What’s going on in Europe? Didn’t we get bailed out of the 2008 financial mess by our stimulus packages? The answers are: “The inevitable slide towards default as banks and governments attempt to cover bad policies;” and “No, we didn’t.” Back in 1996, the CHP’s Communiqué warned that “derivatives” were a financial time-bomb, waiting to explode. In 2008, they blew. What, exactly, are “derivatives;” and why are they dangerous? Derivatives are naked gambling. I know, I know: many people think the stock market is gambling. But while it’s true that some gamblers like to play in the stock market, the market also has a useful side: as a place and a way to accumulate and invest capital, it’s the heart of what makes our capitalist financial system work. And almost everyone in North America is involved: pension funds (including the Canada Pension Plan) put people’s savings into stocks and bonds. But derivatives don’t accumulate or invest capital; they just make bets, and make people rich, if they guess right, or get in and out again before the bubble bursts. It’s just gambling. One of the biggest gambles in derivatives was called “mortgage-backed securities.” They sounded great: what could be more secure than a bond backed by real estate? But the securities being floated in the derivatives market, for more than a decade, were backed by NINJA mortgages: No Income, No Job or Assets. It began when President Bill Clinton pressured Democrats in Congress—Barney Frank, chairman of the House Banking Committee, and Chris Dodd, chairman of the Senate Banking Committee—to enable everyone to buy a house—even if they were NINJAs. Dodd and Frank, who had oversight over Fannie Mae and Freddy Mac, the two giant government-underwritten mortgage insurers, leaned on the banks to make dumb mortgage loans. Guaranteed that those dumb mortgages would be backed by taxpayers, the banks responded—eagerly. Then they bundled those toxic mortgages into bonds, which they sold to other banks and investors. The ratings companies, perhaps lulled by too many martini lunches, said mortgage-backed bonds were “triple-A.” Banks around the world (except in Canada) bought them. Mutual funds bought them. Hedge funds bought them. To try to be “safe,” they covered their risk with Credit Default Swaps (CDSs)—in effect guarantees by insurers… who backed their CDSs with—guess what?—mortgage-backed securities. Smell something strange here? Of course: the lack of real financial support for NINJA mortgages meant the whole house of cards was bound to collapse. But why worry? The American taxpayer, through Fannie Mae and Freddy Mac, would pick up the tab! And they did, through TARP—the Troubled Asset Relief Program. When America’s debt was rolled into tens of trillions of dollars by President Obama’s TARP bailout, overseas investors (notably China) stopped buying U.S. Treasury Bills. No problem: the Federal Reserve (which is not federal and has few reserves) bought them. It was called “Quantitative Easing”—but it was really just paying off old debts with new money created out of thin air, and backed by nothing except the government’s power to make taxpayers pick up the bill—or go to jail. What has all this got to do with Greece and Italy? Seeing the splendid example set by America, European banks followed suit. They also invested in the toxic assets. And they ran their own deficit-financed, vote-buying social programs. Now the American chickens are coming home to roost. One of the biggest beneficiaries of the scheme has been the international banking house of Goldman-Sachs. Timothy Geithner, the U.S. Secretary of the Treasury, is a former Goldman-Sachs executive. So is Mark Carney, Governor of the Bank of Canada. So are many of the biggest international movers and shakers, the recipients of multi-million-dollar bonuses for their “financial wizardry.” Dr. Peter Bernholz, an economist at Basel University in Switzerland, has studied hyperinflation in recent history: Poland, Germany, Brazil, Greece, and dozens more... he says there is a common “tipping point” that shows when hyperinflation is imminent. It occurs when a government borrows about 40 percent of the money it spends. Today, the U.S already borrows 42 cents of every dollar spent. Italy and Greece are far, far worse. Hyperinflation is not just a remote possibility. It’s looking more like a certainty, every day. The Wall Street “occupiers” rail against the “banksters;” they’re probably right: bankers who traded in toxic mortgages got obscene bonuses for making deals that were bound to go sour. But many of the occupiers are also the people whose political pressure motivated the government to give them “something for nothing”—which is what defines both gambling and greed. On the sidelines are people like sociologist and social activist Frances Fox Piven (and her late husband, Richard Cloward); Saul Alinsky; ACORN; SEIU and other public-service unions. The Cloward-Piven strategy for wrecking capitalism and instituting socialism, enunciated in the ’60s, is to bring the system down by making extreme “entitlement” demands on public spending. It’s working—unlike many of the people being used as pawns of the Cloward-Piven strategy. “Occupy Wall Street threatens to activate and polarize the Democratic voter constituencies,” says Piven. “It’s the only way to affect Obama.” Get that? She wants to move Obama further left than he already is! So, what should Canada and Canadians do to protect themselves against the inevitable shock? First and foremost, get out of debt. If you have assets, move them into something that will retain value when the balloon explodes: gold, precious gems, art, food, energy supply, mortgage-free land… do your own due diligence to decide what will continue to be valuable when people are desperate. Don’t trust currencies or securities. Above all, don’t wait for the government to protect your assets; all governments are under pressure to give potential voters something for nothing. The “Occupy” movement is a manifestation of that pressure. As Cicero said, when ancient Rome shifted from a republic to a democracy: “Democracy will work until the plebes discover they can vote themselves a share of other people’s wealth.” That’s where European and North American governments have been heading since the 1950s. The CHP’s plans—get Canada out of debt, balance budgets, give individual citizens and families control and responsibility for their own well-being—could still make us an island of stability in a crumbling world. Restoring fiscal and monetary sanity—something COMER (the Committee On Monetary and Economic Reform) has been advocating for decades—would insulate us, in some degree, from hyperinflation. As a trading nation, we’d still feel the chill of other countries’ currencies becoming worth less (or worthless); but Canada can feed itself, and we could supply our own manufactures, if we stop exporting jobs. Three important things for every believer to do: 1 – pray for Canada; 2 – obey what God has laid down in His Word as rules for honest living; 3 – take responsibility for your own actions. No one else can do these things for you.