Despite daring and far-reaching efforts by world governments to prevent it, the global economy continues to spin out of control. Exactly one year ago last Wednesday, the U.S. stock market peaked at an all-time high of 14,164 points. On Wednesday the Dow closed near 9,200, almost 5,000 points lower. By close of market Friday, after briefly dipping below 8,000, it was down more than 5,500 points, or 40 percent, from the same week in 2007.

In the past eight trading days alone, Wall Street declined nearly 25 percent, the largest drop since the plunge ending Oct. 26 in 1986, which included the Black Monday selloff. In just eight days, nearly $2.5 trillion in value vanished.

What’s sobering is that the carnage may not yet be anywhere near being over. On Friday, Paul Tharp in the New York Post reported that by Thanksgiving, Wall Street could still decline to near 7,000:

A new economic report yesterday supported such a steep downward spiral by showing a sudden slowdown could hit by Thanksgiving, based on an unexpected doubling of wholesale stockpiles of everything from petroleum and clothing to electronics and cars.A Commerce Department report said wholesalers had so much excess inventory on hand in August that they likely wouldn’t need to order goods for more than a month.In turn, that would trigger factory cutbacks, layoffs and slower consumer spending as the economy faces a harsh round of deflation in a prolonged bear market of shrinking growth.

The outlook is similarly dire around the world, as the Associated Press reported on Friday:

The Dow’s abysmal opening prompted further losses on Europe’s stock markets, with Germany’s dax down nearly 12 percent at one stage and Britain’s ftse 10 percent lower. Smaller markets also took a beating. Trading was suspended for various times in Austria, Russia, Iceland, Romania and Ukraine while Milan suspended share dealings in nearly half of its stocks because of excessive losses.In Japan, the benchmark Nikkei 225 index in Japan 881.06 points, or 9.6 percent, to 8,276.43, its lowest closing level since May 2003. It was its biggest one-day percentage loss since the stock market crash of October 1987 and meant that the Nikkei lost nearly a quarter of its value during the week.In Australia, where the s&p/asx200 plummeted a record 8.3 percent, market watchers were calling it “Black Friday.” Key indexes in Hong Kong, Singapore, the Philippines and India were all down about 8 percent. South Korea’s Kospi closed down 4.1 percent, while the Shanghai Composite Index posted a more moderate decline of 2.8 percent.

The collapse has been so alarming that several nations shut down their stock markets. On Friday, Bloomberg reported Italian Prime Minister Silvio Berlusconi as saying political leaders the world over are considering closing the world’s financial markets while they “rewrite the rules of international finance.”

Yesterday, finance ministers of G-7 countries met in Washington to find a way out of the mess. “It is not to extreme to say,” reported think-tank Stratfor yesterday, “that the outcome of these meetings could redefine how the financial markets work, certainly for the next few months and perhaps for a generation.”

This crisis is now widely recognized as the single greatest economic crisis since the Great Depression, and comes with consequences far worse in scope and impact than the crisis of the 1930s. “We face extreme danger,” wrote Ambrose Pritchard-Evans earlier this week. “Unless there is immediate intervention on every front by all the major powers acting in concert, we risk a disintegration of global finance within days. Nobody will be spared, unless they own gold bars” (emphasis added throughout).

Pritchard-Evans is not a fear-monger writing from the extreme fringe. These sobering observations come from an astute, widely respected mainstream journalist. He continued:

During the past week, we have tipped over the edge, into the middle of the abyss. Systemic collapse is in full train. … We are fast approaching the point of no return. The only way out of this calamitous descent is “shock and awe” on a global scale, and even that may not be enough. …The lesson of the 1930s is that any country trying to reflate in isolation will be punished. The crisis will ricochet from one economy to another until every one is crippled. We are seeing it play again in this drama as our leaders fail to rise above their narrow, parochial agendas.

Countless other journalists, experts and world leaders agree. “Yesterday [Wednesday] was a day when the world woke up to the historic nature of the times,” reported the Independent, “and the realization that the downturn will almost certainly now turn into recession, and may even turn into a slump of a kind not seen since the Great Depression.”

To students of history, the likening of the current economic crisis to that of the Great Depression is alarming and deeply sobering. As theTrumpet.com explained here, it was economic chaos that facilitated the rise of Adolf Hitler in the 1930s, and led to the formation of the terrifying Nazi government that caused the Second World War.

History teaches us a valuable lesson: When economic Armageddon strikes, blood-and-bullets warfare is on the horizon.

Following the Path of the British Empire’s Demise

Today’s International Herald Tribune asks whether America will enter a long slow grind down like that which began in America’s mother country a hundred years ago, or whether the current economic crisis represents a sharp landslide from superpower status.

At the dawn of the 20th century, Britain’s crisis in confidence had the populace wondering if theirs was a nation in decline. Britain barely won a surprisingly difficult victory in southern Africa in the Second Boer War, its industrial economy was being drained by a runaway financial sector, and British schools were in decline.

