The vulnerability of the world economy

3 The vulnerability of the world economy

This section will briefly show:

what sound biblical economic principles are.
That industrialized society was born in the part of Europe which had a developing religion,an enthusiastic leadership, and a faith in the future.
That a sound market economy has thereby shown itself to be superior to a planned economy.
But that our so-called new economy unfortunately suffers from inherent weaknesses, which, if they are not dealt with, could lead to a global economic catastrophe.

The material in this section was written during the years 1998-2001. Although certain data could seem increasingly outdated in a few years, I believe that the main points are fairly timeless.

3.1 Economic principles in the Bible

When God created the world, he gave it to humans to administer.

In summary, this administration implies:

That we actually don't own the things which we commonly call"mine and yours". Instead of regarding ourselves as owners, we ought to primarily regard ourselves as stewards who have been entrusted with varying sized "talents" to administer. These can be anything imaginable, such as giftings, knowledge, training, profession, family, etc. On the day of judgment, each one will be required to give account for how they have invested their talent. (ICor.4.1)
Each steward is therefore expected to strive to be able to return their "talent" in better condition than they received it. This is how farmers in olden days regarded their land and property. Their children should be able to receive something which the parents had improved, and not just worn out.
In his parable about the servants who had been entrusted with varying amounts of "talent", Jesus therefore referred to the servant who returned his "talent" without even any accumulated interest as both "wicked and lazy". (Matt.25:14-30)
The investment interest on the talent should be reasonable, and may not appear as profiteering. Neither may we accept bribes. (Psalms 15:5)

Greed is sin, and the present-day chasing after quick money is the same thing as worshipping the idol of Mammon. Neither thieves nor the greedy will have any part in the kingdom of God. (Matt.6:24; Col.3:5; I Cor.6:10)

3.2 The driving force behind the industrial revolution

In his book,"The Wealth and Power of Nations" the English economic historian,David S Landes reveals the reasons why England took first place in the industrial revolution. In his opinion, the main causes were:

A successful combination of:

a developing religion,
an open cultural climate, and
a curious middle class.

In order to understand these assertions, we will take a short historical look back, with Landes' help: At the end of the middle ages, several countries found themselves at approximately the same level as Europe. These were India, Japan, the Arab world, and South America's Indian kingdoms.

China, on the other hand, was both richer and more advanced than Europe. Early on, they had developed the clock, paper, the art of printing, gunpowder, and the cannon. Nevertheless, their development stagnated because the Chinese state leaders considered knowledge as a state monopoly, and that it was dangerous to allow it to spread publicly. Further, the Confucian government operated a dictatorship in a way which was never possible in the politically and religiously divided Europe. Unchangeableness and constancy became, therefore, a Chinese ideal. China is therefore the clearest example of how an authoritarian culture can choke off all further development.

Landes also describes how even the Muslim cultural world had earlier (during the years 750 - 1100 A.D.) exceeded the European culture, and had conquered present-day Spain and Portugal. But since the fundamental and inwardly focused religious element within Islam took over, curiosity and research were quenched.

When Spain and Portugal finally succeeded in breaking free from Muslim oppression, forces arose which quickly launched both countries into influential roles as seafaring nations. The Portuguese found the sea route to Asia, and the Spaniards discovered America. Along with the sea route to Asia came new trade which brought great economic profit to Europe. Also, great wealth was robbed from America. But these riches were soon wasted, since the Spanish elite chose to live a life of luxury, and the Spanish royalty invested their wealth in unsuccessful land and sea battles.

The flow of wealth that reached northern Europe, on the other hand, met with a new type of person, in the form of Protestants, and Puritans. In that the pocket watch was available to the people, time also became worth money. In addition to that the Reformation had brought the Bible to the whole population. Along with this, literacy among both women and children was also a notable characteristic for this part of Europe. In both Holland and England, people strove to honor God through hard work and a relatively simple and unassuming lifestyle. They saved their profits, and reinvested them in new activities. In this way, an ever-increasing group of people arose who were interested in improving their life situation.

The same thing is happening again today, principally in the industrialized countries where the great people revival has already occurred (See the text for illustration 3.12).

Further, both Holland and England had rulers who didn't care to regulate the details of what their citizens did. As a result, these countries acquired a greater element of democratic representation. The leadership of the churches, and the princes in Europe's middle ages, could not in general enforce the rule of conformity which at that time prevailed in China and in the Muslim world. Holland chose trade, and during the 1600's became an economic superpower. However, they lost their head-start to England in the 1700's.

