On this website you will read what I feel has been revealed to me about many of the Bible’s end time prophecies.  I have spent a lot of time over the past 3 years studying and praying about these prophecies.  As you read what is written here, you will find that I do not agree with many popular beliefs regarding many of the Lord’s prophecies.  It has become clear to me that many of the popular interpretations of these prophecies are not correct.  In fact, I will explain to you in later posts why I believe our spiritual enemy will use these popular prophecy beliefs against us.

 

There are many people in the world today who consider themselves well-informed Christians.  They believe that they fully understand the prophecies and warnings given to us in Daniel, Revelation and other books in the Bible.  They are now either sitting back waiting for these things to happen (a secret rapture, an evil world leader, 7 years of tribulation, a peace treaty between the antichrist and Israel, etc) or they are actively proclaiming to the world that they have all the answers – we all simply need to listen to them.

 

What if many popular prophecy scholars today have it completely wrong?  What if they have let worldly pursuits cloud their judgment?  What if they have become focused on the world instead of our Lord?  What if our spiritual enemy has offered worldly wealth and glory to them as part of his plan to deceive the world and they have unknowingly accepted because they’re not as mature as they think they are?  What if there isn’t going to be a secret rapture, one evil world leader (antichrist), or a 7 year period of tribulation when the judgments of Revelation will be poured out on the earth?  What if I told you that none of these things are specifically mentioned in the Bible, but are simply interpretations – interpretations that I believe are not true.  What if we’re not as smart as we think we are?  Our self-righteousness has been used mightily by our enemy.

 

If things begin to rapidly deteriorate in the world and none of the popular interpretations of prophecy come true, what do you think will happen?  There will be many people in the world who are going to feel very lost and alone.  This is why I have been given this message.  It’s time for all of us to change our focus from the world to the Lord’s kingdom.  If you are someone who has been in the church for some time and have believed (as I did for many years) many of the popular interpretations of end time prophecy, you will need to open your mind to the truth and pray to the Lord for confirmation of what I’m going to tell you.  If you are someone who has never been in church or read the Bible, now is the time to come home.   You don’t need any biblical knowledge to start on your journey to know Jesus Christ and our Father.  You only need a desire to know the Truth – a desire to know your Creator and His plan for you.

 

I fully expect that initially - many non-Christians and Christians alike will not want to believe what is written here.  The reason is that the truth is initially going to be difficult to believe.  You’ll understand as you read through this website.  I want to make something clear from the beginning – there is no personal agenda here.  I do not seek worldly power, glory or wealth.  The world offers me nothing of real value.  Everything in this world is temporary – the sooner we all realize this, the better.  The Lord has changed me over the past 3 years and given me knowledge so that I understand what is happening and why.  Everything I have is His.  I am simply running the race placed before me.  So, with that said, we’re going to begin with what the Bible has to say on the subject of deception and being deceived in our world.

 

Let’s start by looking at what Jesus had to say on the subject of being deceived in this world.  I believe that many prophecy scholars are missing something very important that Jesus tells us about our current times.

 

Mathew Chapter 24 begins with the Disciples asking Jesus about the end times. 

“As Jesus was sitting on the Mount of Olives, the disciples came to him privately. "Tell us," they said, "when will this happen, and what will be the sign of your coming and of the end of the age?"

 Jesus answered: "Watch out that no one deceives you. For many will come in my name, claiming, 'I am the Christ,' and will deceive many.” (Mathew 24:3-4)

Jesus responds by warning us against deception.  There will be many who claim to know Him and lead ‘many’ astray.  Remember – many throughout the world are deceived.

 

“At that time many will turn away from the faith and will betray and hate each other, and many false prophets will appear and deceive many people. Because of the increase of wickedness, the love of most will grow cold, but he who stands firm to the end will be saved.” (Mathew 24:10-13)

 

These are very strong words and they speak very loudly to us today.  Notice carefully – ‘many’ turn away from true faith (we’ll discuss this in more detail later) and ‘many’ false prophets will deceive ‘many’ people.  When Jesus says ‘many’, he’s talking about billions of people – and this includes many professed Christians in the world.  Who are these false prophets?  These are people claiming to be God’s teachers and preachers who are, in fact, leading people away from the Truth.  They are leading people away from true faith in Jesus Christ.  They are people involved with false religions and they are people who claim to be Christians, but are not true Disciples.  They do not follow Jesus, but follow our spiritual enemy.  They have infiltrated God’s true church (more on this later).

 

“At that time if anyone says to you, 'Look, here is the Christ!' or, 'There he is!' do not believe it. For false Christs and false prophets will appear and perform great signs and miracles to deceive even the elect—if that were possible. See, I have told you ahead of time.” (Mathew 24:23-25)

 

Once again, Jesus warns us of false prophets.  He adds an addition piece of information here and I feel that it is one of the most important pieces of information given to us.  In my years of attending church, I have never heard anyone discuss this – and I think I know why.  In verse 24, Jesus tells us that these ‘false prophets’ will deceive ‘even the elect’.  Who are the elect?  These are God’s true children.  They are His teachers, preachers and His true prophets.  What Jesus is telling us here is that these false prophets are so deceptive, that they deceive even true believers.  Why is this so important?  Because it’s happening right now – to us.  Our pride and our focus on the world has blinded us.

 

What we all must realize is that Jesus could obviously see into our future.  He’s God – the 2^nd person of the Holy Trinity. He could see exactly what would be happening in the world during our time – right now.  Does He ever tell us that we would have it all figured out?  No.  What does He give us?  Warnings.  Time and again He warns us about deception.  At a time when we should all be on guard against worldly and spiritual deception – we’ve allowed ourselves to be lulled to sleep.  We are not heeding our Lord’s warnings.  We have become self-righteous because we know it all – while the ‘beasts’ are taking control of the world.

 

What, in the world today, is Jesus warning us about?  You will find, as you read through these posts, that Jesus is warning us about many things.  He is warning us about the ‘beasts’ of Revelation 13.  He is warning us about false religions and their leaders in the world today and most importantly, He is warning us about the condition of the Christian Church.  Many of us in the Church today are not true Christians.  Many of us go to church and read the Bible – but many have not truly repented.  Many have not truly asked the Lord for forgiveness and therefore, have not been born again by God.  They have been deceived into believing that living a secular, worldly life is A-OK and that they can ‘believe’ and be saved without really following Jesus.  They have not overcome the world and therefore, cannot ‘see’ or ‘hear’ what is really happening in the world around them.  Every one of us must take a very hard look at our lives and determine who we are really following.  If you are like I was, you’ll find that you are not following Jesus Christ.  You have allowed yourself to be blinded by our enemy.  If you will ask God to come into your life, your life will begin an amazing transformation – and you will be able to see with a spiritual eye.  You will begin to follow the One who is not seen by our physical eyes because you will be able to spiritually discern His will for you.