The parallels between Britain after its superpower peak and America today are eerily similar. America too is facing a national crisis of confidence. It is hard to be a globally confident superpower when you are economically bankrupt. The Tribune writes,

At the heart of the troubles, both short term and long term, is debt. Debt helped create the housing bubble and has now left almost one of every six homeowners with a mortgage larger than the value of their home. Debt built up, and then laid low, modern Wall Street, where firms borrowed $30 for every $1 they owned. And in the coming years, debt will constrain the United States government, as it copes with the combined deficits created by the Bush administration’s policies, the ever-more expensive financial rescue and the biggest item of all, Medicare for the baby boomers.In essence, households, banks and the government have already spent some of their future earnings. The current crisis marks the point at which the bills begin to get paid. Whereas Britain lumbered under the weight of imperial overreach, as the historian Niall Ferguson has written, the United States will be shackled primarily by its financial overreach.

But it is even harder to remain a superpower when you are morally bankrupt. The root cause that determines economic and national strength has nothing to do with economic and military policies. It gets back to something much more fundamental: the moral strength of the nation. And nothing bears this truth out more than the current home-grown economic crisis facing America. You can read about how society’s moral breakdown directly led to the banking crisis that is currently destroying billions of dollars in national wealth in “The Con that Turned the World Against America” and “The Cause of the Crisis People Won’t Face.”

The End of the Axis of Evil, Part Three

“States like [Iraq, Iran and North Korea] and their terrorist allies constitute an axis of evil, arming to threaten the peace of the world,” George W. Bush famously said in his 2002 State of the Union address. Soon after, the U.S. directly confronted Iraq. Today it is apparently comfortable enough with Iran as to be negotiating with it. And now, it looks as though it is ready to consider something of a “mission accomplished” for the North Korean part of this triumvirate.

North Korea will be removed from Washington’s official list of state sponsors of terror, the Weekly Standard reported yesterday.

Why the change? It actually has no apparent basis in a reduction of the North Korean threat. Just this past week North Korea banned un inspectors from its nuclear facilities. For this improvement in status, Pyongyang isn’t even promising to give up its nuclear program. The Standard reports,

“There is no formal written agreement,” says a former top Bush administration official. “The North Koreans haven’t signed anything. We are taking them off the terrorist list based on oral understandings and clarifications. This isn’t diplomacy, it’s lunacy.”A senior adviser to Republican presidential nominee John McCain blasted the deal as a “delusion” and suggested that the administration is seeking agreements for their own sake, not because they make the country safer.”Few regimes have proven themselves less trustworthy than North Korea. We keep easing sanctions and ignoring our allies’ concerns, but verifiable denuclearization doesn’t get any closer,” says a senior McCain adviser. “That is hardly successful diplomacy; it is delusion.”

An earlier U.S. promise to remove Pyongyang’s terror-sponsoring status was contingent upon a declaration of its nuclear activities. The declaration came—and patently failed to mention even the known aspects of North Korea’s nuclear program.

Apparently the thinking in Washington is, since we can’t trust North Korea to tell us the truth about what they’re up to, there’s no use forcing them to pretend to tell us. Let’s drop the charade—and just change their status regardless.

For more on the significance of Washington’s appeasement of North Korea, read Joel Hilliker’s “Exploding Fictions.”

The Russo-German Plan to Bust up nato

Within days of Russia’s invasion of Georgia in early September, our editor in chief, Gerald Flurry, told students at Herbert W. Armstrong College that he believed Moscow, fearful of how Berlin might respond, struck a deal with Germany before it attacked Georgia. After delivering that message to the students, Mr. Flurry wrote in his Personal for the October Trumpet magazine, “I believe Germany may well have been complicit in Russia’s plan to attack Georgia!”

That analysis was bold and unique. At that time, there were no overt facts or reports in the media suggesting behind the scenes dealings between Moscow and Berlin. Since Mr. Flurry made those statements however, a pile of evidence (read this, for example) has emerged which suggests growing cooperation between Russia and Germany.

Last weekend, German Chancellor Angela Merkel visited with Russian President Dmitri Medvedev in St. Petersburg. The two of them discussed Germany’s position on nato, and especially the U.S.-led move to welcome Ukraine and Georgia into the ailing organization. In a press conference after the meetings, the German chancellor made it clear that Germany would oppose nato membership for both counties and would even oppose placing both nations on a path to membership.

Germany’s decision to reject American interests and side with Russia on this issue is of “great significance,” wrote Stratfor founder George Friedman this week. We should remember that Ms. Merkel is the most pro-American politician in Germany and the most pro-American chancellor in nearly 20 years. Moreover, as Friedman noted, as an East German she has an inherent unease about Russia. Yet, despite all this, the German chancellor still chose Russia over the United States.

Why? The first reason is simple. Germany relies heavily on Russian energy, and with the cold months approaching, a free flow supply of gas is critical to Germany.

