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One would think that the stock market would be more cheerful after the Fed announced it would bail out Freddie Mac and Fannie Mae "if necessary." Instead, all this did was to assure everyone that the government was probably going to see the national debt rise by 50% shortly.
These two mortgage banks together hold about $5 Trillion worth of mortgages. No one really knows just how many of those mortgages are going to be defaulted in the near future. But no one wants to purchase them at full price and then find out later that they are worth very little. So the actual market value of those mortgages is about 30 cents on the dollar--if you can find a buyer at all.
Together, these two banks own about half the mortgages in the country. Remember about 6 years ago when the President was bragging about how more people today own homes than at any time in the past? That was something to brag about back then. Politicians and presidents always take credit for the boom in the economy, even though it usually has little to do with them or their policies.
Financial policy is made by the Federal Reserve, not by the president or congress. The president is there to take the credit or the blame when the Fed's polices cause the rise or fall of the markets. But often we hear that "the Fed must remain independent." Few people catch the significance of such a statement. They are really saying that the Fed must be an independent government in America.
When it was named the Federal Reserve System back in 1913-14, men said it was no more Federal than Federal Express. Actually, it was the other way around. It took over the Federal Government and what we now call the Federal Government is no more Federal than Federal Express. The Fed really is Federal, because it has replaced the Constitutional Federal Government. It is the top echelon of Babylonian government.
But back to the current economic situation. The government's takeover last Friday of Indymac Bank was one of the largest bank failures in American history. Some say the second largest, some say the third largest. Either way, it has caused a lot of economic fear, and the Feds have had to talk a lot to try to bring back "faith" in the system.
Now economists, who once said to expect about 150 bank failures, have doubled their figure to 300.
No matter what they say, estimates will always be on the low side, because they are ever so conscious of not wanting to spook the markets. Everything is a house of cards, and one good gust of wind could destroy everything. When everything is built upon faith in Babylon, it really has no solid foundation. It is built upon sand.
So keep in mind that when you hear economists talk about "the solid fundamentals of the economy," these men are professional actors. They should hire some ordinary people to translate their words into the common language of the people.
When the Fed announced the bailout of Freddie and Fannie, the markets reacted by going down. One would think such a bailout would make the markets go up, but the money men know the real implications of this bailout. The dollar is dropping like a rock once again, oil prices are going up again, the price of gold is heading back toward $1000, and silver is again heading toward $20.
But this is nothing compared to the turmoil that is yet to come when we attack Iran. Such an attack is a lose-lose situation, because even if we win, we lose. The disruption of Iran's exports of oil alone will be catastrophic. And now Venezuela is threatening to stop selling us oil.
Of course, the bad news is really only bad news for Mystery Babylon. The divine purpose behind all of this is to set us free from Babylon. The storm has hit our Sea of Galilee, and the boat is fast filling up with water. Keep your eyes on Jesus, not on the storm. What you have learned from the story of Peter walking on the water is about to be applied in real life. Matt. 14:30 says, "But seeing the wind, he became afraid, and beginning to sink . . ."
It is important not to be afraid. The storm is necessary, and with it brings Christ, for Psalm 104:3 says, "He walks upon the wings of the wind."
We have been tested for many years and know that God does indeed provide for us in the midst of the storm. It may be that all the testing and wilderness training that God has put us through in past years is for a time like this. Be glad that God has trained you already, because faith is the one commodity that will be most needful in the times ahead.