 

How exactly, are these ‘beasts’ of Revelation 13 deceiving even God’s true children?  How is it possible that we cannot see what’s happening?  The truth is that they are right in front of you everyday.  They have even told us what they are planning to do – and very few are doing anything about it.  Now that’s deception.  This is what Jesus could see.  This is why we received so many warnings. In addition to Jesus’ own words, the Book of Revelation is clear – these ‘beasts’ deceive the whole world – even the elect. 

 

“And he performed great and miraculous signs, even causing fire to come down from heaven to earth in full view of men. Because of the signs he was given power to do on behalf of the first beast, he deceived the inhabitants of the earth.” (Revelation 13:13-14)

 

“Then the beast was captured, and with him the false prophet who worked signs in his presence, by which he deceived those who received the mark of the beast and those who worshiped his image.” (Revelation 19:20)

 

You’ll learn specifics about how events in the world today relate to these prophecies as you continue to read through the posts on this website.  You’ll begin to see how they have deceived you your entire life.

 

For now, let’s continue to learn about our true enemy and how he is deceiving the world.

 

Who does the Bible tell us is our true enemy?  Who is really deceiving the world?

 

“So the great dragon was cast out, that serpent of old, called the Devil and Satan, who deceives the whole world”  (Revelation 12:9)

 

“We know that we are children of God, and that the whole world is under the control of the evil one.”  (1 John 5:19)

 

“For our struggle is not against flesh and blood, but against the rulers, against the authorities, against the powers of this dark world and against the spiritual forces of evil in the heavenly realms.” (Ephesians 6:12)

 

The Bible is clear on this subject – Satan is the ruler of the world and deceives the whole world.  He is our true enemy.  You will notice that specific nations are not mentioned – he deceives the entire world.  The United States is not immune to this deception.  What you will learn is that the U.S. is actually playing a vital role in deceiving the whole world. 

 

Who overcomes this world and its ruler? 

 

“for everyone born of God overcomes the world. This is the victory that has overcome the world, even our faith. Who is it that overcomes the world? Only he who believes that Jesus is the Son of God.” (1 John 5:4-5)

 

Only those who are spiritually regenerated (born again) by God through faith in Jesus Christ overcome this world and its deception.

 

In the movie ‘The Matrix’, the main character (Neo) discovers at one point that the world he has lived in his whole life is a fantasy created to blind him from the truth.  The parallels between that movie and our world are very similar.  You’ll understand after you read everything here.  You’ll go through the same transformation that Neo went through in the movie.  I know I did.  At first, your mind will reject the truth outright.  You will say it’s not possible, it’s crazy, this can’t possibly be true.  There’s no way I could be that deceived.  I’m intelligent.  I could see this coming if it were real.  As you begin to realize that it is true and that you have been deceived on a global scale – you might just feel physically sick – just like Neo.  You will probably even think at some point that you’d rather go back to being completely ignorant of what is happening around you.  It would be easier this way – simply ignore the truth.  Unfortunately, ignorance is not bliss.

 

If you will humble yourself, realize that you don’t know everything and pray for knowledge, wisdom, faith, strength, courage – and begin a relationship with our Father and Jesus Christ - God will transform you into someone who isn’t afraid.  You will be set free from this world.  He is looking for those who will allow Him to turn them into spiritually mature warriors.  When the rest of the world is running away in fear and telling you to do the same, you will turn and face your enemy.  You will fight when others fall.  When your day of evil comes, you will stand.  Why?  Because the Lord will be with you – always.

 

If you are in a Christian Church today, then you know that Satan is the bad guy.  You know that he is deceptive and evil.  You know that he rules over this world.  Does it make more sense that his plans would be widely known or that they are being done in secret – very deceptively?  Will there be one evil world leader who somehow gets the nations of the world to join together as depicted in the ‘Left Behind’ books?  In this deceptive world, does this really make much sense given that the Bible never points to one person as being the antichrist? Will the mark of the beast simply be the act of accepting a microchip implant or will there be deception involved with the mark as well?  If you re-read Revelation 19:20 again (above), you’ll notice that those who have received the mark are ‘deceived’.  Would the world even allow these things to happen (one evil ruler, chip implant as the mark) given that these prophetic scenarios are so widely known?  Or does it make more sense that there is something very secretive, very deceptive going on in the world that will one day take control?  In the light of the Lord’s Word, the truth is that billions of people are deceived by our spiritual enemy and because they have rejected the one, true God - their continued deception will eventually result in their eternal death.  This lines up with what the Bible tells us about Satan and end time deceptions.  This is not a fantasy created by a writer of fiction.  This is the truth. 

 

These are the questions that kept me up at night for a long time.  I felt that something very important was going on in the world – but I had no real knowledge of it and wasn’t part of it.  I came to the realization that what I was lacking was a real faith in Jesus Christ.  I realized that I was truly deceived.  I came to the startling conclusion that I had allowed Satan to blind me from the Truth.  I realized that as long as I relied on myself, I was going to go nowhere.  I would continue on the broad path to its tragic conclusion.  So, I began to pray and asked God to come into my life and help me overcome the world and its deception.  I searched for the Lord – and He revealed Himself to me.  I asked – and received.  I knocked – and doors were opened. 

 

What I found - what was revealed to me after much prayer – is that the world is truly deceived – just as the Bible tells us it is.  Something deceptive is going on right before your eyes.  The devil is scheming against us – very deceptively – just as the Bible tells us he will do.  He is the father of lies and therefore, his children in this world are liars.   They lie because deception is part of the plan - a plan that is told to us by the Lord.  Even though Satan wants to keep his plans secret, he (and those he controls in this world) cannot hide their plans from God.  Those justified by faith in Jesus Christ know the Truth – they have overcome the evil one.  They see through his evil plans because they rely on the source of all truth to guide them – the Creator of the heavens and earth.  They are light in a dark world – and the darkness will not overcome them.  While the world will tell you that there are many in the world today, I’m here to tell you there are few true believers.  There are few who have entered through the narrow gate – just as Jesus tells us.  I also believe this is about to change in preparation for the end.

 

These things no longer keep me up at night.  I sleep soundly.  Why?  Because the Lord watches over me – and the Lord never sleeps.

 

He will not let your foot slip— he who watches over you will not slumber;” (Psalm 121:3)

 

Why is wealth being taken from the United States?  When you begin to view the world from God’s perspective - and not the world’s – you begin to truly understand.  It’s really very simple.  We have allowed ourselves to be deceived.  The result is that our lives are squarely focused on the world and we have left our Creator.  He’s getting our attention.

 

Friend deceives friend,
       and no one speaks the truth.
       They have taught their tongues to lie;
       they weary themselves with sinning.

You live in the midst of deception;
       in their deceit they refuse to acknowledge me,"
       declares the LORD.

Therefore this is what the LORD Almighty says:
       "See, I will refine and test them,
       for what else can I do
       because of the sin of my people?

Their tongue is a deadly arrow;
       it speaks with deceit.
       With his mouth each speaks cordially to his neighbor,
       but in his heart he sets a trap for him.

