Keep calm and sell everything

Just a few weeks ago, Ambrose Evans-Pritchard wrote an article in The Telegraph alerting us to the fact that RBS has advised its clients to brace for a cataclysmic year and a global deflationary crisis.  In consequence, major stock markets will fall drastically, and the price of oil may plummet.  The watch-word is ‘keep calm and sell everything’.  RBS are likening the possible financial slump to the turbulent months before the Lehmann crisis in 2008.

Andrew Roberts, the bank’s credit chief cites the contraction of global trade and loans as the cause, together with the extortionate global debt ratios.  Credit growth has now turned negative for the third time this century.  On the other two occasions (2001 and 2008) there were global recessions.  The article indicates that China is the economy to watch; RBS refers to her as the epicentre of global stress. 

The bleak financial forecast should come as a warning to us to be prepared, practically and spiritually, for the days ahead.  Interestingly, the former US Treasury Secretary, Larry Summers, remarked that markets often sense a gathering storm when policy-makers are still asleep at the wheel.  He says:

the world economy is so far out of kilter that it takes permanent financial bubbles to keep growth going, an inherently unstable structure

So even though austerity is finally over in Europe and fiscal policy in the US this year will be expansionary, that does not mean that there is a crisis looming.  It simply dupes people to carry on life as usual, blissfully unaware of what is really happening.

Jesus told his disciples in Matthew 24 to keep an eye on the signs of the times and to be alert.  Popular opinion and the governments of the world have the power to deceive us, lulling us into a false sense of security.  Financial upheaval is one of the signs of the End of the Age approaching.  Rather than living with the popular ‘laissez-faire’ attitude, let’s remember that we need to be prepared, and there may be practical steps we can take so that, if and when disaster strikes, we’re not only able to cope ourselves but we may be in a position to help our neighbours, for whom it will come as a much greater shock.

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