Dow Jones Smashes Record: Now What?

Dow Jones Smashes Record: Now What?

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Is this the end of the ‘Lost Decade,’ or a bubble to end all bubbles?

The Dow Jones set a new record on Tuesday. Market commentators say this new record high is a big sign the economy is on the mend.

But is it possible that it signals something much more ominous?

Giddy investors shrugged off concerns over the economy sending the Dow Jones surging 100 points above both its intraday and closing records set in October 2007. The S&P 500 jumped within 2 percent of its record high. Including the Nasdaq, all three indexes are up between 6 to 9 percent on the year.

“With the Dow getting to all-time highs, is this signaling the end of the lost decade?” asked Jim Paulsen, chief market strategist at Wells Capital Management in Minneapolis. “[Y]ou wonder in some sense if that is the significance to this.”

Is America really on the verge of an economic boom?

Consider the bastion of America consumerism: Walmart. No boom here. Bloomberg reported leaked e-mails from Walmart executive officers indicating the worst start to sales in seven years!

“In case you haven’t seen a sales report these days, February [month to date] sales are a total disaster,” wrote Jerry Murray, Walmart’s vice president of finance and logistics, in a February 12 e-mail. “The worst start to a month I have seen in my seven years with the company.”

The same month, Cameron Geiger, senior vice president of Walmart U.S. replenishment, wrote in a separate e-mail: “Have you ever had one of those weeks where your best-prepared plans weren’t good enough to accomplish everything you set out to do? … Well, we just had one of those weeks here at Walmart U.S. Where are all the customers? And where’s their money?”

Both executives went on to blame the 2 percent increase in social security payroll taxes for the company’s plummeting sales.

But here is the point: If Walmart shoppers are broke—then we are all in trouble.

Walmart shoppers are the “barometer of the U.S. consumer,” says analyst Brian Sozzi. If the world’s largest retailer is struggling, other businesses definitely are.

“There’s no reason to be optimistic,” said Sozzi.

Walmart is a good gauge of the economy simply because it makes up such a huge proportion of America’s economic output. More than $1 out of every $45 spent in the country is spent at Walmart—that is more than 2 percent of America’s total gross domestic product. And because of its scale and copious amounts of data, company executives actually have better data about the economy than many economic forecasters.

So if Walmart executives are worried, people should pay attention.

And Walmart isn’t an outlier either. A string of major retailers have announced that sales are so bad it isn’t a question of whether they will close stores, but when and how many.

Best Buy, Sears, Kmart, JC Penny, Office Depot, Barnes and Noble, Gamestop, OfficeMax and Radio Shack have all announced they will close more than 100 stores each. According to analyst David Strasser, Family Dollar, Target and several grocery stores are also in trouble. Reuters reports that retailers had their worst Christmas since 2008. Where is the boom?

David Gallagher, ceo of Town Sports International, which operates fitness facilities, seems worried too. “As we moved into January, membership trends were tracking to expectations in the first half of the month, but fell off track and did not meet our expectations in the second half of the month. We believe the driver of this was the rapid decline in consumer sentiment that has been reported and is connected to the reduction in net pay consumers earn given the changes in tax rates that went into effect in January.”

These slumping sales are reflected in other data as well. Freight volumes have slumped for four consecutive months. In January they contracted for the first time since the great recession of 2007 to 2009. If consumers are not buying, what is the point in shipping goods?

Then there was the recent Interest.com survey that found that new cars are increasingly out of reach for Americans. Median-income families in all but one major American city cannot afford the average price of a new car.

So why does everyone seem to be piling in to the stock market if retailers are struggling and everyday consumers are more stretched than ever?

Jack Ablin, chief investment officer at Chicago’s bmo Private Bank, which manages $66 billion, explains. Regarding the soaring stock market, he said, “It really does represent an achievement …. It’s a testament to what the Fed has done and what investors have done to move beyond the financial crisis.”