In England, the first industrial revolution was being born. The agriculture there had become commercial, with exports not only to the cities, but also to foreign markets. England therefore took up the cause of free trade. The steam engine had been improved so that it could be used in mining and industries. Large numbers of people were also willing to invest in new ventures as these were developed, for example, in the textile industry.

Landes' conclusion is that the developing religious forms of Protestantism and Puritanism had a particularly important role in all of this.

Even other researchers, such as the German sociologist Max Weber, have asserted that Protestantism has so far shown itself to be more conducive to development than Catholicism.

During our own century, however, England lost the second industrial revolution to countries such as Germany, France, and the USA, as a result of investing more in capital management than in new scientific research and in the development of such things as chemical technology, and consumer products.

Now, however, in the third industrial revolution, England is coming back again, under stronger leaders such as Thatcher and Blair. Characteristics of this revolution include good community services, entertainment, and information technology (IT). These two leaders have been good examples of a positively infectious leadership through their enthusiasm and faith in their country's abilities.

Other European countries which have made great economic progress in a short time are Ireland, Poland, and Finland. Even in these countries, religion plays a larger role in society than it does in Sweden.
When, additionally, Finland succeeded in surpassing us in 1998's OECD- statistic, the main reason was probably that the Finns showed more "sisu" (perseverance in effort) than the Swedes have done since the crisis of the 90's began.

All of these four factors:

a developing religion,
an enthusiastic leadership,
faith in their own country's ability, and
a demonstrated measure of "sisu",

are certainly more significant than is generally believed. These factors underlie successful economic development, even though they are not included in traditional economic theories.

3.3 Market economy versus planned economy

In reality, the industrial development in Europe during the 1800's was certainly not so rosy as indicated by the discussion above. A large percentage of the working class still lived in poverty, and all the wealthy certainly did not live in accordance with the biblical principles mentioned above. Therefore, Karl Marx could sit in London and write his famous book, "Das Kapital," which later with Lenin's help, became the true "bible" of the communists and their planned economy of the 1900's.

As a result, the world became divided for 40-70 years into two great economic blocks, the communists with their planned economy, and the capitalists with their market economy. Sweden chose "a third way," which on the whole had a planned economy for community services such as schools and health care, and a market economy for industry. In the long run, even major industries would be socialized through the introduction of so-called labor funds.

Communist propaganda continually boasted of the huge economic progress made in communist countries. Even Sweden's socialistic government believed in this, and as late as the in the 1980's, our prime minister stated that planned economies in Europe would soon surpass us in the West.

But during the second half of the 1900's the USA, through president Ronald Reagan, challenged the Soviet's to a military technology arms race, which over time completely broke the Soviet economy, and led to the fall of the Soviet Union and the iron curtain in the years 1989-1991.

Then, as shown on TV, the whole world could see how they had let themselves be deceived by communist propaganda. In consequence, a comprehensive shift towards market economies began in the majority of countries. But even market economies have their weaknesses, as we shall see.

But first, we choose to shed light on the improvements which the introduction of market economy thinking would have within our public sector health care.

3.3.1 About the market economy
True freedom implies the possibility for all customer/consumers to be able to freely choose between several different care alternatives. In a functioning market economy, a certain balance/equilibrium arises with time between the producers and buyers/consumers. At the same time, both sides become dependent upon one another.

The buyers, however, have a certain advantage in that they have the power to buy or to refuse to buy a particular manufacturer's product. If the manufacturer manages to sell more, his yearly profit increases. But if business is poor, he must try to improve his product, find something new, or in the worst case end up in bankruptcy.

If we hope to have a functioning market economy with many independent health care alternatives, all personnel, from administrators to service personnel must endeavor to not only have satisfied customers, but to also keep them, or to increase the size of their customer base.

In order to survive, private companies must obviously charge the buyer a price which covers their costs. But at the same time, the competition between service companies should also motivate a continuous improvement in efficiency at all levels within the company - towards better service and lower prices.
These "automatic" regulating mechanisms are lacking for the most part within our public sector's offering of education and health care.

3.3.2 About the planned economy
In a planned economic system, these driving forces do not exist at all. Instead, the central authorities in, for example the Soviet Union, determined what would be produced, where it would happen and at what price it would be sold in the market. The "profit" of the company was defined to be that margin over the planned goal which they could produce.

