The numbers on the U.S. economy are worse than expected. This weekend the Commerce Department revealed that the estimated 3.8 percent annual rate of contraction that America’s gross domestic product was predicted to suffer in the last quarter of 2008 wasn’t nearly pessimistic enough. The actual rate of shrinkage was 6.2 percent. Some key facts from the Times report on the subject:

[E]conomists … said that yesterday’s dire U.S. figures set the stage for equally terrible news over the key economy’s performance since the start of the new year. Rob Carnell, of ing Financial Markets, forecast that the first quarter would see America suffer “another horror story.” …American consumer spending, which accounts for more than two thirds of U.S. domestic economic activity, was confirmed as having tumbled at a headlong annual pace of 4.3 percent in Q4, equal to a quarter-on-quarter drop of 1 per cent, marking its sharpest drop since the second quarter of 1980. …The vulnerability of U.S. consumers was highlighted by a renewed fall in their confidence, according to the latest snapshot from the University of Michigan. The poll’s main index of sentiment for this month fell to a three-month low of 56.3, dropping from 61.2 in January as the mounting wave of job losses took its toll.The frailty of U.S. conditions was evident virtually across the board. Exports, which until recently had been boosted by the relative weakness of the dollar and provided one of the few pillars of support for the distressed economy, suffered their sharpest fall since 1971. …Investment spending by business plummeted at a 21.1 per cent rate, the worst fall since 1975, and knocked 2.5 percentage points off GDP.Another blow came from a 22.2 percent annual drop in Q4 in investment spending on construction of new commercial property.

As worrying as these signs are, nothing suggests they’re going to get any better. As billionaire Warren Buffett said this weekend, the economy will be “in shambles” for the rest of this year—and, we expect, indefinitely beyond that. This fall will facilitate a fundamental change in the global geopolitical structure. As the Bible prophesies, America’s dominance is over.

The Path Toward Socialism

America’s socialists are coming out of the closet in droves, says Mark Hyman in the Washington Times today. “Elected officials advocating ideological viewpoints that would have elicited derision and laughter only a few months ago are now emboldened to openly promote socialist policies. They feel safe because America’s chief executive has embraced an agenda that is quickly moving America toward socialism in which the goal is to have all power vested in the state and any dissent is quashed.”

The transformation has indeed been alarming. Barack Obama has been in office less than two months, and the American government is already firmly committed to a future in which big government dictates, freedom of speech and thought is hemmed and ignorant citizens blindly worship the secular state. Hyman provides three examples (emphasis ours throughout):

Exhibit No. 1 is President Barack Obama’s claim that “the federal government is the only entity left with the resources to jolt our economy back into life.” Rather than provide tax and regulatory relief for businesses that would actually jumpstart the economy, Mr. Obama’s $787.2 billion “stimulus package” is crammed full of wasteful spending measures that hew to a social engineering agenda that includes government central planning at its very core. …Exhibit No. 2 is Mr. Obama’s grossly naive call for universal health care. His failed Health and Human Services Secretary nominee, Tom Daschle, promoted a U.K.-style of socialized medicine. … Mr. Daschle’s call for a centralized medical records system controlled by the federal government should have privacy advocates up in arms. However, most disturbing is a provision in the stimulus bill establishing a National Coordinator for Health Information Technology that would, in the words of Mr. Daschle, ensure doctors only prescribe “[medical] treatments [that] are the most clinically valuable and cost effective.” Such policies are eerily reminiscent of the political left’s eugenics movement promoted by Planned Parenthood founder Margaret Sanger.Exhibit No. 3 is the Democratic effort to silence critics. Michigan Democratic Sen. Debbie Stabenow, whose husband was an executive with the now-bankrupt Air America liberal talk radio operation, has joined a growing list of Democratic elected officials who have vowed to disable the few conservative broadcast media outlets by imposing the inappropriately-named “Fairness Doctrine.” Sens. Chuck Schumer, Dick Durbin, Tom Harkin and John Kerry have joined House Speaker Nancy Pelosi and former President Bill Clinton among others in vowing action that would effectively shut down criticism of their brand of government.