Should I not punish them for this?"
       declares the LORD.
       "Should I not avenge myself
       on such a nation as this?" (Jeremiah 9:5-9)

 

June 2006

As you’ve read what is written on this blog, you’ve probably felt a certain sense of fear at some point.  As the truth has been revealed to you, a fear of the future, the beasts and what we face has slowly crept into your consciousness.  How can we stand against these beasts?  How can we be expected to fight them?  They have too much control…..too much power.  If I reject their mandates and their decrees, I will face imprisonment, persecution or death.  How can I, one person, stand against them?  God tells us that we can stand against overwhelming odds.  We can win against forces that seem much stronger than ourselves.  We can do so not because we are particularly strong, or intelligent or cunning.  We can do so only by drawing near to our Lord and following His plan for us.  It is He who wins battles and defeats evil.  It is He who strengthens us and leads us in this war.  He is looking for those with a heart like His own that will follow Him wherever He leads.

 

 “The LORD is my light and my salvation—
       whom shall I fear?
       The LORD is the stronghold of my life—
       of whom shall I be afraid?

 When evil men advance against me
       to devour my flesh,
       when my enemies and my foes attack me,
       they will stumble and fall.

 Though an army besiege me,
       my heart will not fear;
       though war break out against me,
       even then will I be confident.

 One thing I ask of the LORD,
       this is what I seek:
       that I may dwell in the house of the LORD
       all the days of my life,
       to gaze upon the beauty of the LORD
       and to seek him in his temple.

 For in the day of trouble
       he will keep me safe in his dwelling;
       he will hide me in the shelter of his tabernacle
       and set me high upon a rock.

 Then my head will be exalted
       above the enemies who surround me;
       at his tabernacle will I sacrifice with shouts of joy;
       I will sing and make music to the LORD.

 Hear my voice when I call, O LORD;
       be merciful to me and answer me.

 My heart says of you, "Seek his face!"
       Your face, LORD, I will seek.

 Do not hide your face from me,
       do not turn your servant away in anger;
       you have been my helper.
       Do not reject me or forsake me,
       O God my Savior.

 Though my father and mother forsake me,
       the LORD will receive me.

 Teach me your way, O LORD;
       lead me in a straight path
       because of my oppressors.

 Do not turn me over to the desire of my foes,
       for false witnesses rise up against me,
       breathing out violence.

 I am still confident of this:
       I will see the goodness of the LORD
       in the land of the living.

 Wait for the LORD;
       be strong and take heart
       and wait for the LORD.” (Psalm 27 – written by David)

We have discussed fear in another post and have learned how the Bible instructs us to overcome our fears.  So, in this post, we’re going to focus on how the Lord expects us to stand against our enemies in the face of overwhelming odds.  As I’ve mentioned before, the Book of Revelation tells us that most will not stand against these beasts.  They will look at these entities and be overwhelmed by their worldly influence and power.  It appears that most will join them instead of standing against them.

 

“Men worshiped the dragon because he had given authority to the beast, and they also worshiped the beast and asked, "Who is like the beast? Who can make war against him?"” (Revelation 13:4)

 

This short verse gives us a very clear picture of our future.  What are we told?  Many will follow satan and these beasts.  Many will be afraid of them.  Many will think about how to overcome them, but in the end, they will fail to stand against the beasts due to their worldly power.  If we look at these entities from a worldly perspective, they will look unbeatable.  A world-wide political beast wielding the world’s military and police power coupled with a religious beast that will force unbiblical doctrine on the world – it will seem to the world that there is no way out – if you can’t beat them, join them.  Of course, the Bible tells us we must stand against them.  We must worship our Creator and reject the mark.  How can we find the courage and strength to stand when others fall?  By relying on our Lord’s wisdom and strength – not our own.  Remember, this is His war, we are not asked to make our own plans to fight the enemy, we must draw close to Him and be obedient in order to follow His plan.

 

There are many examples in the Bible of how the Lord has strengthened both men and women to accomplish His will – but I don’t think there is another example in the Bible that as closely resembles what we face as the story of David and how he overcame Goliath.  Even if you’ve never read the Bible, chances are that you’ve heard about this story.  It’s a popular story because the little guy finds the strength to overcome the bully. Why do you think movies like Rocky and The Lord of the Rings are so popular?  We all like to hear stories of how the underdog somehow overcomes great odds and beats the favorite.  While you’ve probably heard about David’s battle with Goliath, have you ever read about David’s life?  You may know that David later became king of Israel and ruled for many years, but do you know how he got there?  Did he live a privileged life that led up to his becoming king?  No.  Did he come from a long line of kings and was next in line to the throne?  No.  Did he become king because he was physically and mentally strong?  No.  Super Intelligent?  No.  Did he avoid all temptations and sin?  No. Did he always follow the Lord’s plan for him?  No again.  David became king because he loved the Lord.  We’re told that he knew the Lord’s heart.  David is the only human being in the Bible (other than Jesus) described as having a heart like the Lord’s.  The Lord tells us that David had a heart like His.  We’re going to briefly look at David’s life and learn what it can teach us.

 

This story begins in 1 Samuel chapter 16.  The Lord has instructed Samuel to travel to Bethlehem to anoint one of Jesse’s sons to be king.

“Samuel did what the LORD said. When he arrived at Bethlehem, the elders of the town trembled when they met him. They asked, "Do you come in peace?"

Samuel replied, "Yes, in peace; I have come to sacrifice to the LORD. Consecrate yourselves and come to the sacrifice with me." Then he consecrated Jesse and his sons and invited them to the sacrifice.

 When they arrived, Samuel saw Eliab and thought, "Surely the LORD's anointed stands here before the LORD."

But the LORD said to Samuel, "Do not consider his appearance or his height, for I have rejected him. The LORD does not look at the things man looks at. Man looks at the outward appearance, but the LORD looks at the heart."

 Then Jesse called Abinadab and had him pass in front of Samuel. But Samuel said, "The LORD has not chosen this one either." Jesse then had Shammah pass by, but Samuel said, "Nor has the LORD chosen this one." Jesse had seven of his sons pass before Samuel, but Samuel said to him, "The LORD has not chosen these." So he asked Jesse, "Are these all the sons you have?"
      "There is still the youngest," Jesse answered, "but he is tending the sheep."
      Samuel said, "Send for him; we will not sit down until he arrives."

So he sent and had him brought in. He was ruddy, with a fine appearance and handsome features.
      Then the LORD said, "Rise and anoint him; he is the one."

