Friday, June 11, 2010

Recession 2.0

A second dip recession is coming in 2011 and it will likely be worse than the previous one in 2008-2009. That is Arthur Laffer’s conclusion in an excellent Wall Street Journal article analyzing the impact of the tax increases that will take effect January 1, 2011.

Laffer also says that the apparent economic strength we are seeing in 2010 is a result of business managers anticipating the 2011 tax hikes. Actions are being taken to pull as much revenue into 2010 as possible before cut backs are necessary in 2011. I have certainly seen this phenomenon at Texas Instruments where lead times for our products are longer than we would like because of exceptionally robust demand.

Laffer’s succinct summary of the dynamics that will bring about the 2011 economic collapse is compelling. It is interesting to note that few people are talking about this. It’s like the elephant in the room; investors are nervous about a second dip recession but people are afraid to talk about what will cause it as if such talk might become a self fulfilling prophecy.

You'd think Republicans would be beating the drum about the coming tax hikes since they will make a second-dip recession all but certain. It struck me that maybe they’re waiting until it is too late for Congress to address the issue before the November elections. Apparently politicians only dust off conservative principles when they can be used to get elected. Power does indeed corrupt… Satan controls all the governments of the world; see Luke 4:5-6 and Jesus calling him the “the ruler of this world” in John 12:31, 14:30 and 16:11.

Our increasingly excessive taxes are due to the social engineering that Barack Obama promised when he ran for president. Everyone likes to think they are on the receiving end of the hand-outs. But moving the wealth around involves taxing the productive component of society to be able to reward non productivity. It is well known that the top 50% of wage earners already pay over 96% of all income tax revenue. And incredibly over 47% of the people in this country pay no federal income taxes at all. This is non-sustainable and yet the vision of our liberal governmental officials is to spread even more of the wealth around.

The Bible tells us that the end of the age would be characterized by authorities robbing wealth from the wage earners… “Indeed the wages of the laborers who mowed your fields, which you kept back by fraud, cry out; and the cries of the reapers have reached the ears of the Lord” (James 5:4, NKJ).

We have had a series of economic bubbles burst foreshadowing the Financial Armageddon that will occur during the Tribulation per Revelation 18. The 2011 recession will be the next one and, given the status of other geopolitical developments, it may be the last one prior to the Tribulation…
Therefore be patient, brethren, until the coming of the Lord. See how the farmer waits for the precious fruit of the earth, waiting patiently for it until it receives the early and latter rain. You also be patient. Establish your hearts, for the coming of the Lord is at hand. (James 5:7-8)

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