Friday, October 10, 2008

Credit cards and saving

I was reading this week's Time magazine the other day and ran across this:

Somewhere along the way, THRIFT did not just stop being a value; it became a folly. Saving was for suckers; you'd miss the ride, die leaving money on the table when you could have lived it up. There are no pockets in a shroud, as the saying goes. We once saved about 15% of our income. By the roaring '80s the rate was 4%; now we're in negative numbers...The average American has nine credit cards with a total $17,000 balance. We borrow against our houses and pensions to live in a way that dares us to actually grow old...

There's no way to tell during this current distress whether we're repenting or just retrenching. THRIFT-store sales are up. Cars are shrinking. P. Diddy retired his private jet to save on gas. In hard times, people often rediscover the peace that prudence brings, when you try to spend a little less than you have because tomorrow might be worse. But that feels almost un-American; we're optimists by nature, and we've been living large for so long that solvency feels like a sacrifice.

<idle musing>
That is the highest number I have heard for average credit card balance. The previous one was $12,000, but that was a few years ago. I guess the way to handle a shortage of funds for your favorite toy is to charge it. The scariest thing is that I don't have any credit card balance, and I know at least 3 other people who don't. That means somebody, somewhere, has to make up for it.

I think it is high time that we as a church wake up and repent of the sin of overindulgence, of the sin of loving the world and the things of the world, of serving mammon instead of God. God is a jealous God, and he will not delay his judgment forever. Perhaps 9/11/2001 was a warning salvo across the bow. If so, we missed it and blamed it on somebody else; not our fault, we say...
</idle musing>


Andy said...

The average is 17 grand? Wow. I think I'd have to combine every debt I owe — including my mortgage — to be in that deep.

Lest one think I'm being self-righteous, note that I havefallen into that trap, dug myself out, and don't wish to go there again.

It's too easy.

Anonymous said...

I agree James 100%. Forgive me for clogging up the blog with the lengthy text below, but I hope it will demonstrate that we need to pray that the Lord will forgive the greed and credit excesses in our society and in our own lives that has built up the momentum we see in the imploding credit crisis, and in stocks, bonds, and soon in the dollar. And we need to pray that satan will not be allowed by the Lord to bring full "Great-Depression-like" devastation to this country and the nations.
Below are 2 messages--Message (1) below is from prophetic leaders Cindy & Mike Jacobs (personal friends of mine, whom we know and trust) with prayer points from God to lessen the financial & economic crash that satan wants to use to knock out nations and the Church in all nations. Below that Message (2) is a forecast from market analyst, Karl Denninger that shows how "Great Depression-like" bad conditions could get in this country by late this year and into 2009--please pray through these--blessings, Gary (a 25 year friend of James)
- - - - - - - - - - - - - - - - - -
Mike and Cindy Jacobs
"Day of Prayer for the World's Economies - October 29, 2008"
Dear Intercessors,

October 29th marks the anniversary of the Stock Market Crash of 1929, after which the great depression ensued. Earlier this year, the Lord reminded me of this, adding that "Satan wants to do it again!" We must be proactive through prayer!

For this reason, I am issuing a worldwide prophetic call to a Day of Prayer for the World's Economies on October 29, 2008.

The Reformation Prayer Network and the The Global Day of Prayer in the United States will be joining us in this prayer initiative. Please rally your prayer groups to set themselves upon the wall on October 29, 2008 to intercede for the economic systems of our nation and the nations of the world. To facilitate unified global intercession on this day, a prayer guide has been provided below.

Day of Prayer for the World's Economies - October 29, 2008

"For thus says the Lord of hosts: 'Once more (it is a little while) I will shake Heaven and Earth, the sea and dry land; and I will shake all nations, and they shall come to the Desire of All Nations, and I will fill this temple [house] with glory,' says the Lord of hosts. 'The silver is Mine, and the gold is Mine,' says the Lord of Hosts." Haggai 2:6-8

We are calling for prayer for the stock markets, banks, and financial institutions of the world on October 29, 2008. Why the 29th of October? The stock market of the United States collapsed on that day in 1929, and a great economic depression ensued.

At the beginning of the 2008, intercessors began to hear from the Lord that without divine intervention, a major shaking was coming to Wall Street. This would spread until there were food shortages. In fact, we heard that 2009 would be worse than 2008! Of course, it goes without saying that this would affect markets around the world.

During the same time period, a dream was given that showed 50 boxes of iniquity representing the economic systems in all 50 states. The lid was off and the stench was terrible. God gave an instruction in that dream that we were to "put the lid back on the boxes" until a biblical economic structure could be built in its place. Of course, this could be said of economies around the world as well.