Many solid arguments and examples exist testifying to the failure of socialism. Indeed, as Thomas Sowell once said, “socialism in general has a record of failure so blatant that only an intellectual could ignore or evade it.” Another insightful snippet that resonates in light of current socialistic trends comes from 20th-century motivational speaker and political conservative William J.H. Boetcker, who warned,

You cannot bring prosperity by discouraging thrift.You cannot help small men by tearing down big men.You cannot strengthen the weak by weakening the strong.You cannot lift the wage earner by pulling down the wage payer.You cannot help the poor man by destroying the rich.You cannot keep out of trouble by spending more than your income.You cannot further brotherhood of men by inciting class hatred.You cannot establish security on borrowed money.You cannot build character and courage by taking away man’s initiative and independence.You cannot help men permanently by doing for them what they could and should do for themselves.

The German Superman

Earlier this week theTrumpet.com reported that Eastern Europe is in dire straits. All together, the region has borrowed $1.7 trillion from abroad, most in the form of short-term debt. Now $400 billion—around one third of the region’s total gdp—must be paid back or rolled over this year.

That’s not the worst of it. Much of the money has been borrowed from Western Europe, meaning Eastern Europe’s delinquency will likely destabilize and in some cases, unless there is outside intervention, even bankrupt some Western European economies. “Whether it takes months, or just weeks, the world is going to discover that Europe’s financial system is sunk,” Ambrose Evans-Pritchard wrote recently. Evans-Pritchard believes the debt drama in Russia, Ukraine and Eastern Europe has reached “acute danger point,” and that unless drastic measures are taken soon, European economies will melt.

Enter Germany.

With the number of European economies collapsing or teetering on the brink of collapse growing, Europe’s largest and healthiest economy—which till recently has been reticent about indebting itself to bail out other states—is beginning to accept the fact that it will soon have to intervene.

Last Thursday, German Chancellor Angela Merkel gave what German daily Der Spiegelreported was her biggest hint yet that Berlin is now prepared to step in and provide assistance to troubled European economies. Speaking to journalists ahead of today’s EU summit, Ms. Merkel said, “We have shown solidarity and that will remain so.”

The chancellor’s remarks come on the heels of recent moves by both Foreign Minister Frank-Walter Steinmeier and Finance Minister Peer Steinbrück indicating Germany is preparing to throw a rescue float to fellow European states. Der Spiegel continued,

Her comments follow growing speculation that Berlin may act under article 100 of the Maastricht Treaty, which permits financial assistance for countries experiencing “difficulties caused by natural disasters or exceptional occurrences beyond its control.” Foreign Minister Frank-Walter Steinmeier said last week that Germany was considering ways in which economically stronger euro zone countries could help other states … and Spiegel reported last week that German Finance Minister Peer Steinbrück had asked his staff to draft scenarios for possible rescue measures including bilateral bonds that could see Germany borrowing at more attractive interest rates to raise money for hard-up countries.

This is a major event that should be watched closely. The Trumpet has explained to its readers for nearly 20 years that Germany will emerge as the clear-cut leader of a united European conglomerate. We have also warned that a major crisis, both globally and in Europe, could propel Germany into this leadership position.

This could now be happening! Der Speigel continued,

Germany’s apparent willingness to support its neighbors reflects a change in direction for the leadership. Until now Germany, which has kept close tabs on its finances, has been reluctant to offer to help pay for what it sees as other countries’ lack of discipline in national spending. As a result, it is expected that extensive strings will be attached to any assistance offered, a point made clear by president of Germany’s Bundesbank, Axel Weber. Speaking to German daily Die Welt, he said “targeted aid for individual member states” may be “unavoidable” but any such moves would have to be accompanied with “strict demands and conditions.”

Notice, German assistance will come with strings attached, and with “strict demands and conditions.” To learn more about Germany’s prophesied role in latter-day events, read Germany and the Holy Roman Empire.

Obama Sends Churchill Home

Some years ago, the British government had given a bust of Winston Churchill to the White House, and George W. Bush featured it directly in the Oval Office. It symbolized the special relationship between Britain and the United States that has lasted for decades.

President Obama decided to return Churchill to his home country.

As radical as the changes being proposed by the new American administration are, one of the most radical in the foreign-policy realm is its imminent redefinition of the historic British-American relationship. As Ron Fraser explains in the newest Trumpet print edition,

The coming of the Obama administration has mortally wounded the natural symbiosis of diplomacy between Britain and America. This is a radical departure from the 200 years of mutual support and cooperation between the U.S. and Britain, particularly in matters of defense and security. The Blair-Bush years were the swan song for that strongest of natural, yet unwritten, alliances.