Large-scale production became the true guiding principle, completely independent of actual costs for production and transport. Thus, soft drinks could be produced centrally in southern Russia, and then both filled bottles and empty glass could be transported back and forth over the entire country, without consideration for the actual transport expenses. Also, private farms were forced together into large collectives, despite resulting reductions in productivity which partially came about from the lack of a sense of responsibility and motivation among the farmers for the work.
For the same reason, many managers of shops and restaurants regarded their customers more as a nuisance than as an opportunity to satisfy the customer and increase their business.

In Sweden, we still have a similar way of thinking to some degree within the areas of schools, care for the elderly and health care. Once the parliament and government determine the framework for these productions, the administrators in the county councils and communities take over. The planning is done altogether too much from the top down, instead of from the bottom up, using the help of self-governing groups who know what the job entails. The patient who is forced to ask for help has to try to act lowly, and to "compliantly stand there with cap in hand" before the doctor.

Since the tax payer, who is also the customer/patient, never sees the actual cost to society of care which is desired or received, his interest to be economical with the common community resources is dulled. The customer/patient is all too often easily tempted to take all he can get, since it is, after all, not his own money which is being spent. This was most clearly noticed in how prescriptions for medicine increased drastically when the new, expensive weight-loss pills were introduced in Sweden in the spring of 1999.

3.4 Old fashion market economy

The western market economy rested upon a more stable foundation in the beginning of the 1900's than it does today.

The basis for this stability was:

As a security for the amount of money in circulation in each state, the central bank was required to have a gold reserve. Anyone who wanted had the possibility of having their paper money exchanged for a corresponding value of gold coins. I still remember how my grandmother had gold coins from the time before the first world war.
People placed their savings into interest-bearing bank accounts, or...
invested them in stocks, based on previous year's recorded profits.
Investors acted more with long-range goals, based upon what was known.
The investments were, for the most part, within the country.

3.5 Modern speculative economy

Today's economic market, on the other hand, builds altogether too much upon short-sighted speculations which are based upon what is expected to occur within the near future. The purchase of traditional stocks can, in addition to the yield, give the right to vote in the annual corporate meeting. In this way, the stockholders obtain the possibility of influencing their corporation's future direction. For example, small investors blocked Volvo's plans to merge with Renault of France, but they supported the merger with America's Ford some years later.

This possibility for influence does not come with capital funds, which are becoming more popular in our time. With these, one needs to also distinguish between high-risk funds, and low-risk funds. With a successful investment, high-risk funds can of course give a higher yield, but the risk for losing your money is also higher. In addition, investors in stocks and funds are moving more into global markets. During the last few years, many small investors have in this way lost large amounts of money on their investments in Russian and Asian funds, due to the drops in their stock markets.

A shrewd "gambler" knows when to buy low, and then to sell laterat a good profit, after a rise in the stock market. For example, those who bought Nokia stock in April, 1998 could sell it for almost three times its purchase price just before the stockmarket fell under year 2000.

Therefore, this type of international market speculations increased from 75% year 1977 to 98% in the end of 1990. This means that only 25% to 2% of exchange of capital has gone into actual payments for goods and services. This is one of the fundamental reasons for the instability in the modern capital market. Especially as the foreign exchange increased 800% during the same time.

Another main reason is that the exchange of capital is carried out based too much upon the investors' expectations, and not based upon the facts, such a corporation's annual report.

3.6 - 3.13 The crisis in global capitalism

(The text which follows to end of section 3 is my attempt to summarize the main message in George Soros' book with the same title as above, which is very much worth reading. Purchase it and read it yourself.)

George Soros, who became one of the wealthiest men in the capitalistic world, emigrated from Hungary to England in 1947, where he studied economy before emigrating further to the USA in 1956. There he soon began to build up his great fortune by starting and directing an international investment fund.

As a result, one could state without exaggeration that he should be well-qualified to describe the advantages and disadvantages of capitalism. He has collected his life-wisdom into several books, and through a network of organizations, he is now active in 31 countries. The purpose of these is to strengthen and preserve what he calls, "the open society."

3.7 A short historical overview

The roots of today's world trade probably go back to the Hansa League, along with the Italian states, of which the later ones were all the more tied together by commercial and financial bonds. The capitalistic system was then progressively developed from the 1700's onward, being fueled by the progress of industrialization in Europe.