So Samuel took the horn of oil and anointed him in the presence of his brothers, and from that day on the Spirit of the LORD came upon David in power. Samuel then went to Ramah.” (1 Samuel 16:4:13)

Pay very close attention to what we’re told here.  Does the Lord look at us the same way the world looks at us?  No.  The Lord sees our hearts – not our appearance.  How does the world look at us?  Most of the world looks at how pretty or handsome we are, how thin we are, how physically strong we are, how much money we have, the people we know, etc. – but the Bible is clear, God does not look at these worldly things.  The Lord looks at our hearts.  Jesse brought seven of his sons before Samuel, but all were rejected.  Who did the Lord select to be king?  The youngest son who was tending sheep.  A shepherd was most likely the worst job offered to anyone.  Take note that his father didn’t even bother to bring him initially before Samuel.  What does this tell us?  It tells us that Jesse probably didn’t consider him a possibility.  Why choose David when there are older, stronger, better looking sons to choose from?  Does the Lord choose the arrogant, the proud, the strong?  No, the Lord chooses those for authority that love Him, worship Him and are obedient to Him. 

The battle with Goliath begins in 1 Samuel Chapter 17:

“Now the Philistines gathered their forces for war and assembled at Socoh in Judah. They pitched camp at Ephes Dammim, between Socoh and Azekah. Saul and the Israelites assembled and camped in the Valley of Elah and drew up their battle line to meet the Philistines. The Philistines occupied one hill and the Israelites another, with the valley between them.

 A champion named Goliath, who was from Gath, came out of the Philistine camp. He was over nine feet  tall. He had a bronze helmet on his head and wore a coat of scale armor of bronze weighing five thousand shekels; on his legs he wore bronze greaves, and a bronze javelin was slung on his back. His spear shaft was like a weaver's rod, and its iron point weighed six hundred shekels. His shield bearer went ahead of him.

Goliath stood and shouted to the ranks of Israel, "Why do you come out and line up for battle? Am I not a Philistine, and are you not the servants of Saul? Choose a man and have him come down to me. If he is able to fight and kill me, we will become your subjects; but if I overcome him and kill him, you will become our subjects and serve us." Then the Philistine said, "This day I defy the ranks of Israel! Give me a man and let us fight each other." On hearing the Philistine's words, Saul and all the Israelites were dismayed and terrified.” (1 Samuel 17:1-11)

Imagine this scene.  One huge man is terrorizing an entire army.  The entire army cowers as this man yells insults.  Full grown men are afraid and do nothing.  Sound familiar?  We all face our own Goliaths.  We have all had someone or something that has bullied or insulted us and we didn’t know how to handle them…..so we did nothing.  Most of us are even now doing nothing as our government and our leaders are removing more and more of our freedoms.  How should we respond?  Let’s continue with David’s story to find the answer.

 “Now David was the son of an Ephrathite named Jesse, who was from Bethlehem in Judah. Jesse had eight sons, and in Saul's time he was old and well advanced in years. Jesse's three oldest sons had followed Saul to the war: The firstborn was Eliab; the second, Abinadab; and the third, Shammah. David was the youngest. The three oldest followed Saul, but David went back and forth from Saul to tend his father's sheep at Bethlehem.

For forty days the Philistine came forward every morning and evening and took his stand.

Now Jesse said to his son David, "Take this ephah of roasted grain and these ten loaves of bread for your brothers and hurry to their camp. Take along these ten cheeses to the commander of their unit.  See how your brothers are and bring back some assurance from them. They are with Saul and all the men of Israel in the Valley of Elah, fighting against the Philistines." (1 Samuel 17:12-19)

For 40 days, no one in the entire army of Israel is willing to take on this man.  Keep in mind what we were told earlier – “from that day on, the Spirit of the Lord came upon David in power”.  So, no one in the army is doing anything about Goliath and circumstances are bringing David to the battle.  Events are being set in motion that will result in David becoming king of Israel.

“Early in the morning David left the flock with a shepherd, loaded up and set out, as Jesse had directed. He reached the camp as the army was going out to its battle positions, shouting the war cry. Israel and the Philistines were drawing up their lines facing each other. David left his things with the keeper of supplies, ran to the battle lines and greeted his brothers. As he was talking with them, Goliath, the Philistine champion from Gath, stepped out from his lines and shouted his usual defiance, and David heard it. When the Israelites saw the man, they all ran from him in great fear.” (1 Samuel 17:20-24)

So, once again the army of Israel cowers in fear and for the first time, David hears Goliath’s insults.

“Now the Israelites had been saying, "Do you see how this man keeps coming out? He comes out to defy Israel. The king will give great wealth to the man who kills him. He will also give him his daughter in marriage and will exempt his father's family from taxes in Israel."

David asked the men standing near him, "What will be done for the man who kills this Philistine and removes this disgrace from Israel? Who is this uncircumcised Philistine that he should defy the armies of the living God?"

 They repeated to him what they had been saying and told him, "This is what will be done for the man who kills him."

 When Eliab, David's oldest brother, heard him speaking with the men, he burned with anger at him and asked, "Why have you come down here? And with whom did you leave those few sheep in the desert? I know how conceited you are and how wicked your heart is; you came down only to watch the battle."

 "Now what have I done?" said David. "Can't I even speak?" He then turned away to someone else and brought up the same matter, and the men answered him as before.  What David said was overheard and reported to Saul, and Saul sent for him.

 David said to Saul, "Let no one lose heart on account of this Philistine; your servant will go and fight him."

 Saul replied, "You are not able to go out against this Philistine and fight him; you are only a boy, and he has been a fighting man from his youth." “ (1 Samuel 17:25-33)

David attempts to determine what is happening and his brother attacks his character.  Have you ever followed the Lord and been ridiculed?  We should expect it from the world.  Undaunted, David turns to others and is told the situation.  He then offers to fight Goliath.  Remember, David is still a young boy….maybe 14 or 15 years old.  Is he fighting alone?  No.  He is being led by the Lord.  David knows that he does not fight alone.  A young boy offers to fight the mightiest warrior their army has ever seen.  If you were king, how would you respond?  You would probably respond the same way Saul did – by telling him he’s crazy.  How can a young shepherd boy fight a seasoned warrior?

“But David said to Saul, "Your servant has been keeping his father's sheep. When a lion or a bear came and carried off a sheep from the flock,  I went after it, struck it and rescued the sheep from its mouth. When it turned on me, I seized it by its hair, struck it and killed it. Your servant has killed both the lion and the bear; this uncircumcised Philistine will be like one of them, because he has defied the armies of the living God. The LORD who delivered me from the paw of the lion and the paw of the bear will deliver me from the hand of this Philistine."
      Saul said to David, "Go, and the LORD be with you." (1 Samuel 17:34-37)

How does David respond?  The Lord will deliver this Philistine to us.  The Lord has saved me before and He will do so again.  Why has the Lord told David that this Philistine will be delivered to him - ‘because he has defied the armies of the living God’.  He defies our Lord.  The Lord is placing David on His path for him and at the same time He delivers victory to the army of Israel.

“Then Saul dressed David in his own tunic. He put a coat of armor on him and a bronze helmet on his head. David fastened on his sword over the tunic and tried walking around, because he was not used to them.
      "I cannot go in these," he said to Saul, "because I am not used to them." So he took them off. Then he took his staff in his hand, chose five smooth stones from the stream, put them in the pouch of his shepherd's bag and, with his sling in his hand, approached the Philistine.” (1 Samuel 17:38-40)

David has such a strong faith that he removes his armor.  What does this boy take into battle?  A sling, 5 stones in a shepherd’s bag and his staff.  If you were Goliath, how would you respond to his boy?  Probably the same way Goliath did – with unbelief and insults.

