Michael Snyder THE ECONOMIC COLLAPSE BLOG
When debt grows much faster than GDP for an extended period of time, it is inevitable that a good portion of that debt will start to go bad at some point. We witnessed a perfect example of this in 2008, and now it is starting to happen again. Commercial bankruptcies have been rising on a year-over-year basis since late 2015, and this is something that I have written about previously, but now consumer bankruptcies are also increasing. In fact, we have just witnessed U.S. consumer bankruptcies do something that they haven’t done in nearly 7 years. The following comes from Wolf Richter…
US bankruptcy filings by consumers rose 5.4% in January, compared to January last year, to 52,421 according to the American Bankruptcy Institute. In December, they’d already risen 4.5% from a year earlier. This was the first time that consumer bankruptcies increased back-to-back since 2010.Of course consumer bankruptcies are still much lower than they were during the last financial crisis, but what this could mean is that we have reached a turning point. For years, the Federal Reserve has been encouraging reckless borrowing and spending by pushing interest rates to ultra-low levels. Unfortunately, this created an absolutely enormous debt bubble, and now that debt bubble is beginning to burst. Here is more from Wolf Richter… The dizzying borrowing by consumers and businesses that the Fed with its ultra-low interest rates and in its infinite wisdom has purposefully encouraged to fuel economic growth, if any, and to inflate asset prices, has caused debt to pile up. That debt is now eating up cash flows needed for other things, and this is causing pressures, just when interest rates have begun to rise, which will make refinancing this debt more expensive and, for a rising number of consumers and businesses, impossible. And so, the legacy of this binge will haunt the economy – and creditors – for years to come.Despite all of the economic optimism that is out there right now, the truth is that U.S. consumers are tapped out. If the U.S. economy truly was doing great, major retailers would not be closing hundreds of stores. Sears, Macy’s and a whole host of other big retailers are closing stores because those stores are losing money. It truly is a “retail apocalypse“, and this trend is not going to turn around until U.S. consumers start to become healthier financially. We also see signs of trouble in the auto sales numbers. Compared to 2016, sales were way down in January this year… Compared to January last year, car sales collapsed for all three US automakers, and the largest Japanese automakers didn’t do much better:A lot of attention is given to our 20 trillion dollar national debt, and rightly so, but a similar amount of attention should be paid to the fact that U.S. households are collectively more than 12 trillion dollars in debt. About two-thirds of the nation is essentially living paycheck to paycheck. Most families really struggle to pay the bills from month to month, and all it would take is a major event such as a job loss or a significant illness to plunge them into financial oblivion. In America today we are told that the secret to success is a college education, but most young Americans have to go deep into debt to afford such an education. As a result, most college graduates start out life in the “real world” with a mountain of debt. And since many of them never find the “good jobs” that they were promised, repayment of that debt becomes a very big issue. In fact, the Wall Street Journal has discovered that student loan repayment rates are much worse than we were being told… Last Friday, the Education Department released a memo saying that it had overstated student loan repayment rates at most colleges and trade schools and provided updated numbers.If you do find yourself deep in debt, a lot of families have found success by following a plan that was pioneered by author Dave Ramsey. His “Debt Snowball Plan” really works, but you have to be committed to it. Getting out of debt can be tremendously freeing. So many people spend so many sleepless nights consumed by financial stress, but it doesn’t have to be that way. Most of us have had to go into debt for some reason or another, and not all debt is bad debt. For example, very few of us would be able to own a home without getting a mortgage, and usually mortgages come with very low interest rates these days. But other forms of debt (such as credit card debt or payday loans) can be financially crippling. When it comes to eliminating debt, it is often a really good idea to start with the most toxic forms of debt first. It has been said that the borrower is the servant of the lender, and you don’t want to spend the best years of your life making somebody else rich. Whether economic conditions turn out to be good or bad in 2017, the truth is that each one of us should be trying to do what we can to get out of debt. Unfortunately, a lot of people never seem to learn from the past, and I have a feeling that both consumer and commercial bankruptcies will continue to rise throughout the rest of this year. |
Use your sanctified imagination to envision the following make-believe scenario.
Joel Osteen, Andy Stanley, Joyce Meyer, Ed Young Jr., Dave Ramsey, James Robison, Ken Copeland, Pat Robertson, Matt Crouch and other high-profile Christian leaders all begin their programs with an agreed-upon in-advance, sober warning to their collective millions of listeners.
"The following message is completely uncharacteristic of our normal broadcast. But we are not living in normal times. We can't keep pretending God's judgments aren't real. What's happening currently can't be dismissed as coincidental but providential. We have come to the conclusion that God has directed leaders across this nation to simply communicate eight words: '40 more days and America will be destroyed.' That's what He instructed us to say. But there still is hope if we believe that God will have mercy on us if we humbly turn back to Him and the ways of our Founding Fathers."
"Larry, that's unrealistic and too far fetched!"
Do you know that the greatest awakening in world history took place when an obedient servant of God echoed those exact words in a different location? The leader and the people were so shaken by the severity of the message that they turned from their sinful ways and returned to God.
"When God saw their actions, that they turned from their evil ways, He changed His mind about the disaster that He had said He would bring upon them, and He did not do it" (Jonah 3:10).
