Beware friends; we are not out of the financial wilderness yet. Despite what we are being told we are very close, once again, to financial destruction worldwide.

If this is worrisome, as Al Jolson sang, “You Ain’t Heard Nothing Yet”. What is happening in the United States and especially Greece as I write this could be far worse! In the United States the Senate is debating (translated arguing) about raising the debt ceiling of $14 trillion so that the American government can continue doing business. Without raising this ceiling, the public employees, pensioners, and unemployed will not be paid. And for the world economy the United States will be in default of their bonds and debts around the world. At present it is strictly a political tug-of-war, with the Republicans wanting to cut costs and the Democrats wanting tax increases. Both sides are pandering to their political base in this colossal game of chicken. They are likely to come to some kind of agreement as soon as one side blinks. If they don’t, the United States faces concern by investors as to how reliable their treasury bills and bonds will be in the future. In the interim, stock markets are fluctuating because of the uncertainty. This could have major implications on the world financial markets. Fortunately for the United States their financial fate is in their own hands. The same cannot be said about Greece.

In Europe, the concerns are over what has become known as the “PIIGS” (an acronym for Portugal, Ireland, Italy, Greece, and Spain); the biggest concern at present is Greece. On the precipice of bankruptcy, how Greece handles a much needed turnaround of their financial crisis will affect how the rest of the PIIGS and Europe will react and respond. Greece is very close to defaulting on their foreign debt and bonds. In an attempt to receive a bailout package, again, from the International Monetary Fund (IMF) and the European Union (EU) the Greek government, led by George Papandreou, has had to pass a series of austerity measures, including tax increases and cost cuts in the short term. They are also being forced into the privatization of many public assets, such as power companies, railways, and ports, which in the long term will only increase costs to a population already suffering from the austerity measures. The population of Greece is rioting in the streets against such measures. But, to receive the funds the IMF and the EU are calling the tune and Greece is expected to dance. As Proverbs 22:7 says: “The rich ruleth over the poor, and the borrower is servant to the lender.”

When the privatization of Greek national assets, such as those mentioned above, occurs even the experts say it will be a fire sale of a large portion of the Greek infrastructure. And who can afford the prices of such large assets except huge companies? Don’t be surprised if China is not at the table wanting to stabilize a large trade partner (the EU). China is one of the few, if not the only one, with huge financial reserves to buy such assets, and China is still buying Greek bonds and slowing the purchase of U.S. bonds and treasury bills. Greece faces the prospect of the EU tiring of the Greek mismanagement and simply asking Greece to leave the EU for stability. There have been reports of such meetings between the other EU members. Perhaps Greece will simply withdraw from the EU and try to fend for themselves.

The French and German governments are trying to propose a “soft” rollover of the debt to the banks, but considering Greece’s penchant for overspending this may be a tough sell and may not satisfy the financial markets. A soft roll over would be a simple acceptance of deferred payments or restructuring of the debt, still it would likely be seen as a default by the world markets. It all has the makings of a Greek tragedy in which the entire world may feel the pain.

Do not be fooled, this is not a bail out of Greece, but a bail out of the Banks of Europe. If Greece defaults there will be another rash of bank failures around Europe, especially France and Germany; the banks of France and Germany hold almost 100 billion Euros worth of Greek debt on the books and no one knows how much may be hidden in derivatives and other financial gymnastics. All of Europe is destabilized because of this situation. If the EU doesn’t help, it weakens confidence in the member states. In helping they may be postponing the inevitable. With the mood of the citizens of Greece, the Papandreou government has no chance of winning the next election and the next government may not follow the austerity measures agreed to now. Thus the EU may be going through this dance again in a couple of years. And as a result the rest of the PIIGS could simply follow Greece’s lead and follow the same path or just simply default. This will leave the world markets in a terrible state for a long time.

Proverbs 4:7 says: “Wisdom is the principal thing; therefore get wisdom: and with all thy getting get understanding.” Perhaps Greece will get understanding, but perhaps the rest of the EU should get understanding with all their giving. Because, if all nations do not learn the lessons that have been thrust upon Greece, they will find themselves in the same situation of great debt without the ability to pay.

Editor’s Comments: This month we are adding a new feature to our magazine. Our editorials for the next few months will be penned by well known leaders in the Israel Truth movement. We begin by introducing Mr. Kent Purvis, President of the British-Israel-World Federation, Toronto, Ontario. Mr. Purvis, longtime protégé of Bible scholar Douglas Nesbit, assumed the presidency three years ago and has brought many important changes to the organization, including introduction of a colourful and informative new magazine, “ The Kingdom Herald”. We recommend that you write to obtain an introductory copy. By the way, B.I.W.F. is hosting their annual conference later in September and among the speakers will be Texas Pastor Ken Kemble and our correspondent from Michigan, well know author, lecturer and historian, Pastor Jory Brooks. Try to attend; it will be one of the most important conferences to be held in many years