“Meanwhile, the Philistine, with his shield bearer in front of him, kept coming closer to David.  He looked David over and saw that he was only a boy, ruddy and handsome, and he despised him. He said to David, "Am I a dog, that you come at me with sticks?" And the Philistine cursed David by his gods. "Come here," he said, "and I'll give your flesh to the birds of the air and the beasts of the field!" (1 Samuel 17:41-44)

Goliath can only see the boy in front of him.  By following false gods, he is spiritually blind.  He sees no danger in front of him.  He laughs and insults – not realizing that he is taking on his Creator. 

“David said to the Philistine, "You come against me with sword and spear and javelin, but I come against you in the name of the LORD Almighty, the God of the armies of Israel, whom you have defied. This day the LORD will hand you over to me, and I'll strike you down and cut off your head. Today I will give the carcasses of the Philistine army to the birds of the air and the beasts of the earth, and the whole world will know that there is a God in Israel. All those gathered here will know that it is not by sword or spear that the LORD saves; for the battle is the LORD's, and he will give all of you into our hands." (1 Samuel 17:45-47)

David’s respond should have given Goliath pause.  Something in Goliath’s mind should have sounded an alarm.  Where has this boy found the courage and strength to fight when Israel’s army flees from me?  Who speaks with authority and confidence like this in the face of overwhelming odds?  He doesn’t sound like a boy – he sounds like a man given authority.  Where is this authority coming from?  Blinded by pride and arrogance, Goliath walks right into a battle with God.  Should the outcome surprise us?

“As the Philistine moved closer to attack him, David ran quickly toward the battle line to meet him. Reaching into his bag and taking out a stone, he slung it and struck the Philistine on the forehead. The stone sank into his forehead, and he fell facedown on the ground.

So David triumphed over the Philistine with a sling and a stone; without a sword in his hand he struck down the Philistine and killed him.

David ran and stood over him. He took hold of the Philistine's sword and drew it from the scabbard. After he killed him, he cut off his head with the sword.
      When the Philistines saw that their hero was dead, they turned and ran. Then the men of Israel and Judah surged forward with a shout and pursued the Philistines to the entrance of Gath and to the gates of Ekron. Their dead were strewn along the Shaaraim road to Gath and Ekron. When the Israelites returned from chasing the Philistines, they plundered their camp. David took the Philistine's head and brought it to Jerusalem, and he put the Philistine's weapons in his own tent.” (1 Samuel 17:48-54)

What can we learn from David’s encounter with Goliath?  Do we need money, power, military might or the latest weapons to defeat our enemies?  No.  As long as we are following the Lord and His laws – as long as we are close to Him, He will protect us and deliver us according to His will.

So, when the beasts of Revelation tighten control over the world, should we fear them?  Should we go along with their false doctrine?  No.  We must stand against the enemies of God.  They don’t realize that they defy the Lord.  Being blinded by pride and arrogance, they are focused on worldly wealth and power and don’t realize that they are fighting against God.  We must praise and worship our Father and allow Him to guide us.  If the Lord is with us, who can be against us?  Best of all, we’re told their fate.  The Bible tells us that they will suffer the same fate as Goliath.

I encourage you to study the life of David.  Mike McClung (Lionheart Ministries) has created many CD’s on the heart of David.  I have also listed a book entitled ‘Facing Your Giants’ by Max Lucado that documents David’s life and how it applies to us.  You will find that David did not have an easy life.  He endured many trials and tribulations after his confrontation with Goliath before becoming king.  The king of Israel tried to kill him.  He was rejected by his family and his people.  He even fled to his enemies and was rejected.  He spent time living in a cave after being rejected by everyone.  Through all of this, the Lord never left David.  We must always remember this.  Even though things will get difficult, the Lord will help us and give us our true purpose.  We must always stay close to Him.  When the world tells us it’s impossible to stand against the beasts, don’t believe it.  Nothing is impossible with God on our side.

When discussing God and His relationship to the world, one of the most often asked questions is this: ‘Why does He allow so much suffering and misery in this world?’  It’s a very good question.  If you happen to discuss God with someone who doesn’t believe in Him, chances are that you will eventually be asked this question.  A standard answer is that human beings invited sin into this world (Adam and Eve) and as a result, the world is in a fallen state.  Because we’re living in a fallen world, bad things are going to happen to us.  A more specific answer goes much deeper than this.  In order to truly understand why God allows suffering and misery, you must begin to understand God’s character.  A few months ago I was given a short article written by John Balukian that does an excellent job of answering this question.  Who is John Balukian?  As you will read, John was a simple man with terminal cancer who was given one last task to do before he left this world.  As you will see, at first it seemed like a small thing to do.  What John learned (as every Christian does) is that we’re asked to be obedient to our Creator regardless of how small or large we think the task may be.  He will take care of the rest.  We have no idea how our lives can impact others and God’s plan for this world – but He certainly does.  Like every true man of God, John would tell you that this comes from the Lord - he is simply a servant doing what he is asked to do.  This will be longer than most of my posts, but I feel strongly that the Lord has asked me to give this to you.  As we near the end of this age, suffering and misery will get worse - we need to understand why.

_________________________________________

Dear precious reader:

Regardless of what kind of person you are, regardless of what you have not done, in God’s eyes you are extremely precious.  Bring to mind right now the most vile and repulsive person you can think of.  Can the same be said of that person?  Is that person extremely precious in God’s eyes?  Absolutely, positively!  What is it that makes a person precious? Connection with God.  When the Creator has free access to the creature he will re-create the creature into His own precious image.

 

This is a letter of introduction to the article I am enclosing.  Many people have been greatly helped by this humble article, so please pass it on that others may be helped.  Thank you.  This material may be reprinted, copied or re-used in any form so long as the original text is not altered or abridged in any way.  This is not my message, so please do not change it.  This is God’s doing.  Those who know me know that I have no natural abilities of this kind and there’s no way under the sun that I could possibly write an article like this.

 

Briefly, about myself:  After losing the battle with Lymphoma, I permanently checked into this Veterans Administration Medical Center Nursing Home in Fresno, California, as a terminal cancer patient with only a short time to live.  I just could not understand why god would not heal me!  I had diligently studied the laws of health, healing, prayer, faith, total commitment, etc.  I was anointed twice by Godly men.  And, on top of all this, I had great plans to give our message to thousands of winter visitors who come each year to the warm desert areas of and .  But human plans aren’t worth anything.  The sooner we all learn this, the better.

 

The greatest surprise I have ever had in my life and the happiest that I have ever been was after my little world fell apart and I was admitted to this Nursing Home, waiting to die.  This beautiful, generous gift that God gave to me – this article He impressed me to write – marvelously turned everything around for me.  After having failed Him all my life, He very kindly and graciously gives me a gift like this!  My parents certainly gave me the right name.  In Hebrew, the name John means “God is gracious”.  God has certainly been gracious to me.  After I go to my “rest”, this paper will keep right on working.  When I think of how kind, how generous and gracious God is, and how He is treating me, what can I do but just cry!