Note specifically his reference to actions by the Federal Reserve.

Since 2008, the Federal Reserve has embarked upon the greatest money-creating scheme in the history of the world. It has bailed out huge financial institutions. It is allowing big banks to borrow money at near zero percent interest rates. And it is printing money to cover government spending.

All told, the Federal Reserve has created almost $3 trillion out of thin air. Through the multiplier effect, it created much more.

At first, much of the money went to prop up the financial system—to keep it from imploding. Now the Federal Reserve is attempting to prevent the economy from tanking and unemployment from soaring.

But all is not going as planned.

Debt-bloated America is already saturated with debt. As Pimco’s Bill Gross recently highlighted, extra debt is no longer boosting the economy—it is consuming it like a supernova.

All the extra money being created by the Federal Reserve isn’t being put to productive use, but is instead fueling speculation and the markets. Just like the previous two times the Federal Reserve tried to avoid the consequences of a recession (dot-com and housing bubbles), low interest rates and easy money are inflating a massive bubble.

And it is not just the stock market. Over the past five years, the bond market and various commodities have soared in value too—despite deteriorating economic fundamentals on both the national and global scale.

The booming stock market—instead of heralding a new age of prosperity—may actually be signaling that the real economy is on life support, and that dangerous new wealth-destroying bubbles are forming.

Russia Eases Stance on Syria?

Russian President Vladimir Putin said on Thursday that Russia should listen to some of the French arguments about Syria. This may be a sign of a radical shift in Russian relations with Syria.

Putin made the comment after talks in Moscow with French President Francois Hollande, whom Putin said made some new proposals on dealing with the nearly two-year-old conflict in the Arab state.

His remarks were unusually conciliatory for a man who has spent most of the past two years criticizing the West’s stance on Syria’s civil war. Russia has backed Assad financially and by using its veto at the UN Security Council to shield Assad’s regime from sanctions for cracking down on what began as peaceful protests.

The fact that France has been among the most vociferous critics of Assad and a major booster of the Syrian opposition makes President Putin’s remarks interesting.

Bible prophecy tells us that Syria will ally itself with a German-led Europe. However, the current Assad government in Syria, backed by Russia, is at odds with the Europeans, who are supporting the rebels.

Russia could keep fighting to prop up Assad, but Putin’s remarks may indicate a change in Russian foreign policy. If Russia abandons Syria, it would be a devastating blow to Assad—and would probably herald the end of the regime.

For more information on why the battle in Syria will soon affect you, read “Russia and Europe Moving Toward a Deal on Syria?” and “A New Strategic Partnership Emerges.”

Venezuela: What’s Ahead After the Death of Hugo Chávez

Venezuela: What’s Ahead After the Death of Hugo Chávez

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The death of the president leaves the door open for Venezuela to draw much closer to the Europe-based Holy Roman Empire.

Venezuelan President Hugo Chávez died on Tuesday afternoon after a long and difficult battle against cancer, leaving the world to wonder who will become the next leader of the oil-rich Latin American nation.

Vice President Nicolás Maduro will succeed Chávez as interim president, but the country must hold a new election within 30 days, according to its constitution. At that time, Venezuela may undergo a period of instability followed by a political transition on a scale the nation has not seen since Chávez first came to power in 1999, according to a Stratfor report published in December when the president’s health was rapidly declining.

Chávez’s death, Stratfor said, would give a unified opposition group—likely supportive of former presidential candidate Henrique Capriles Radonski—its best chance in over a decade of rising to power. Such a leadership change would likely signal a seismic shift in Venezuela’s foreign policy.

During his long presidency, Chávez distanced the Venezuelan government from the Vatican, which caused Pope Benedict xvi to reportedly view Chávez as a dangerous man, and to express deep concern over Latin America’s slide to the left.