But there is more to Germany’s decision than gas. Friedman observed, “Germany views the U.S. obsession with nato expansion as simply not in Germany’s interests.” He continued,

First, expanding nato guarantees to Ukraine and Georgia is meaningless. nato and the United States don’t have the military means to protect Ukraine or Georgia, and incorporating them into the alliance would not increase European security. From a military standpoint, nato membership for the two former Soviet republics is an empty gesture, while from a political standpoint, Berlin sees it as designed to irritate the Russians for no clear purpose.Next, were nato prepared to protect Ukraine and Georgia, all nato countries including Germany would be forced to increase defense expenditures substantially. This is not something that Germany and the rest of nato want to do.Finally, and perhaps most importantly, Germany spent 1945-1992 being the potential prime battleground of the Cold War. It spent 1992-2008 not being the potential prime battleground. Germany prefers the latter, and it does not intend to be drawn into a new Cold War under any circumstances. This has profound implications for the future of both nato and U.S.-German relations.

What does all this mean? It means Germany is in the midst of a “strategic crisis in which it must make some fundamental decisions.” Germany is right now in the process of deciding its future. Should it remain an ally of the U.S.? This means maintaining its support for America’s foreign-policy objectives, which include expanding nato and increasing its military presence on Russia’s doorstep—which would assuredly infuriate the Russians.

The other option is realigning itself with the newly resurgent Moscow. At this stage, the latter option is more appealing to Germany because upsetting America is less risky than upsetting Russia. Friedman continued,

If Germany were to join those who call for nato expansion, the first step toward a confrontation with Russia would have been taken. The second step would be guaranteeing the security of the Baltics and Poland. America would make the speeches, and Germans would man the line. After spending most of the last century fighting or preparing to fight the Russians, the Germans looked around at the condition of their allies and opted out.

The Germans know that any benefit that might come from maintaining its support of America will be far outweighed by the repercussions that would come from upsetting the Russians. “Everything in German history has led to this moment,” Friedman concluded.

The country is united and wants to be secure. It will not play the role it was forced into during the Cold War, nor will it play geopolitical poker as it did in the first and second world wars. And that means nato is permanently and profoundly broken. The German question now turns into the Russian question: If Germany is out of the game, what is to be done about Russia?

We need to watch German-Russian relations closely. History shows that the formation of a strategic alliance—which Russia and Germany are putting together right now—is a precursor to war. For more, read Mr. Flurry’s article, “Russia’s Attack Signals Dangerous New Era.”

Where’s My Retirement?

This International Herald Tribune article gives pretty good examples about the fear people are dealing with in the face of the current stock market meltdown. The amazing thing is the complacency of most people. Apparently times have been so good for so long that everyone assumes things will eventually bounce back to where they used to be. Consequently, many people are going to see vast amounts of wealth disappear. For example,

A year ago, Robert Paynter was comfortably retired and looking forward to years of refurbishing old cars and boating from his dock on Lake Norman in North Carolina. Over a 17-year career at Wachovia, he amassed a pile of stock and options from the bank that he had assumed would be worth more than $600,000.But now the options are worthless, and he watched the value of his Wachovia shares shrink to about $15,000 before he sold all of them this week after the bank succumbed to the financial crisis and its stock fell to fire-sale prices. The rest of his investments are in free fall.”It’s like having an out-of-body experience,” said Paynter, 61. “It’s like being in a hospital bed and watching yourself dying. Whatever the bottom is going to be, I wish it would just get there. It’s the every day, watching the blood drain out of it, that’s hard to take.”

Remember, Wachovia has been dying for over a year. It took 97.5 percent of the value of Paynter’s Wachovia stocks to evaporate before he decided to sell. And he still has other free-falling investments that he hasn’t yet sold. And Paynter is not alone. Millions of Americans have seen their retirement accounts plummet by 20 to 30 percent or more. It looks like the job market is about to have a host of seniors re-entering it unexpectedly.

Elsewhere on the Web

Charles Krauthammer’s column this week makes some worthwhile points regarding Barack Obama’s associations with convicted felon Tony Rezko, unrepentant terrorist Bill Ayers, and the race-baiting preacher Jeremiah Wright. “Today, on the threshold of the presidency, Obama concedes the odiousness of these associations, which is why he has severed them. But for the years in which he sat in Wright’s pews and shared common purpose on boards with Ayers, Obama considered them a legitimate, indeed unremarkable, part of social discourse. Do you? … Equanimity is a virtue. Tolerance of the obscene is not.” The candidate’s supporters—including the mainstream media—have effectively stricken the issue from the minds of many voters, but it remains deeply troubling nonetheless.

Last night, the head of the International Monetary Fund warned that the world is on the brink of financial meltdown. “Intensifying solvency concerns about a number of the largest U.S.-based and European financial institutions have pushed the global financial system to the brink of systemic meltdown.” Global shares could drop another 20 percent before stabilizing, he said.

Economists are warning that a tidal wave of job losses is about to hit Britain, leaving more than a million Britons out of work by November, today’s Guardian reports. The transport, building and car industries have been particularly hard hit. Swelling unemployment and bad economic news is battering consumer confidence, which is reducing consumer demand, hurting business and forcing still more job losses in an increasingly ugly economic cycle.