For this reason, we are meeting with intercessors at the New York Stock Exchange and the Federal Reserve Bank and its 12 principal branches around the U.S. on October 29, 2008. We are also going to intercede at the site of the statue of the bull on Wall Street to ask God to begin a shift from the bull and bear markets to what we feel will be the "Lion's Market" or God's control over the economic systems. While we do not have the full revelation of all this will entail, we do know that without intercession, economies will crumble.

Please gather with your prayer groups and networks at financial institutions around the globe. Intercessors are already going to some of the stock exchanges in other nations, but do not assume this is so; make sure that the one in your nation is covered in prayer. Also intercede for the banks and financial institutions in your area.

Urgent Prayer Points

Here are a few suggested prayer points for the day:

1. Repent for any personal greed. Ask God to show you any personal connection that you have with mammon.

2. Repent for the economic sins of your nation. Ask God to forgive the greed, avarice, participation in mammon, etc., that has taken place in your nation's economic system.

3. Repent for any excessive participation in debt. Ask God to give a strategy both to you, personally, and to your country to heal your economies.

4. Repent for a lack of love for the poor. Ask God to forgive any way in which you and your nation have not addressed the needs of the poor, either in the workforce or through racism.

5. Cry out to God for mercy for your nation. Plead with Him according to 2 Chronicles 7:14 and pray that your nation will turn from any wicked ways.

6. Pray for wisdom for the leaders of your nation on how to deal with the current financial crisis.

7. Ask God to stabilize the nation's economy, putting the lid back on the box as shown in the dream given.

8. Begin to intercede and ask God to establish righteousness in the stock exchange, expose corruption, and bring to justice those who have sinned against God and the nation. Ask God to heal the economy.

9. Pray that God will raise up an economy based upon biblical principles.

10. Intercede that a great revival will break out in the marketplace as a result of the shaking. Pray that God will begin to give wisdom in the midst of the shaking - to shift the wealth of nations into the hands of the righteous.

Let us know if you will be joining us for the Day of Prayer for the World's Economies on October 29, 2008, by emailing a brief note to

Below we've also provided some urgent messages from Jerry and Mona Tuma of Cornerstone Financial Services, on how to engage in fervent intercession for our economy - as of NOW!

Warring for the soul of our nation,

Cindy and Mike Jacobs
Generals International
The United States Reformation Prayer Network

- - - - - - - - - - - - - - - - - - - - - - - -
Date: Thu, 09 Oct 2008 13:26:23 -0400
Time Is Up Congress - And America
The Market Ticker
Wednesday, October 8. 2008
Posted by Karl Denninger at 03:38
Time Is Up Congress - And America
This is not good.

But the worst news is not in the stock market. It is in fact in some of the other indicators in the market which were indicating potential capital flight, along with still-extreme levels of stress.

I must caution everyone - if you are not prepared for six months to two years of unemployment, you need to be. If you are dependent on credit to survive (that is, if you couldn't make it without your credit cards) you need to fix that now.

Like today now.

Several times I have said "raise cash, get out of debt, be prepared."

I must reiterate this advice and emphasize it, as we may see a bond market dislocation and concurrent stock market crash at any time, without warning. It could be as early as today, in fact.
No, what happened the last three days isn't a crash, although it has now hit my full "bear market" target - 1070 - and in fact exceeded it.

Unfortunately what happened the last three days forces me to reset that target to the 2003 lows, and perhaps as low as four hundred on the S&P 500, 4000 on the DOW.

Needless to say if that happens it will be on the back of an economic catastrophe of a scale similar to the 1930s.

Bernanke's latest load of crap with an "SIV" for commercial paper is just another example of "more of the same" stupidity.

Bernanke and Paulson need to be indicted and jailed for criminal negligence (at best) and put in the stocks where the people can serve up some rotten tomatoes.

This evening we were "treated" to both political candidates shooting their mouths off on matters economic, but saying nothing of substance. Neither candidate was willing to admit the truth - that this "bailout" hadn't worked, that in fact the market had crashed by 15% since it was voted on, and that there is a zero chance of it having any positive impact on one American household.

But no, not even the "moderator" was willing to ask those tough questions, nor was anyone present.
These "debates" are a sham, a fraud and a gigantic waste of time.

Never mind that McCain embarrassed himself by claiming to be a "maverick" and "against pork", when he had just gotten done voting for over $150 billion of it in the Bailout Bill - pork that was not present in the original house version.

Was that claim of being "against pork" good for a "no" vote? Nope. He voted yes, as did Obama.
To those who dismissed the six petitions (you can go over to and see the old ones) over the last year, how do you feel about it now?

To those who said that "subprime was contained", how contained is it now?

To those who said that deterioration in consumer credit wasn't going to be a big deal, would you like to revisit that belief?