This weekend’s Telegraph reports on the same theme in its article “Will Barack Obama end Britain’s special relationship with America?”

In the marbled halls of the British ambassador’s residence in Washington … a quiet fear is calcifying. Hints from the White House machine suggest that the Age of Obama means a dramatic makeover not just for America, but for that old symbol of Anglo-American fealty, the Special Relationship. … [W]ord is spreading through political Washington that the new president wants to shake up the way the U.S. government relates to its allies, which will leave little space for the sentiment of old ties.

Last weekend, when the White House announced British Prime Minister Gordon Brown’s visit this week, spokesman Robert Gibbs said, “The United States and the United Kingdom share a special partnership.” The Telegraph says,

Those familiar with the thinking of Mr. Obama’s top team say that use of the word “partnership” rather than “relationship” is an important distinction—it illuminates Mr. Obama’s belief in practical measures that work, not the old way of doing things.A Washington official who is close to several members of Mr. Obama’s inner circle said: “They craft every word for the stone tablets. Words are what they do. It is not a mistake.”A partnership is a business arrangement based on what you can do for Obama, not a relationship like a marriage that thrives through thick and thin until death do us part. He’ll judge the specialness of a partnership with Britain on what he gets out of it.” … [I]nsiders say he will be ruthless in cutting adrift countries who do not cooperate with his global agenda, whatever their historic relationships.A British official said: “I don’t think Obama is steeped in the tradition of the special relationship going back to Churchill and Roosevelt. Of course someone of his generation is going to look at it differently. I think what he looks at are the assets that are brought to the table and the expertise you have. This is a definite change of emphasis.”In the six decades since … Winston Churchill first coined the phrase special relationship, successive American presidents have paid ritual obeisance to the notion that Britain should assume a place at the White House top table.Now even allies of Mr. Obama believe he intends to extract a higher price for access to the corridors of his power.Steve Clemons, of the New America Foundation think tank, who has links with the higher echelons of the Obama administration, said that Britain would be expected to make sacrifices in return for influence.Mr. Obama’s approach was “all about putting a price on access and a price on the relationship,” he said. “I think Obama does believe that this is a time of historical change. He wants to push reset on a lot of things. He thinks old patterns, old framings can get you into trouble, particularly when you’re trying to encourage different parts of the world.” …The conventional wisdom, which Mr. Obama has done little to dispel, is that he is less anglophile than his predecessors. He hailed the resilience of America’s founding fathers against the British “enemy” in his inauguration speech and devoted 35 pages of his memoir, Dreams From My Father, to his grandfather’s torture under British colonial rule during Kenya’s Mau Mau rebellion.

The British-U.S. relationship can only be fully understood when viewed in its true historical context, explained in rich detail in Herbert W. Armstrong’s book The United States and Britain in Prophecy. And as much as President Obama would like to push reset on these ties, biblical prophecy shows that America’s fate is inextricably linked with that of Britain. The weakening of the relationship will only weaken both countries and make them more vulnerable to being trampled by ascendant powers. Read about the stunning prophecy of their simultaneous fall in our article “Band of Brothers.”

Strength Spent in Vain?

President Obama has targeted August 2010 as the end of American combat in Iraq. According to the New York Times, some Iraqi politicians are taking the news with pessimism—“including Sunni lawmakers worried about the possible erosion of their influence in the Shiite-dominated government.” As senior Sunni politician Adnan al-Dulaimi said, “All Iraqis want the Americans to withdraw from Iraq as soon as possible. We’re just afraid of the vacuum that this withdrawal may cause.”

Obama’s aides rejected an idea formerly envisioned by George Bush for the U.S. to have a long-term peacetime presence in Iraq—similar to what occurred in Germany or South Korea. “The path we’re on here, the path is not towards any sort of Korea model,” said a senior administration official. “The path is towards reducing, in a fairly substantial way, U.S. forces in 2010 and then down to what’s currently anticipated, down to zero, by the end of 2011.”

Fatah and Hamas to Unify?