 

It all started when my former roommate told me he was an atheist.  I told Charlie that in order for a person to come to an intelligent conclusion about anything, he would have to first look at all the facts – all the evidence.  I asked him what evidence he examined that brought him to such a drastic conclusion that God did not exist.

Charlie related stories of tragedies and suffering in his family and friends.  Then he concluded with, “If there is a God, would He allow things like this to happen to good people?” (He stressed the word good.)  I said excitedly, “Charlie, I have an answer.  Just read the first chapter in this book (“Why Was Evil Permitted?), and you will see this whole thing from an entirely different perspective.”  His answer was, “No, I’m an atheist and I don’t believe in life here-after.”  Poor Charlie.  To think that 30 minutes of reading was too much trouble for him!  It reminds me of the thousands who died because they refused to just look at the uplifted serpent [Numbers chapter 21].  It was at this time I decided to write a small article showing what God is like and why He had to allow sin and suffering to devastate this world.  As I started writing, it was very evident that I was receiving Divine assistance.  I had no idea of God’s plan to place this paper around the world.  I only wrote it to be used here in the Nursing Home. 

 

Two hours after I started handing out the papers here in the Nursing Home, a patient came to my room with tears in his eyes and told me how touched he was by reading my paper.  He asked for written permission to make copies and pass them out.  He’s from .  A sister is sending a copy to the Braille Foundation, and if they use it, it will go around the world.  My pastor’s wife is sending a copy to the Pacific Press to see if they will put it in booklet form for colporteurs to place in Medical/Dental offices, etc.  Many came back for extra copies to give out.  Groups are passing them out in their door to door work.

 

In just a matter of three weeks I have had to broaden my thinking from a small local work here in this V.A. Medical Complex to a work that goes around the world.  I am absolutely overwhelmed.  I never expected anything like this!  God is so good to me that I can hardly stand it.  People have offered to give me money for this work.  I really don’t want anyone’s money until I use up all my own.  Thank you.

 

When a person sees God as He really is, a God with such unbelievable kindness toward one who is so undeserving, then that person’s prayers change from words to tears.  Then the story of Mary washing Jesus’ feet with her tears and wiping them with her hair becomes the most beautiful story in the Bible [John, chapters 11 & 12).  When you realize the true sacrifice of God – His willingness to die eternally for you, and your heart constantly overflowing with love and appreciation for Him, it is then that God’s purpose of allowing sin to devastate this world has been accomplished forever.

With my warmest regards,

John Balukian

 

Now, Do You Believe God?

 

In your opinion, who is the most controversial person who ever lived?  Without a shadow of a doubt, it is God, Himself.  Many see God as being tender-hearted, caring, highly sympathetic toward all His creatures and they see that He is not willing that any should perish.  And they see that His love and feelings for them are so deep that He willingly allowed His Son to come down from heaven and become one of us and go through terrible sufferings and insults and die for every one of us so that if we wanted to, we could live forever.

 

Why Didn’t God Nip This Whole Thing In The Bud?

 

All this is very touching; however, a serious question must be answered before this makes any sense.  Why didn’t God nip this whole thing in the bud and prevent all this terrible suffering and misery to come into our world?  He could have done it and done it with ease.  God knew what would happen if He allowed sin to come into our world, and yet He allowed it.  Why?

 

Many people are puzzled over this and I was too.  But now that I have the answer, I can see that what God is doing makes a lot of good sense.  And certainly, God is very desirous for each of us to have an intelligent understanding of religion.  In writing this little paper to answer this question and others, I am well aware that many different types of minds are reading it.  I must be very careful and not take anything for granted and try to write this so clearly that everyone who reads it can’t help but understand.

 

In the Beginning….Love

 

So, let’s go back to the beginning and take a look at what life was like under God’s marvelous government of love.  We will see also how this terrible problem of sin began and why God, very wisely, did not nip this whole thing in the bud; but allowed it to wreak havoc in this poor world for these last 6,000 years.  The Bible tells us that God is love and also His character, law and government is love.  The beautiful relationship of God with His children was also one of love.  But now, really, what is love?

 

What is love?

 

It was after a number of years of being a struggling, up and down Christian that I began to really understand the meaning of this vital word.  Love is a small word that is used in a wide range of meanings; from the barnyard love to the outstanding sacrifice of God on the cross.  Love has deep feelings and emotions.  The Apostle Paul, in 1 Corinthians 13, shares with us the beautiful and noble qualities of love.  But in order to grasp a fuller understanding of this word, and how it relates to God’s government and people, let’s define love as a principle.

 

Illustration of a Principle

 

To make sure that everyone clearly understands what this word (principle) means, I’ll give an example:  Remember the saying, “Do unto others as you would want them to do unto you”?  It’s so easy to see the principle involved here and to understand what this word means.  Say that your boss treats you harshly and unjustly.  According to the principle that’s in this saying, how should you respond?  Certainly not the same way he treated you.  What a brilliant and beautiful idea.  Think of the peace and harmony that would result from following such a simple principle!

 

The Principle of Love

 

Now, let’s define this principle that is in love and put it in one simple sentence so that no one can possibly misunderstand it.  The greatest demonstration that was ever given, or could ever be given, was when God willingly suffered and died so that you and I would be able to live.  We are talking about God – The majestic and awesome Creator of this whole vast universe!  As if that isn’t enough to blow your mind, think on this: God was not only willing to die, but to die eternally just so that you could live eternally.  (Jesus knew that He would rise up again to life after three days.  But in His darkest temptation, when He cried out, “My God, my God, why hast thou forsaken me?” He did not know that he would ever live again, but He chose to save man at any price.)  Dear reader, can you really grasp that?  Would God die eternally just for Saddam Hussein?  Absolutely!  But why?  Because this is exactly the type of person He is.  God is love.  He is this principle.

It is not difficult to see the principle in love, is it?  When it came right down to choosing to save Himself or His children, He chose to save His children – and at what a terrible price!  He put His children first and Himself second.  So in one sentence, and in my own words, here is my definition of this principle: “Love is a principle that always puts the other person first.”  What another brilliant and beautiful idea!  With God and all His creatures living by this principle, no wonder heaven and the entire universe enjoyed such supreme happiness and experienced such peaceful harmony.

 

The Principle of Sin

 

But then a completely different principle raised its ugly head and the peace and harmony of the universe was shattered.  In this principle, Self is put first instead of putting the other person first.  It all began when Lucifer, the highest angel in heaven, wanted to become God.  For him to pursue such an insane and impossible ambition, he had to first cast aside this beautiful principle of love and take hold of the principle of sin.  So, we see that the principle of sin is self-seeking, selfishness, putting one’s own desires ahead of God’s desires and everyone else’s.  Now we have two entirely different and directly opposite principles operating in this world and they are totally incompatible.