But that breach would be rapidly healed if Capriles, a self-described devout Catholic, comes to power. Capriles was educated at the Catholic University in Caracas, and has said if he ascends to power the first items on his agenda would be to pay homage to the Virgin Mary, repeal Venezuela’s weapons deals with Russia, and contemplate an end to the nation’s robust relationship with Iran.

Such policies in Venezuela would no doubt greatly please the former pope and his successor, who will likely be in power before the end of the month.

The Trumpet and our forerunner magazine the Plain Truth have long pointed out Bible prophecies indicating that Europe and Latin America will likely draw near each other in the time just before Christ’s return—cemented together by the Roman Catholic religion and the Spanish language. The death of Hugo Chávez could open the way for these two sides to draw much closer.

To understand the deep significance of Europe’s inroads into Latin America, read “Is Venezuela on the Verge of a Roman Catholic Spring?” and “Europe’s Latin Assault.”

America’s ‘Gentler’ Defense Policy

America’s ‘Gentler’ Defense Policy

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The weakening of America’s defense policy is well advanced. The consequences will be disastrous.

In an op-ed piece published in the Wall Street Journal recently, Mackubin Thomas Owens, a senior fellow at the Foreign Policy Research Institute and editor of Orbis, the institute’s journal of world affairs, maintains that we are heading for a “kinder, gentler Department of Defense” that will have serious negative consequences for American security (February 22).

Akin to ancient Israel, America long ago made its decision not to rely on God to fight its battles, rather to rely on its own strength.

That being the case, a fundamental understanding of human nature would lead any reasonable mind to conclude that the nation had better acquire a defensive capability more than equal to the strongest of its enemies.

The shock of Pearl Harbor brought this fact home to the nation back in 1941. It was this realization that impelled U.S. defense policy toward global dominance under President Reagan, resulting in the moral and economic collapse of America’s major enemy at the time, the ussr.

Under the present Utopianist U.S. administration, U.S. military power is being hollowed out, gutted from within. Its present generation of generals are a far cry from those who led the U.S. to victory in World War ii. Indeed, if it was possible, soldierly leaders such as generals MacArthur and Patton would turn in their graves at the sight of U.S. defense policy of today. In fact, they would not be able to effectively operate against an enemy under its conditions.

Having read their own accounts of their personal military history, it is doubtful that even generals of a more recent generation such as Schwarzkopf and Franks could accept such restrictions on action as current U.S. defense policy imposes on its fighting men.

Mac Owens points to three prime examples of bungling by the current U.S. administration that are bound to continue the lowering of both morale and defense capability within the U.S. military.

Speaking of the appointment of a “yes-man/hatchet-man as the likely next secretary of defense whose job is to do his worst at the Defense Department,” Owens muses on a comparison between the Sen. Chuck Hagel nomination for that post and a replay of President Harry Truman’s appointment of Louis Johnson as secretary of defense in early 1949. “Like Mr. Obama, Truman was committed to funding his domestic programs at the expense of military spending” (ibid).

Such a policy is currently having similar results to those that resulted from President Truman’s stance on defense—a reduction in the general morale of servicemen and accelerated attrition of its leadership.

Owens points especially to current early forced attrition of the most talented military personnel, referring to the sacking of Marine Gen. James Mattis from his post as commander of Central Command. Ostensibly this resulted from “General Mattis’s advice, in particular his effort to change the strategic framework regarding Iran. General Mattis thought we should be planning for what Iran is capable of doing—such as closing the Strait of Hormuz or attacking Israel—not just what we assume Iran will do. In addition, General Mattis and the White House clashed over the way ahead in Afghanistan, his concerns about Pakistani stability, and the response to the Arab Spring” (ibid).