To those who said that "the nation would not have a recession", do you have any regrets, apologies, or perhaps an outright retraction?

To those who told people to buy buy buy all the way down, how do you feel now that they've lost 30% of their money?

To those politicians from both parties who voted for the ESSA on the claim that it would "stabilize markets", can you show me where it has been, in fact, stabilized? If this is "stable" I'm somewhat curious as to your definition of "unstable".

There is chatter circulating, apparently, that "global equity markets will be closed after the emergency G7 meeting this weekend." That ought to induce confidence - just ask the Russians or Indonesians, both of whom have tried this and it has resulted in an instantaneous crash when they reopened (the Indonesian market was just closed AGAIN this evening, after literally imploding - down by more than 10% - within an hour of starting to trade.)

This is no longer a US problem, but the United States continues to refuse to lead. We continue to "trust" the idiot savants Bernanke and Paulson, both of whom have sung the same song since this crisis began more than a year ago, have been wrong 100% of the time, and yet have found an ear in Congress repeatedly willing to listen to and follow their insanity.

By allowing this action and indeed following the advice of these two each and every one of the 535 members of that body has taken unto themselves the responsibility for the calamity that now faces American investors and the public, as our economic system literally "folds back" and consumes itself. Americans will not be able to retire and have no economic security, and now are losing their jobs in increasing numbers. This will continue.

For more than a year I have tried to get the attention of Congress with petitions, phone calls and faxes. I have been ignored, as have others who have been consistently right in our expectations and beliefs, including "Mish" Shedlock, Nouriel Roubini, Charles Hugh Smith and others. Over 200 degreed economists urged that the "Bailout Bill" not be passed as submitted, including two Nobel Lauretes; all were ignored.

The people of this nation have sat on their hands and watched American Idol, now turning into the NFL, while lapping up the slop from Paulson, Bernanke and Bush about how the "economy is fundamentally strong", instead of showing up in Washington DC to protest or flooding the fax and phone lines demanding that Congress act to reign in the fraudsters.

Let me know how "fundamentally strong" the economy is when you're walking the unemployment line and waiting for your turn at the soup kitchen for something to eat.

Entitlements? Forget 'em. They're gone. Social Security? Medicare? Done. Not today, but in the not-distant future. China, having gotten its money from the $700 billion "bailout", will ditch our Treasuries and refuse to buy more, as they will no more need to sterilize export dollars as our economy collapses.
We in turn will be left to twist.

We deserve it, because we could have (but didn't) stand up to their demands that we cover a private dispute instead of handing over $700 billion we don't have. When (not if) the foreign flow of funds inward disappears due to the lack of need for these nations to recycle dollars, we will suddenly find that we have a nearly $800 billion a year hole in our federal budget - a hole that can only be filled by chopping Social Security, Medicare and the Military. Congratulations Congress (and America in general); you didn't really think you'd get away with that, did you?

George W. Bush will go down in history as the President who held the office while we drove our nation's financial system off the cliff, laughing all the while about flipping houses. And despite his protests to the contrary, the history books will record that it was his administration that removed the 12:1 leverage limits, sued New York to prevent them from clamping down on predatory lending, and willfully stuck its head in the sand while Bear Stearns prepared to blow up, never mind ignoring the problem after Bear detonated in February.

Henry Paulson will go down in history as the Treasury Secretary who sold out our nation to the Chinese and London Bankers, then fled the country with $500 million he "earned" creating and selling the very credit instruments that later blew up and sunk the nation.

The members of the House Financial Services Committee, the Senate Banking Committee and the Joint Economic Committee will each have special places reserved in the history books for refusing to deal with Ben Bernanke's raw power grab after Bear Stearns, an act that will ultimately be judged to be the single most important element of the crisis, as it forever put the market in a mood to expect "rule changes" at any time, precipitously damaging trust and liquidity.

The "no short" rule will ultimately be cited as the reason that the market crashed, being that there were no shorts to cover and thus hundreds of stocks, on that fateful day, went "no bid" and had their prices collapse to zero - all at once.

Oil will collapse in price to $20/bbl. Unfortunately nobody will have any money to buy gasoline, or a car, so it won't matter. As in The Depression millions of automobiles will be scrapped after being abandoned by their owners for lack of insurance and registration fee money. Cheap scooters will become the dominant form of transportation for those with jobs, as they will be all most people can afford.

As credit collapses distribution of food and other essentials will break down. Unable to access credit, trucking companies will be unable to get goods to market. The current distribution system for food requires travel of over 500 miles from production to consumption; this is untenable in a market where stable credit is unavailable. Food distribution will be severely impacted and in some areas may break down below critical levels.