 

The Deadly Blindness of Sin

 

This raises a very interesting question.  What could possibly be the reason why a created being would dare stand up in opposition to his Creator and actually believe that he could take over His throne?  We are referring to God, the One who created this whole vast universe; the One who has unlimited power and authority; the One who knows the end from the beginning.  And, on top of that, Lucifer knew that to be God, one has to have creative power – power to create something out of nothing.  This same power is necessary to sustain all creation.  If this power was cut off, the entire universe would immediately disintegrate, which of course, would mean his own death too.  And yet Lucifer still wanted it and vigorously pursued it.  Why?  It just doesn’t make any sense!

Lucifer was not a dummy or a slouch.  He was the most brilliant, intelligent, talented, and beautiful of all angels; and also had the highest position (right next to the throne of God).  Without even realizing it, Lucifer made a fatal mistake by pushing aside God’s principle of love and taking hold of the selfish principle of sin.  What happened when he did that?  He actually separated himself from God.  Since God is the very source of all light, truth and wisdom; all good judgment, common sense and balanced thinking; when Lucifer turned away, he lost all of this and stepped right into darkness.  He was now blind.  He became unreasonable and unbalanced in his thinking.

 

God’s Way of Keeping Pride Out of Our Hearts

 

If Lucifer had remembered one thing and had taken it to heart, he would not have gotten proud and possibly this whole problem of sin would not have arisen.  I mentioned the noble qualities that Lucifer had; his brilliance, beauty, talents, position, etc.  Where did he get these?  God gave them to him.  Every good thing that Lucifer had was a gift from a gracious God.  A deadly problem arose when Lucifer began to think of all these beautiful and noble qualities and characteristics that he had as being his naturally rather than as precious gifts from God.  That opened wide the door to pride.  Pride always brings self into the picture and puts it first.  This is the very principle of sin.  What a lesson for us!  If we would never let go of the idea that every good thing we have is a loving gift from a gracious Creator, we would shut the door to deadly pride.

 

Who is Telling the Truth – The Creator or the Creature?

 

Getting back to our original question:  Why didn’t God nip this whole thing in the bud by simply putting Lucifer to death?  Look at all the terrible misery He could have avoided.  Wouldn’t you have done just that if you were in charge?  Not if you were able to see the end from the beginning, as God is able.  Suppose you were there witnessing all of this.  On one side is God, whom you love and worship.  Opposing God is Lucifer, whom you respect and admire.  God says one thing and Lucifer says the opposite.  Who are you going to believe?  Remember now, you had never heard a lie before; you have no idea what sin is really like; and certainly to accept the idea that Lucifer, if given the opportunity, would go so far as to actually kill God, would be unthinkable to you!

 

In this situation, if you saw God kill Lucifer, what would you think?  You would consider God to be totally unreasonable and unfair.  In fact, you would begin being looked at as a tyrant.  You would not serve God any longer because you loved and appreciated Him, but would serve Him because you became afraid of Him.  God wants us always to be free, happy and trusting.

 

God’s Children Were Created to Fully Appreciate Him

 

Let’s take a closer look at God’s situation.  If God had created His children to be mere robots, there would be no problem.  All He would have to do would be to program their computers to never sin again.  God would never have to be concerned about His children disobeying Him or rebelling.  But who would want children like that?  God wants His children to have the highest type of life and to never stop growing and developing.  In order to have this type of children, God created us in His own image.  He created us with the ability to reason things out and come to intelligent conclusions.  God gave us a heart that could fully appreciate Him and spontaneously respond to His love and kindness.  He made us free.

 

Change of Name to Fit the Character

 

When Lucifer rebelled, God changed his name to fit his character.  Lucifer means “Light Bearer”, Satan means “Adversary”.  So, from now on, I will refer to Lucifer as Satan.  Satan toured the vast universe and with great piety and carelessness, he cleverly spread vicious lies about our gracious God.  This brought in untold confusion and perplexity.  I must remind you again that no one had ever heard a lie before.  This will help you to understand why there was such serious perplexity.  So we see the deep damage that Satan did by planting the seeds of disturbing suggestions and doubts in the minds of all.

 

Sin Shall Never Rise Up Again

 

God promises that after this terrible experience of sin is over, that sin shall never rise up again.  Never!  Is it because God will not allow it to happen again?  No, that would be defeating His purpose.  His children are always free to sin any time they want to, but no one will ever want to.  Because all these disturbing seeds of doubt have been completely removed and absolute trust and admiration for their gracious God has been fully restored.  Since God never used fear or force, what means does He use to accomplish this miraculous feat?

 

Truth is God’s Weapon

 

Let’s sharpen the focus.  In Genesis 3:4, Satan contradicts God and calls Him a liar.  The issue in this controversy is not who has the greater power or anything like that, but the issue is who is telling the truth.  Truth is on God’s side.  Satan is deathly afraid of truth because it exposes his lies and deceptions and this will definitely be the cause of his total defeat.

 

What is the topic we hear most about today?  Isn’t it how bad everything is getting?  Crime, sickness, the insane legislative policies of our politicians, etc.  Who wants this type of life?  It all started when Lucifer began telling lies about our gracious God.  This undermined confidence in God.  Before this whole problem of sin can be resolved permanently, total confidence in God must be restored.  Truth restores.  The truth about God’s character; how He feels about His children; the unspeakable sacrifice and suffering He is willing to go through to save us, and many other truths.

 

Do You Really Know What Faith Is?

 

I have come to the place where I don’t take anything for granted anymore.  This little word, faith, for instance, is extremely important (“Righteousness by faith”, “Justification by faith”, “Salvation by faith”, etc.).  If we don’t understand what this word means, then how are we going to understand how faith in God is restored?  I know people who have been Christians many years who flunked this easy, simple, homely test.

Sally was driving through in the month of August with the temperature over 120 degrees.  All of a sudden, her car quits.  After waiting for several tormented hours, a car pulls up with one man in it who is a total stranger.  Immediately, another car stops with one man and she knows him real well.  He is her pastor.  Now, for Sally to best demonstrate what faith is, which car should she get into – the car of the stranger or the car of the friend?  You might be thinking, “What kind of question is that? Of course she is going to get into the car of her friend.”  But wait a moment.  We are trying to clarify what faith is.  Hebrews 11:1 says, “Faith is the substance of things hoped for, the evidence of things not seen.” So now, once again, for Sally to best demonstrate what faith is, which car shall she get into, the car of the stranger or the car of the friend?

 

If you hesitated to answer, chances are you don’t really know what faith is.  True faith is not blind.  True faith is based upon evidence.  How could Sally possibly determine if the stranger could be trusted if she had no experience, no evidence by which to judge him?  She couldn’t.  She had ample evidence that her friend could be trusted.  So in order for Sally to best demonstrate what faith is, she could get in the car of the friend.  In order for God to completely gain the faith of His children, He had to give them the evidence upon which they could intelligently judge Him.  He gave them mountains of evidence during these past several thousand years which came to a convincing climax upon the cross.