Owens also refers to the morale- and discipline-destroying policy of Secretary of Defense Leon Panetta, which he announced as “the opening of most ground-combat billets to females.” Apart from the obvious differences between male and female which render them incompatible for serving together in battle, Owens points to the fact that “the presence of women also leads to lowered—or worse, double—standards that will have a serious impact on morale and performance. Secretary Panetta’s statement that ‘if [women] can meet the qualifications for the job, then they should have the right to serve’ is bunk, and everyone, especially infantrymen (and most women), knows it. … The combined effect of these three events will degrade the readiness and effectiveness of the U.S. military far more than sequestration will.”

It is interesting to note that as the U.S. withdraws increasingly from the European, Middle East and African theaters, Germany is quietly filling the vacuum. At the same time, the Japanese prime minister has recently announced a government policy that is identical to that which it adopted in its imperialist approach pre-World War ii. What a paradox that the very nations that were our enemies just 70 years ago should be now taking advantage of our weakened, feminized, homophile defense policy.

As Herbert Armstrong declared, following World War ii (co-worker letter, Jan. 31, 1968):

And now, (Leviticus 26:19), God says to Britain and America: “And I will break the pride of your power ….”God gave us the most colossal national power and wealth ever possessed by any nation or empire. Already He has taken away that power from Britain. Before World War i they were the world’s greatest power. Today they are a second- or third-rate power—no longer one of the world powers. But the United States still possesses that power! We are the world’s greatest power! Yet we are afraid to use it.God has taken from us the pride of our power!

Speaking of an early incident between pipsqueak North Korea and the U.S. military monolith, Mr. Armstrong observed (ibid),

Had a little nation like North Korea captured a United States Navy ship when Theodore Roosevelt was president, he probably would have issued orders at lightning speed to effect the recapture of that vessel, and had it back even before the world heard the news. Not even a big power would have dared attack or seize a United States Navy ship, then! And we didn’t have but a fraction of the power, then, that we have today! We had pride in our power then!!I have said before, America has won her last war! God in heaven determines the outcome of wars (see Psalm 33:13-19, especially verses 16-19).And now that God has broken our pride in our power ….

Full well Mr. Armstrong foresaw the outcome of the great prophecy for our time penned by the Prophet Isaiah: “For behold, the Lord, the Lord of hosts, doth take away from Jerusalem and from Judah … the mighty man, and the man of war …. For the leaders of this people cause them to err; and they that are led of them are destroyed” (Isaiah 3:1-2; 9:16).

We are literally living out those days today, prophesied so long ago.

But thank the Eternal God that they are but a dramatic precursor to the fulfillment of a far better future. For as Isaiah was inspired to record, they are but the lead-up to a time when the whole governmental system of man, which has wrought so much pain and suffering on humankind, will be suddenly replaced by “The mighty God, The Everlasting Father, The Prince of Peace. Of the increase of his government and peace there shall be no end …” (Isaiah 9:6-7).

Then, the majority of humankind will yield to its Maker to fight its battles, the outcome finally being the end of all wars (Revelation 20:7-15) and the coming of universal peace for all time! (Revelation 21:4).

Profits Over Patriotism

Profits Over Patriotism

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The quiet response by American victims of Chinese cyberattacks is a frighteningly short-sighted strategy.

An e-mail arrives in the inbox of an employee working for the U.S. government or an American corporation. It appears to be from one of the recipient’s bosses or co-workers, and includes a signature complete with the sender’s job title and other information. The language of the e-mail might be slightly odd, but its subject matter is specific to the employee’s job or one of his interests. It includes an enticing link or attachment.

The employee skims the e-mail, and then positions his mouse cursor over that link or attachment.

He clicks.

With that click, not only is his computer compromised, but he has also given the e-mail’s sender a platform for movement throughout the organization’s network. The sender was not actually his co-worker, but a crafty cyber predator who did his research—combing through social networking sites, blogs, etc. to obtain the information needed to make the e-mail appear legitimate.

This practice of “spear phishing” is the favored attack method for more and more hackers because it’s the path of least resistance into an organization’s network. This route is unhindered by antivirus software because it dupes a human being into bypassing all of that and swinging the doors wide open for cyber predators. For all the savvy employees who spot the ruse, there are usually a few who don’t.

