Family of God: [FamilyofGod] A CRISIS IN LEADERSHIP

A CRISIS IN LEADERSHIP – THE END OF FREE MARKET CAPITALISM

The world is currently experiencing three historic events that will reshape the geopolitical landscape of the world. We are seeing unfold:

Germany emerged as the dominant European power dictating the terms on economic policy.

The Catholic Church is facing its biggest crisis in leadership for centuries.

The beginning of global stag-inflation, and the end of American free-market capitalism.

The significance of the three events will have a profound impact on shaping the world for the next decade.

Germany, by insisting that they will only bail out Greece on their terms, against the request of the majority of the other Eurozone members, has been able to impose its authority on the EU. Why has Germany taken such a firm stand on providing direct financial support for Greece?

Germany itself is only just recovering from recession, and has budget deficits of its own to cope with. The German people do not see why they should rescue the spend-thrift Greeks when they have their own problems, and have made sacrifices to correct imbalances in their own economy. Though the German economy is already recovering from the recession, with exports up, and unemployment falling, they cannot save the rest of Europe alone. Germany is the one country in the EU which is now benefiting from having the recent weaker Euro, with a strong manufacturing base, and little inflationary pressures to take advantage of a weaker currency to expand exports. This has been helped by those global markets which have stimulated domestic demand following the recession by inflating their money supplies.

Germany, having been the world's largest exporter for many years, has accumulated extensive investments abroad. Its strong manufacturing base and technical expertise will allow Germany to enforce greater authority over the direction of Europe. Because Germany is in a stronger financial position than the rest of the EU the German economy has recovered quicker from the recession than the other members of the EU. Yet Germany cannot impose its will on the rest of Europe unless there is a political and economic crisis that will force the other EU members to accept German leadership? Only serious crises affecting the rest of the EU accept Germany's terms in return for economic stability and leadership.

The crisis the EU is facing is threatening its very existence as an institution. It is a much a crisis of leadership as it is an economic crisis. Yet is also an opportunity for those pushing for a Federal United States of Europe to bring about the reforms to achieve this goal. Unless these reforms are made immediately most of the States in the Eurozone will default and Europe will disintegrate into economic chaos and depression. This would in turn drag the rest of the world down into a serve economic depression.

While most countries around the world have inflated their money supplies to stimulate their economies to assist their recoveries from the recent economic crisis, the Eurozone countries have not been able to achieve this under the terms of accepting the Euro. The European Central Bank (ECB) is prevented under its charter from increasing the money supply to inflate individual member states economies. The Germans, still remembering the devastation inflation created in 1923 and following WW2, are still very aware that printing money will devalue your currency and create inflation, insist on the ECBs independence in maintaining fiscal stability.

As many European governments have been spending more than they earn, they have borrowed money from the global money markets to finance their deficits. This has created fiscal problems for those Eurozone countries which financed domestic growth out of debt, as the cost of servicing these loans has become unsustainable. In addition the global recession has reduced government revenue. These governments now need to reduce expenditure to balance their budgets, which means making some very unpopular economic and political decisions. Lower Government expenditure is also causing further contraction of many EU economies.

Countries in the Eurozone such as Greece, Portugal, Ireland, Spain, Italy and even France are now facing liquidity crisis's, with falling government revenues, pressure to increase government expenditure to stimulate economic growth, and rising interest rates. Unlike countries outside the Eurozone who have been able to print money to inflate their economies, the Eurozone countries have had to attempt to reduce Government, and continue borrowing money on the international capital markets to finance their deficits. It will take years before these countries will be able to restructure their economies to get their budgets back into balance, repay their debts, and to be able achieve economic growth again. It is during this period of restructuring there will be a period of social unrest, political upheaval, and high unemployment.

These Eurozone nations now fear the specter of national bankruptcy. If they cannot inflate their money to repay their national debts, and are unable obtain further credit, they will default on their loans. A number of countries in the Eurozone will default if they can no longer obtain credit. These Eurozone nations are looking to Germany to bail them out. Germany as the largest and wealthiest EU nation is the only country with the reserves to fund the debts of those Eurozone nations facing insolvency. However the scale of the problem German cannot alone save the rest of the Eurozone - they have their own problems with deficits exceeding what is allowed under ECB rules. Bailing out the rest of the EU is only going to drag the Germany economy into insolvency as well.