Fatah and Hamas leaders have reached “an agreement in principle” that will lead to joint leadership of the Palestinian Authority, according to the Bethlehem-based Ma’an news agency. They plan to form a joint government until elections take place. The two terrorist groups also agreed to a prisoner exchange between them.

Representatives from Hamas and Fatah met in Cairo to end the two years of disunity within the Palestinian Authority. The two groups also agreed to stop all media attacks against each other, according to an aide to Palestinian Authority President Mahmoud Abbas.

Planet on the Brink

The global economic meltdown that has already caused multiple bank failures, bankruptcies, plant closings and foreclosures will leave tens of millions of people unemployed across the planet. But according to Michael Klare, professor at Hampshire College and author of Rising Powers, Shrinking Planet: The New Geopolitics of Energy, another more perilous consequence of the crash of 2008 has only recently made its appearance—increased civil unrest and ethnic strife. Eventually, he says, war will follow.

Indeed, if you want to be grimly impressed, hang a world map on your wall and start inserting red pins where violent episodes have already occurred. Athens (Greece), Longnan (China), Port-au-Prince (Haiti), Riga (Latvia), Santa Cruz (Bolivia), Sofia (Bulgaria), Vilnius (Lithuania), and Vladivostok (Russia) would be a start. Many other cities from Reykjavik, Paris, Rome, and Zaragoza to Moscow and Dublin have witnessed huge protests over rising unemployment and falling wages that remained orderly thanks in part to the presence of vast numbers of riot police. If you inserted orange pins at these locations - none as yet in the United States - your map would already look aflame with activity. And if you’re a gambling man or woman, it’s a safe bet that this map will soon be far better populated with red and orange pins.

China’s Leverage

China has complained that it has no option but to buy U.S. treasury bonds. But, as the Financial Times reported this week, China

can still try to turn its investments into some sort of leverage. Think-tanks close to the government have been given the task of devising concessions that China can seek in recognition of its bigger role in international economic affairs. Zha Xiaogang, of the Shanghai Institute for International Studies, has published an “economic wish-list,” which includes a relaxation of U.S. restrictions on exports of sophisticated technology to China.

America’s great indebtedness to China gives China a considerable amount of power. China is starting to demand a say in America’s economic policy. Yu Yongding, an economist at the Chinese Academy of Social Sciences, stated that “There should be more give and take; some sort of guarantee that our interests will be defended.” He also stated that America “should at least be a little nicer” due to China’s role in financing U.S. debt.

Elsewhere on the Web

Moody’s predicts that the proportion of companies going bust in the economic crisis will exceed that of the Great Depression. The Telegraph’s story is here. “In what will be seen by many as die-cast confirmation that the world economy is plummeting towards an economic and corporate implosion of unprecedented proportions, Moody’s said it anticipated a tidal wave of defaults was approaching,” it says. During the Depression, the default rate reached upwards of 15 percent; but if the economy gets worse than expected, Moody’s said as many as one in five companies could go under.

America’s financial crisis is bad, but Europe’s is worse. How bad is it? Jack Ewing provides some of the grim details in this piece in Der Spiegel.

The German election campaign is underway. Foreign minister and candidate for chancellor in this September’s election Frank-Walter Steinmeier lambasted his rival Angela Merkel this week for her inept leadership during times of crisis. “Germany is in rough seas,” he said, and Merkel and her Christian Democrats are “busy discussing what course to take. All hands are below deck and the bridge is vacant.” The national election in Germany is one of the most important upcoming events to watch. To read more about the campaigning, see Der Spiegel’s full article here.

According to Newsmax, “The Obama administration is moving to rescind a federal rule that reinforced protections for medical providers who refuse to perform abortions or other procedures on moral grounds, an official said Friday.”

In the first two months this year, 29 U.S. troops have been killed in Afghanistan, compared to 8 during the same period last year. “The latest casualty toll among U.S. forces could portend a deadlier year in Afghanistan than the U.S. military has experienced since the Taliban’s ouster in 2001,” the Chicago Sun-Times reports.

Central European nations are exerting increasing clout in the geopolitical arena according to this article in Spiegel. Their influence may be a determining factor in the future of the European Union. The article states, “How (and whether) they use [their] advantages in the years ahead could have an unexpectedly decisive impact on the fate of the EU project.”