All it takes is one.

Who are the cyber predators sending the counterfeit e-mails? Much of the time it’s the Chinese Army.

U.S. intelligence says Chinese cyberattacks wreak so much havoc on American companies that they threaten the nation’s global economic competitiveness. Yet it’s rare to hear about severe damage in the reports companies file with the government. The number of disclosures and the extent of the damage revealed in them doesn’t even begin to bear out the picture of rampant, economy-bleeding cyberattacks painted by America’s intelligence community.

Why the discrepancy?

Sometimes corporations just don’t know they are being punctured and leeched. In other cases, executives believe revealing a breech would only invite other attacks, so they keep mum about their company’s soft digital underbelly. In other situations, firms fear that disclosures would rattle the confidence of their customers or shareholders, reducing stock values, and potentially incurring legal liabilities.

The Chinese market holds the most lucrative business opportunities for many U.S. firms. American tycoons don’t want to risk a loss of business from the world’s second-largest economy and its largest trade nation. They prioritize profits above patriotism. They want to turn another check, so they turn the other cheek.

Then there is the competition. Many executives fear that if they upset China by disclosing Beijing’s attacks, not only could they lose China’s business, but they could lose it to their American rivals. If competitor duos like PepsiCo and Coca-Cola, or Airbus and Boeing would collaborate on a united front, they could pressure the Chinese markets in a way no single corporate entity could. But American firms often view and treat each other as adversaries more menacing than the Chinese cyberterrorists.

The god of too many U.S. policymakers and businessmen is the almighty dollar. Those who worship in its skyscrapers are often willing to sacrifice national security on the altar of profit. Obsession with the bottom line keeps American firms from sharing information with each other or with the U.S. intelligence community that could help the whole nation defend against the blight.

On the National Level

In 2009, China’s intellectual property theft cost the U.S. $48 billion and eliminated 2 million jobs. In the time since then, the attacks have steadily intensified.

Last week, the New York Times called the quiet cybersecurity standoff between the U.S. and China “a new Cold War.” In some ways this war is “more complex and pernicious” than the superpower conflicts of past decades, it said. If it is so potentially pernicious, why does Washington keep so quiet about it? The Obama administration—even when confronted with undeniable evidence—has refused to so much as name China as its enemy in this war.

“We were told that directly embarrassing the Chinese would backfire,” an unnamed intelligence official said. “It would only make [the Chinese] more defensive and more nationalistic.”

American leaders cringe at the thought of a China that is more defensive and more nationalistic than it already is.

The U.S. has the power to pummel China with conventional or cyberattacks. Why not use it? Another unnamed intelligence official said Washington won’t confront Beijing because of “huge diplomatic sensitivities.” These “sensitivities” link mostly to the fact that China is the debt-ridden U.S.’s biggest creditor. America’s suicidal spending and borrowing habits have helped to break the nation’s will to use its military might. American leaders hope that if they keep quiet, the attacks will stop. But Chinese policymakers see America’s refusal to confront their belligerence as the weakness that it is. Beijing sees that America no longer has the stomach for confrontation, so the Chinese continue these acts of war without fear of retaliation.

In the near term, those unsuspecting U.S. employees will keep on clicking on false links. Infiltrated organizations will continue to keep quiet—obscuring and downplaying the damages they sustain. And American leaders will continue to flee confrontation. The broken will, greed and fear of U.S. leaders are all indications of the country’s precipitous decline. The slide toward destruction is past the point of no return, but that sobering trend is closely tied to the best news this world could ever hear: Jesus Christ is just about to return to usher in an era of unprecedented peace, cooperation and prosperity for all men and all nations!

To understand more about the causes behind the U.S.’s faltering leadership, read Character in Crisis.

Web Exclusive: America Under Attack—Part 2