However, the free movement of capital is a relatively recent phenomenon. Even at the end of the second world war, economies were mainly national. International trading was tightly limited, and strictly controlled by export/import licenses and rules of payment. This definitely gave a greater degree of economic stability than in the current increasingly global economy, but at the expense of lower economic effectiveness.

The Marshall Plan, The International Monetary Fund, and the World Bank have all come into being with the aim of facilitating international trade in a world which lacked international movement of capital. Direct investments recovered first as, for example, US companies quickly invested in daughter companies in Europe after WWII. The international finance market developed more slowly, since many currencies were not fully convertible, and many countries long maintained control over the flow of their capital.

The real breakthrough for global capitalism came in the 70's, as a result of the oil crisis. Since the oil-producing nations raised the price of crude oil over a few years from 2 to 28 dollars per barrel, they accumulated a huge surplus of funds. The importing nations, on the other hand, were forced to finance large deficits, leading to a world recession, which triggered the international debt crisis in 1982.

The problem was partially solved by beginning to draw the oil capital back through encouraging the oil producers to make large investments in the West, and through tax relief. Therefore, oil-producing nations currently own many buildings and large businesses in London, for example.
The market economy was further noticeably strengthened through Thatcher in England, and Reagan in the USA coming to power in the 1980's. Both were devoted to the idea that countries should allow market forces to steer themselves, without outside interference. After some difficult years, the world's economy thus began an uninterrupted expansion, which continued in every case into the beginning of the year 2000.

One could perhaps state, however, that the idea of a global capitalism was born in the 1970's when the concept of the "Euro" currency was initiated. This expanded quickly after the collapse of the Soviet Union, since many countries with a planned economy then freely switched to some form of market economy. Both communism and Naziism had previously asserted ever since the beginning of the 1900's that they had found the final truth. They both concluded, therefore, that they had the right to force their views and their economic system on the rest of the world using violence and war. This era is now past for the time being, at least.

But despite the fact that the market economy in the 1990's came out the victor in the conflict, it is by no means without faults.

Therefore, according to Soros, there is an acute need to review and reform the system of global capitalism, as it has developed since the year 1980.

Its weaknesses are clearly seen in connection with the Asia crisis at the end of the 1990's. Some Asian stock markets dropped at that time more severely than what happened in the classic Wall Street crash of 1929. Besides this, their currency fell drastically compared to its original value, which had for years been tied to the US dollar. In 1998, however, those markets recovered almost half of the earlier losses.

The recovery in Japan has, however, recently stagnated (April, 2001), which comprises a threat for the rest of the world. For these reasons, the crisis could be even worse next time, if it "infects" the rest of the world. (At that time, it would be extra difficult for countries with large national debt, like Sweden, with approximately 1.2 trillion in national debt, and 70 billion per year in interest. At the same time as interest rates rise through the roof, unemployment would probably also rise, resulting in lower government tax revenue. So far, we have not managed any amortization (repayment) of much value. --My notes.)

In August, 1998, the Asia crisis "infected" Russia, which suffered a real economic refining, which could have had further, unanticipated political consequences. Despite this, the wealthy G7 nations' reaction to the Russian crisis was deplorably inadequate. The International Monetary Fund (IMF) did not function as it was intended either.

The system of global capitalism builds upon the assumption that finance markets, if left to themselves, tend towards equilibrium, just as a pendulum does if it is moved off-center. Soros believes that this notion is false.

The reasons for this is that, whereas the pendulum is inanimate material being affected by fixed physical forces, the market is influenced by living people who have their own expectations and analyses.

As a result, in the latest crises, the finance market has behaved more like a wrecking ball, which is thrown violently against one economy after the other.

A new understanding must therefore begin with the admission that the finance markets suffer from an inherent instability. The goal of the international economic politicians should be to therefore maintain more stability in the finance markets. Soros, therefore, recommends instituting global monitoring of the national monitoring authorities, such as the central banks. Up until now, these national authorities have primarily cooperated in times of crisis, and have not so much worked to prevent crises.

3.8 The global economy

Today, the global economy includes:

Free trade of goods and services
Free movement of capital, which enjoys an even greater freedom than trade. Finance capital can be transferred by computer, much more quickly than goods and services, wherever the owner believes it can earn the most. Therefore, daily speculations make up a 2-3 times greater flow of money in the movement of global currency than results from the traditional payments for goods and services. For example traditional payments for goods and services decreased from 28% to 2% between 1977 to 1989.
Despite this, the global finance markets operate for most part completely outside the control of national and international authorities.