Read the entire account of this amazing, historical event in Jonah 3:3–10.
What Will It Take to Awaken Us?
On an individual basis, scores of people say their conversion took place after a series of events jolted them to humble themselves and turn to God. Should we not expect something similar needful for a nation at large?
"Hungry and thirsty, their soul fainted in them. Then they cried unto the Lord in their trouble, and He delivered them out of their distresses" (Ps. 107:5-6).
An amalgam of unexpected, swift events exploding in tandem with each other would certainly get the attention of millions in America. The following are real and within the realm of possibility very shortly: devastating economic collapse; horrific drought, gas and food shortages; Middle East war; a series of coordinated Islamic terrorist attacks; outbreak of new AIDS-like virus; racial riots erupting nationwide; multiple massive earthquakes, EMP (Electromagnetic Pulse) Internet-crippling attack; assassinations and political chaos.
David Stockman, Ronald Reagan's former Budget Director, says of the economy, "All hell is about to break loose!"
ISIS just released a statement, as reported in Charisma News, that they have over 70 trained terrorists in 15 U.S. states now.
To picture what it could be like when some of these events explode on the scene, picture a segment from the film "Mad Max" or the TV show "Walking Dead." [I don't watch these but have seen pictures from them.] Or visualize a city like those in the Ukraine—once-thriving cities now lawless centers of desperate people who've become marauders and looters carrying out criminal acts with impunity.
Our parent's generation exhibited patience, sacrifice, discipline and civility in difficult times. Being realistic (recall Ferguson or Baltimore recently?) and not dismissing all of this as nonsensical conspiracy theories, do we really expect people in a crisis today to let others go ahead of them in lines and folks patiently serve one another amid shortages, curfews and roving vigilantes?
God hasn't given us a spirit of fear, but it might wake people up to pause and ponder some of these coming realities. Just read afresh what Jesus said would be taking place prior to His Return.
How Should We Then Live?
In the '60s, theologian and prophet Francis Schaeffer posed this question to Christians. Analyzing events in history and foretelling what was coming to our nation, he warned us of this implosion while calling us to engage our culture and beseech God for divine intervention.
Christians can no longer settle for "status quo" religion with neatly packaged, sanitized, inspirational programs and services while ignoring the epidemic of Christians being persecuted and Western civilization crumbling. In England, the former Archbishop of Canterbury said, "Christianity is facing extinction in Great Britain."
We are currently engaged in a titanic, unprecedented struggle with forces of evil and must categorically reject wishful thinking that this is simply temporary, cyclical or manageable. We are at a tipping point where either we experience a divine intervention of God in a Third Great Awakening or we will witness the fulfillment of A.W. Tozer's prophetic warning: "Historians will conclude that we of the 20th century had the genius to create a great civilization but we lacked the moral wisdom to preserve it."
One Word Captures Our Charge
In Matthew 24 and Mark 13, Jesus told us the signs of the end of the age. He basically summed everything up with these words, "He who perseveres till the end will be saved. " (Mt.24:13; Mk.13:13). And in Romans 5:3 God tells us, "...suffering produces perseverance."
There simply are no shortcuts in difficult days. We must draw upon the grace of God and make a quality decision that we will persevere.
Presently I'm reading a book called The Churchill Factor - How One Man Made History. This biography of the towering figure of the 20th century who saved Western civilization from extinction demonstrated one overarching quality: perseverance.
When his fellow countrymen and Cabinet were capitulating to Hitler and his war machine, Winston Churchill told them to persevere, to fight and not to negotiate. "If this long island story of ours is to end at last, let it end only when each one of us lies choking in his own blood upon the ground!" With this almost Shakespearean climax, he rallied them to press on till victory was theirs.
Days ago I spent some time with my wife in Oak Ridge, Tennessee, called the "Secret City" during World War II. Here 75,000 citizens worked tirelessly to develop the atomic bomb to ultimately defeat Japan and bring about their surrender. These patriots, alongside of our servicemen and women who gave their lives on battlefields, and the D-Day invasion persevered to secure our freedom.
During these turbulent times, if you need a fresh read to bolster your perseverance, let me suggest a book called Staying Power by my year friend of 33 years, Ken Roberts (kenlroberts.com).
Ken faced incredible adversity when his wife of 25 years was killed in a car accident, a church building project and pastoral team imploded and he resigned his ministry in a mudslide of despair.
Yet Ken Roberts drew upon the grace of God and discovered lessons to sustainability. He persevered and today has new life, a new wife and a new ministry impacting multitudes. I highly suggest readers check it out.
As we await the Supreme Court ruling that may tip the scales in a way that may accelerate judgment on our land, may perseverance be our watchword.
Remember the words of the prophet Jeremiah, "If you have raced with men on foot and they have worn you out, how can you compete with horses? If you stumble in safe country, how will you manage in the thickets by the Jordan?" (Jer. 12:5).
Larry Tomczak is a best-selling author of 8 books with 43 years of trusted ministry experience. He is a cultural commentator whose weekly articles appear on sites reaching 26 million monthly. Connect and view short video commentaries at larrytomczak.com.
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