Unemployment will reach 25% within two years. Median income will fall by 30% nationally.
Foreclosures will reach 20 million homes. The government will step in with HOLC-style remediation but
it won't matter - the unemployed won't be able to pay irrespective of the price.

House prices will fall to well under $100,000 nationally on a median basis but with lending all but non-existent you'll need 50% down. A few people will make out like bandits near the bottom, being able to buy up homes for $10,000 each in blocks of 10 at a time - for cash. 60% of America will be renters; nearly half of all homeowners will ultimately lose their homes to foreclosure.

Civil unrest will break out in major cities when incomes fall but the cost of food and essential services fail to come down materially, leaving millions of Americans hungry, broke and homeless. Unlike in the 1930s America will not quietly stand in soup lines - instead they will riot, loot and burn. The National Guard will be called up but will find it impossible to exert meaningful control without shutting down all commerce in the affected areas. The decision will be made to cordon off the cities and deny entry to anyone who does not live in that specific neighborhood, essentially shutting down commercial activity. GDP will fall by 30%.

The S&P 500 will fall to 150 and flatline, a 90% loss. CNBC and Bloomberg will cease broadcasting. Volume will fall to 10% of former levels.

Bleak outlook?

Quite possible?

Can it be stopped?
Yes, but not for much longer.

The markets are perilously close to a tipping point where they will collapse, after which all of the above will come to pass, and Congressional action (or inaction) will be irrelevant.

Congress will then have to face the people, as will President Bush and his Cabinet, and may God have mercy on our Republican form of government, because history shows that when government mismanages things to this degree and refuses to respond to the will of the people, a "messiah" generally appears with a "solution" - but there will be "compromises."

Like your freedom.

To fix the problem trust must be restored. To restore trust you must stop the lying, expose the liars, prosecute and jail them all, and stop changing the rules in the middle of the game.
This must happen now. Today. Immediately. Not tomorrow, not next week, not after a series of hearings.

Right now.

Market participants must be able to know that when they engage in a transaction it will be transparent, handled fairly, and their rights will be protected.

Our politicians must stop demanding the impossible - that home prices "levitate." House prices cannot be maintained at more than 3x incomes - it simply can't be done. We must encourage home prices to contract to sustainable, affordable levels quickly and efficiently.

Mortgages must return to 30 year fixed notes, 20% down, no more than 36% DTI. No government-linked paper in any GSE may issue outside these guidelines. We must reliquify the mortgage market, and this is the only way to do it - by writing only sustainable mortgages.

Strong consumer protection laws must be written that bar negative balance auto and home loans. The practice of "rolling over" an old car loan into a new one, producing an instant 20% or more deficiency against the vehicles value, must end.

Usury laws must be re-imposed, limiting credit card and other consumer loan interest to no more than a reasonable spread over funding costs. Yes, this will limit credit to less-worthy borrowers. So be it. Unbridled credit got us here, and we must prevent it from happening again.

The excess, unsustainable debt in the system must be defaulted. Whether held by corporations or individuals, it must be purged from the system. Those firms and individuals that are bankrupt must be so declared and their assets liquidated, so they can start over and the market can clear.

People will say that what I ask is unreasonable, unable to be achieved, or "needs study."
You're free to study all you want, but if these actions are not taken immediately, right now, today, the above forecast will come to fruition.

You are seeing the global credit markets unravel in front of your eyes, and it is happening precisely because the fraud, avarice and outright theft has gone unpunished and left in place to siphon off wealth from the average American for more than 20 years, and our President, in that environment, went on national television and threatened the world with a global Depression unless his Treasury Secretary got a $700 billion blank check.

The markets, correctly perceiving there was a problem, did exactly what they did when this same gambit was run during the Fannie and Freddie debacle - they called the bluff.

The check is now on the table and we have but two choices - either pay it or suffer the consequences.

Joel and Renée said...

What do you think about all this James? I don't see it as being outside of the character of God to allow our economy to fail and allow great suffering in America. Sure he blesses when it brings him the most glory; sure we can pray for his blessing, but what if its not his will to restore the economy. Why should we trust prosperity prophets when there weren't any in the Bible? The silver and gold in God's temple in Haggai, as referred to above, are realized in the glorious riches of the Gospel, Christ in us, the hope of glory, not in financial blessing. We've got to keep our hands open and pray Thy will be done. If blessing then well be grateful. If suffering, then let it come, and let it make us holy.

jps said...

I have to agree with Joel here. It seems we have learned nothing in the 1600 years since Augustine wrote The City of God. We still think that God has to use the reigning country (in this case the U.S.) in order to get his will done.

What hubris! We deserve to crash and burn. We have thumbed our noses at God and created our own gods in our own image. Now they are failing and we expect God to come along and fix everything.