The money serves in these capacities:

as an economic measuring stick
as a means of payment
as a valuable reserve (capital reserve)
also, it often provides power.

The center of the global economy in our time is wherever the most active and mobile sector of the world's finance capital is found. This implies New York and London where the finance markets exist, and Washington, Frankfurt and Tokyo where the world money supplies are determined.
Since the finance capital is much more mobile than physical investments, it can instantly decide to avoid countries where it is subjected to excessive taxation, and regulation. Perhaps the most rapid movement occurs with the international portfolio investments, which can also move large sums of money in a short time.

Soros makes the comparison between the finance world and an enormous vacuum cleaner. It sucks up capital in the center, and spreads it out on the periphery.
Since the central countries' economic politics are determined by internal considerations, the borrowing nations on the periphery have very little control over their own destiny. Additionally, in seasons of uncertainty the capital tends to return to its country of origin. This is one reason why the countries on the periphery are more severely affected than those in the center.

The classic national economy is founded upon two ideal assumptions: that the players have perfect knowledge of the situation, and that the market automatically tends towards equilibrium, like a pendulum. Soros calls those who defend this view "market fundamentalists".
But the market system is defective, just like every other human enterprise. As a result, the most realistic economic model appears instead to resemble a sinusoidal curve, with continuous ups and downs, followed by a crash. (See the illustration below.)

The most profitable course is then to buy stocks and funds at the beginning of a new upswing,
and to sell immediately when the market begins to fall.

Without the intervention of the monetary authorities, the system would have crashed on at least the following 4 occasions: in 1982, 1987, 1994, and 1997. The international debt crisis of 1982 was precipitated by the drastic increase of interest rates in the USA. The Asian crisis of 1997 was brought about by the increasing exchange rate of the dollar. The European currency crisis in 1992 was caused by a similar imbalance between Germany and the rest of Europe.

Sine curve

The notable features of an economic growth/crash curve are:

a strong competition for capital during the upswing, in conjunction with,
an overconfidence in the market's self-regulating ability. On the upswing, these enforce one another, and as the flow of capital turns around, these two things both fall apart during the crash.

Every finance crisis is preceded therefore by an precarious expansion of credit:

When the borrowers are the state and community, the loans will become publicly known,
In the private sector however, the loans often remain anonymous until it is too late, as in the case of the Asian crisis in 1997.

Ever since the birth of capitalism, there have been such periods of recurrent financial crises, some of which have had devastating effects. In order to reduce the risk of their recurrence, both banks and finance markets have been subjected to national regulations.
However, there are no international regulating authorities or central banks which are comparable to the national overseeing authorities. On the contrary, in conjunction with the growth of globalization, a deregulation of the finance markets has occurred.
Through the institution in 1982 of the Paris Club for state debts, and the London Group for business debts, which resulted from the finance crisis at that time, a small step in the direction recommended by Soros has perhaps been taken.

(My comments are that Soros is probably more right than wrong. The steps he proposes, and more besides, will be most likely be introduced after the third world war, if not before, when the Antichrist cleans up the then shipwrecked world economy. See the mini text of illustration 5.7)