What can now be done to prevent a total disaster unfolding and the Euro collapsing? This can only be achieved by imposing political and economic reforms upon the EU that will bring about full political and economic union under a single President who has the authority to govern the EU as a single political entity. A new Federal Government is needed to take over the management of the economies of the member nations in the Eurozone. While the EU does have a President, unless individual member states are prepared to give up their national sovereignty he remains little more than a figure-head. Unless the EU members agree to having the individual economies managed by a single governing authority the Euro and the European economy are facing disintegration. If this was to happen, Europe will break up – they will experience economic collapse and widespread political unrest. Europe is facing the worse crisis since its creation – it is much as a crisis of leadership as it is an economic crisis.

Interesting the USA experienced a similar crisis following the War of Independence and it was through the efforts of US Treasurer Alexander Hamilton in having the Federal Government to form a new Central Bank, and take over the debts of the individual states in return for their loyalty and sovereignty to a centralised Federal Government, and which bought about the political unity and prosperity for the USA.

The Euro will emerge from this crisis as the only global currency accepted as the world's reserve currency. The Euro will survive this crisis and strengthen again when an inspirational leader emerges to restore confidence. This must happen soon, to avoid disaster. As inflationary pressures build up around the world the Euro will be adopted by governments as the global world reserve currency. It will be accepted as a new global currency, replacing many countries domestic currencies.

Unlike the Eurozone, the rest of the world has gambled by inflating their currencies to enable them to stimulate economic growth to revive their domestic economies. However it appears that in a desperate gamble to prevent the collapse of the Euro the EU is now prepared to prop up insolvent member states by creating credit and purchasing their government bonds. In the short term this is working, but as China is now beginning to experience, it will soon create an inflationary bubble. Inflation quickly reduces a country's ability to maintain a viable export sector, as rising costs lessen any benefits from a weakening currency, destroying their production sector, and leading to speculation in property.

Very soon most of the world will experience an inflationary boom that will result in rapidly rising prices in property, commodities and food. With rising prices so will there be increasing pressure on wages and consumer prices. In brief, prices will go up as money looses value. Global inflation will destroy the value of most currencies, especially for those countries holding reserves in US dollars and will find that their reserves have become worthless. Governments will be forced to increase interest rates to try and prevent their currencies loosing value, which will only worsen the situation and create another more serious economic crisis. Governments will discover that they cannot just continue to just borrow money, print money and create credit to satisfy the consumer lusts of their citizens.

As money loses value, social unrest will spread. Without money people will starve, disease will become wide-spread, as well as poverty. Already many countries are facing the prospects of famine as the supply of food becomes affected by drought and other natural disasters, forcing up the prices. Those countries depended on imported food will no longer be able to afford to fed their people, resulting in starvation. This will be followed with political upheaval as people demand solutions. Rising interest rates and large government deficits will result in many countries defaulting, wiping out trillions of dollars in savings. It will plunge the world into depression.

This social unrest will have considerable impact politically, motivating people to look for a strong leader such as another Napoleon or Hitler to restore order, unity and political leadership.

Most countries will be willing to accept the Euro as the world's reserve currency, and agree to submit to the economic authority under a new economic order. It will mean the end of free-market capitalism, to be replaced by State-controlled capitalism similar to what was practiced under Hitler by the Nazis.

Not only is Europe experiencing an economic and political leadership crisis at this time, it is also facing a religious leadership crisis. The moral authority of the Catholic Church has been largely undermined of the sex abuse scandals and their cover-ups. Around the world daily new sex scandals are being revealed almost daily that have been covered up by the Catholic Church. The crisis in the Catholic Church coinciding with the economic crisis in Europe is the precursor for bringing about some of the greatest changes in international politics the world has ever experienced

This leadership void in the Catholic Church and EU politics will only be filled with a new religious leader who will be able to transform the Catholic Church, and restore it moral authority. This leader will become the intermediary to unite Europe and Christianity. It now appears that the current Pope will be forced to resign, to be replaced by a new leader who can restore moral the wounded Catholic Church, and reform the institution. This leader will play a key role in reshaping a unified Europe and installing his authority throughout the world to create a new economic order.

The coming weeks we will be seeing some of the most significant events in history unfold.

Bruce Porteous

bruceport@xtra.co.nz