Category 5 hits Wall Street

The United States' economy is already exhausted. The nation's manufacturers are struggling and inflation and unemployment are rising. Plus, the Fed is coming off of its recent bailouts of Bear Stearns, IndyMac, Fannie Mae and Freddie Mac. Within the context of an already weakened economy, the events of September 13–14 were devastating. The Associated Press reported, "For Wall Street, it has probably been the most extraordinary 24 hours since the late 1920s…. The global financial economy has never in recent years been tested by quite such a combination of accidents and jolts to confidence" (September 15, 2008).

The Wall Street Journal called it "The Mother of All Mondays" and indeed, it was. Quickly, one prestigious institution after another fell. Lehman Brothers was a 25,000-employee firm that had literally helped build our nation by financing the railroads that would one day ship commerce from coast to coast. Lehman's $639 billion in assets was huge. This made it the biggest US failure in terms of assets held. By comparison, Enron only controlled $81 billion in assets.

On the heels of Lehman, the esteemed 60,000-employee Merrill Lynch organization was frantically struggling to raise capital. Failing, it was forced to sell itself to Bank of America. Shortly after, Washington Mutual had its debt rating reduced to "junk status" and later that day Hewlett-Packard announced it would cut 24,600 jobs (CNNMoney.com, September 15, 2008).

Adding to the turmoil, the Fed was forced to rescue AIG for $85 billion (the largest insurance company in the world). Another costly blow to the US Taxpayer, the Fed simply could not let AIG fail. Why? Because AIG insures approximately $307 billion in loans granted by mostly European banks to embattled US financial institutions (BBCNews, "How banks depend on AIG" September 16, 2008).

These events led to the worst day on Wall Street since the 9/11 tragedies of 2001, and are being compared to the beginning of the Great Depression (CNNMoney.com, September 15, 2008). According to The Washington Post (September 16, 2008), "Wall Street's biggest shakeout since the Great Depression stems from a collapse in housing prices, which spread losses among firms that bet on securities linked to mortgages."

As events unfolded, former Federal Reserve Chair Alan Greenspan direly warned, "Let's recognize that this is a once-in-a-half-century, probably once-in-a-century type of event." He continued to state that this is "by far" the worst economic crisis he has ever seen (September 14, ABC News).

But perhaps an unknown pundit best summarized the magnitude of events when he wrote on the WSJ.com Marketbeat blog, September 15: "A Lehman bankruptcy will be more like the assassination of Archduke Ferdinand – i.e. the real start to the financial world war rather than the end of the credit crunch."

Dire times are ahead and our government will not be able to bail out the market forever. Foreign governments will also become increasingly unable…and unwilling… to help.

And why are these financial calamities happening? Because of systems founded on excessive gain, oppression and extortion (Habakkuk 2:6), and because of our unwillingness to obey God's commandments, to keep His Sabbath and Holy Days, and to truly walk according to His Law (Deuteronomy 28:43-45). Sadly, the days are coming when, "Suddenly, your debtors will rise up in anger. They will turn on you and take all you have, while you stand trembling and helpless" (Habakkuk 2:7, NLT).

Let us earnestly seek God and fervently pray for our nation. And let us eagerly await Christ's return, because only that will solve this world's many problems. Please click the link to watch our recent Telecast, Why Must Christ Come Again? for much more insight.