3.9 Weaknesses in our global economy

Chasing after more money, has made Mammon into the main idol of our time.
Instabilities in the market forces as a result of being steered by trends ("herd behavior"). This amplifies the up and down swings of the stock market, for example. In this manner, certain popular IT stocks have become so grossly over-valued during upswings that it would take up to 50 years before they yielded the invested capital. In the worst case, when people finally realize these facts, the market can take a nose-dive towards bankruptcy.
In a similar manner, an exaggerated extension of credit already hot market can lead to overheating and a crash. This occurred internationally in the 70's and in 1982, and in Mexico in 1994, and in Asia in 1997. (We will comment more on this).
Eroding moral values, both nationally and internationally. "Why strive to be honest, when it is success, and no longer honesty which wins people's respect?"
In consequence, precious societal values are undermined which consideration for others is expressed. For example, old fashioned managers, who considered what was best for their personnel and for society, are increasingly rare.
Each participant is assumed to be foremost given to maximizing their own profit, to the exclusion of all other considerations. Currently, the pursuit of more money comprises the overall dominant value. The global economy is becoming more and more a purely transaction-based economy, without any stabilizing personal relationships between buyers and sellers.
This implies that market forces are increasingly allowed to intrude into areas where they do not belong, contributing to the overall destabilization of society. Soros, therefore, asserts that our current condition is unsound and untenable in the long run.
Soros calls those who nevertheless defend the global market economy "market fundamentalists." The classic national economy which they defend, is as mentioned earlier, based upon two ideal assumptions, that the players have perfect knowledge of the situation, and that the market automatically tends towards equilibrium like a pendulum.
However, as already stated, the market system is defective, as is every other human enterprise. As a result, the most realistic economic model appears instead to resemble a sinusoidal curve, with continuous ups and downs, followed by a crash.
We have now come into a global capitalistic system which is constantly pursuing continual rapid expansion, just like Alexander the Great's empire in his time. This has the possibility of leading to increasing instability, and the system's collapse in the event of major disturbances, such as war. (See, for example, the midi-text, section 7.5, on the rise and fall of world empires.)

The first world war, for example, so powerfully affected the global capitalistic system of that time that it resulted in the stock market crash of 1929, and the great depression which followed. The capitalistic system of that time had then successively developed from the 1800's onward.

On that occasion, the ancient Judeo-Christian ethical and moral values constituted a significantly more stable basis for what was considered right and wrong. Today, a much looser set of values are brought to bear upon our increasingly ruthless market.

Therefore, is it not much more likely that our current version of market economy could suffer at least as drastically?

Soros emphatically warns that our market forces could create chaos, leading to the fall the global capitalistic system, if they continue to be allowed to have a free hand in the economic and financial arenas.

What he proposes, therefore, is a proper balance between politics and the market, where the politicians establish the regulations which the market brokers must follow. Unfortunately, the politicians have so far failed in this attempt, both nationally and internationally.

3.10 The open society

Soros describes the following three archetypes of society in our own time. On the one hand is a society which has a totalitarian political leadership, such as the communists and Nazis had. On the other hand is a society composed of religious fundamentalists, which is seemingly increasingly popular today. In between is the open society found in our western countries.

Our open society should be characterized by:

A democracy where the citizens actively participate in the market economy.
A regulating mechanism for the finance market's increasingly unrestricted actions.
Rules for maintaining law and order and peace, even on a global scale.
People who learn from their experiences and who also admit their relatively imperfect nature, and who work towards continual improvement. (Such as in the challenge given in illustration 3.2, series 1)

We have now lived for 200 years in the age of human reason. The first blow to overconfidence in human reason's sufficiency was the French revolution with its acts of terror. Soros therefore emphasizes over and over that our open society cannot survive in the long run without conscious efforts to preserve it, such as with certain limits on an individual's self-seeking gain. This assertion is of course renounced by the so-called "live and let live" school of thought. According to this ideology, an unrestricted pursuit after one's own interests gives the best of all worlds. But this ideology is refuted every day, in fact, by what we see in the world, and especially by the plundering capitalism which rapidly developed in Russia during the 1990's.

3.11 The Asian crisis is not over

The Asian crisis continues to provide a level of threat to the global economy in the year 2001. For comparison, it can be mentioned that the drops in the Wall Street market which affected the entire western world were 86% over 4 years (between 1929 and 1933), and all of 76% in just one year (between 1997 and 1998). He questioned in 1998 if it would lead to a successful or an unsuccessful outcome.

In any case, it seems that a major crisis will lead to:

Banks and companies going bankrupt, or needing to reorganize.
An increased dependence upon foreign capital and influence.
An increased investing in profit maximization, overriding previous traditional social considerations.

This implies, for example, that Korean capitalists would be forced to give up family control, in favor of control by international banks and multinational corporations. The profit motive will in this way achieve preference over Confucianist ethics, and national pride.

If the capitalistic system triumphs through the current crisis, the world economy will become even more dominated by internationally traded corporations.

The ruthless competition will not allow them to give social considerations, such as preserving any occupation which harms their profit.

3.12 Is a global crisis looming?

In connection with this, Soros is of the opinion that our current history shows that the imbalance could become even worse, so that our entire society collapses into chaos. For example, the fall of the Soviet Union created a vacuum and the collapse of law and order, which in the worst case could have led to an equally great threat as communism was in its own time. Similar collapses of national authority occurred in the 1990's in Jugoslavia, Albania, in Africa, and Asia. The Asian crisis in its turn pulled down Russia, South Africa, and Brazil along with it.

According to Soros, the major threat in our time does not come from some totalitarian state, but from instabilities in the global capitalistic system, unless we acknowledge its shortcomings, and take steps to correct them in time.

In these days, business dealers are praised for their economic success, and not for their uprightness or for the contributions which their company gives to the improvement of society. Currently, sentiments are building up all over Asia against the USA, the Monetary Fund, and all foreign capital. The ultimate crisis will therefore be political, with the raising up of domestic movements which desire to expropriate multinational corporations and to recapture national wealth. Their success could therefore shake the self-confidence of the finance markets, and lead to a downward spiral.

If people do not have faith in the advantages of an open society, and willingly limit their self interests, the open society will hardly survive.

3.13 Soros' three most important recommendations

Restrict the rapid movement of capital, with consideration for example for the needs of the various parties, such as private individuals, businesses, banks, fund administrators, etc. ( Such a restriction could be the so called "Tobin tax" of for instance 0,05% on each transaction. This would release 30-300 billion dollar yearly, money which could increase our yearly humanitarian aid to the undeveloped countries with a factor 2-6. My comment)
Institute a responsible international control of the actions of the central banks and of the overall "health" of the global market.
Reinstate the stabilizing, traditional Judeo-Christian moral values such as:
"You shall not lie," and "You shall not steal." Strive to do what is right, even if it is not momentarily popular.

The Golden Rule given to us by Jesus is: "Do to others what you would have them do to you."

3.14 My own concluding illustrations

Illustration 3:14.1 shows the development of the stock market in the 1990's in USA, Europe, and Japan. The market has shown a record increase in the USA, and almost as much in Europe. But the Japanese economy has gone so drastically backwards, despite all their government's attempts at supporting it, that it could simply be said to be "deadlocked."

If the country was a corporation, it would have probably already gone bankrupt, since the Japanese national debt has become the largest in the world. It amounts to almost 130% of their GNP, or something between 3 - 9 trillion dollars, depending upon how one figures their uncertain assets. (For comparison, we could mention that Sweden's national debt is around 52% of their GNP, or approximately 1.4 trillion kronor, or about 175 billion dollars.)
Japan's problem infected the other Asian economies, as we have said. Despite all that has been done, in the year 2001 it is still to early to say that the danger is definitely past for now.

Illustration 3:14.2 shows the unbelievable increase in the trade of the Stockholm market during the 1990's, which passed the 4 trillion level in the year 2000. In the 1970's, the trading oscillated between 1-2 billion per year, which the current market trades in just one hour.

Image 3.14.1 Image 3.14.2

We had a small foretaste of a real stock market crash in the autumn of 2000, when the air began to go out of the over-inflated IT market sector in the US and in Sweden. In six months, between March and September, the value of the American Nasdaq market for 280 corporations sank about 2 trillion dollars, or at least 75%.(See illustration 3:14.3) Over 22,000 people became unemployed, and over 16% of the dot.com companies went bankrupt, (over 130 companies in less than one year). The Swedish stock market followed a course relatively similar to the US market. (Illustration 3:14.4) The flagship, Framfab, broke the record for poor performance when its stock first fell over 300 kronor to about 20 kronor per share, and then finally to about 2 kronor per share. Altogether, three of Sweden's large investors lost over 3 billion kronor (about 750 million dollars).

Image 3.14.3 Image 3.14.4

3.15 My final comments

Why have our Christian leaders not addressed these sort of important questions previously? I am reminded here of Jesus' words, "I tell you, if these were silent, the stones would shout out." (Luke 19:40) It's high time, therefore, for us Christians to turn over a new leaf!

When you have read this, turn back for a minute to section 2, and read prophecy SK4. On its second page, God speaks of a coming world economic depression. Give particular attention now to this:

God exhorts Christians to learn to be led by Him, even in our daily work, before this happens. Only in this way can God help us even during crises.

"When people see the forward-looking attitude and the driving force you have, then they will understand that it is I who give the power, and thus they will turn to me.

Thereby, the great revival in Sweden will become an indisputable fact. God desires that this fire be then carried further out to Europe. The final word from God is the challenge given below, that we combine our spiritual development with a very down-to-earth, practical Christianity.

"Do not become weary with well-doing and helping those in need."