 

The Cross Tells a Convincing Story

 

The entire universe looked on in total shock and in complete silence as they watched their Creator dying on the cross.  With His last living breath He managed to cry out, “It is finished.”  Then He died.  At that very moment, God came off victorious.  How can that be since He is the One who died?  As the universe looked on, their sorrow turned into heart-warming joy as they saw and suddenly realized the truth about God’s willingness to pay the supreme price of dying eternally for his children.  This beautiful truth they witnessed with their own eyes, completely removed every trace of doubt that satan planted with the lie; that God did not have His children’s best interest at heart.  The truth revealed how fantastic our gracious God is.  Their hearts were so touched and filled with love and affection for their gracious God that nothing could ever change it.

 

Let’s go back to the beginning again and let’s say that God did nip this whole thing in the bud by putting Lucifer to death.  We know that this act of God would have been totally unacceptable to you.  But how about when you stood before the cross in absolute shock and watched your Creator die? Here is 4,000 years of undisputed evidence and demonstration of how far Lucifer would go and, on top of that, the demonstration of the terrible malignancy of sin.  Now, you can see clearly that if God had put Lucifer to death at the beginning, you would have wholeheartedly agreed that He did the right thing.  It’s too bad that God had to take the long and painful way around, but it’s the only way that His children could understand.

 

Sin is insanity

 

We need to take a closer look at sin to see what it really is.  Here is another homely illustration:  A scorpion wanted to get on the other side of the pond.  He asked a turtle swimming by to take him over on his back.  The turtle replied, “Do you think I’m crazy?  You would sting me and I would die.”  The scorpion said, “Do you think I’m crazy?  If you died, I would die too, because I can’t swim.”  The turtle thought for a moment and then said, “You’re right.  Nobody would be that crazy!  Get on my back and I’ll take you across.”  When they were about halfway across the pond, the turtle felt a sickening sting on the back of his neck.  He turned his head and said, “Why in the world did you do that?”  The scorpion replied, “I just couldn’t help it, it’s my nature.”

 

Why would the most intelligent angel in the universe kill God, since it is God who gives Him life moment by moment?  It certainly doesn’t make any sense, does it?  The Bible defines sin in several ways, but my personal definition is:  Sin is insanity!

 

A Law of the Mind

 

It’s a law of the mind that we will become like the one we worship and admire.  It’s terribly important then that we know what kind of person our God is.  Jesus warned His disciples in John 16:2-3 “Yea, the time cometh, that whosoever killeth you will think that he doeth God service.  And these things will they do unto you, because they have not known the Father, nor me.”  Why will these persecutors resort to violence?  Because they think God is this way.  God does not force anyone’s conscience.  He wins hearts by his gentleness and love.  What do you think of a God who created this whole vast universe; who has all this power and authority, yet He is so humble that He willingly washed twelve pairs of filthy feet when His disciples refused to do it?  This appeals to me to no end.  God is the most humble person in all this universe because He lives by the beautiful principle of love.  God always puts the other person first and Himself second.

 

The true God of heaven appealed to the hearts of His rebellious children with kindness and love.  He didn’t use a sword! There are millions of people who believe that the end justifies the means by using force in God’s work.  This is what a band of religious fanatics had in mind when they rode into the town of over a hundred years ago.  They came to take the life of the Christian minister if he did not yield to their wishes.  They were not familiar with the weapons of kindness and love.  Their weapons were force and fear.  They were out to force the Christians to change their beliefs.

 

They were highly disappointed when they learned that the minister had died.  So they did the next best thing by taking the minister’s widowed wife and her three little girls to the town square.  Surrounding this poor widow they all drew out their huge, wicked knives.  The leader, raising his voice demanded that she renounce Christ and declare before all these people that Mohammed was the true prophet of God.

 

Everyone knew what would happen if she refused, and with tears they begged her to comply.  Speaking in Armenian so that these men couldn’t understand, they said, “We know you love Jesus.  God knows you love Him.  Please, please do what they say and save your life.  Think of your children!”  Oh, what terrible pressure!  Standing before her were her three little girls petrified with fear.  The oldest girl was my mother.

 

The Sword Never Wins

 

But my Grandmother didn’t put herself first, she put her God first.  She had learned the principle of love.  Raising her voice and speaking in perfect Turkish, my Grandmother said, “I believe with all my heart that Jesus Christ is my Lord and Savior.” Without a moment’s hesitation they slashed her to the ground and hacked off her head.  My mother’s tender mind was affected for the rest of her life.  I remember while growing up, whenever my mother thought of her mother, she would cry.

 

The Basic Reason Why a Church Would Turn to the State for Power

 

What would you say would be the basic reason why a church or religious organization would turn to the state (government) for power to force others to accept their religious teachings?  Is it because they don’t have power – the Holy Spirit (the power of God)?  Why don’t they have the power of God?  Because God uses only one kind of power – Love.  His method is winning the heart, not forcing the conscience with threats and fear.  God’s method of winning hearts is simply putting the other person first.  God always has that person’s best interests at heart and He is willing to go through any amount of suffering and to pay any price to save that person.  He is not willing that any should be lost.  How can a sincere, honest person fight against that?

What Makes a Person Savable?

 

Just what is it that makes a person savable anyway?  The Apostle Paul makes it very clear in 1 Corinthians 13 that even a person loaded with talent, doing God’s work with zeal, making tremendous sacrifices by putting all his means in the work and even going as far as giving his body to be burned is not savable if he does not have love.  And it doesn’t take a rocket scientist to understand why.  Love is a principle that always puts the other person first.  God and all His children live by this principle.  If you refuse to live by this principle, you couldn’t possibly fit in.  You would be out of harmony with the entire universe.

 

Love is a Gift from a Gracious God

 

God is very reasonable and understanding.  He generously gives us everything that He requires of us.  We need love?  He will see to it that we have it.  Every good thing that we have or will need now and throughout all eternity will be given to us as a gift from a generous and gracious God.  We are absolutely dependent upon God for everything and always will be.

 

There Are Only Two People in Religion

 

Now we come to the bottom line.  The sharp focus is on only two persons: you and God.  Oh, if I had only done this years ago I would have avoided many disappointments and discouragements.  Never again am I going to allow my religion to become complicated or confusing.  One to one contact with God, forming a bond and friendship that can never be broken, is actually what religion is all about.  It’s just that simple.  Just imagine, the very best friend you have is the One who created this whole vast universe.  Wow!  Can you bend your mind around that?

 

Another thing I find extremely helpful is to personify a text.  Take Romans for example: “For sin shall not have dominion over you: for ye are not under the law, but under grace.”  I love the strong, positive, emphatic way this is put.  To me, this is saying that, in no way will sin dominate me.  Then it goes on to tell why.  When I read this text, this is the picture that comes to my mind: I am standing before the law, which I picture as a huge giant, towering over me.  I’m a sinner and condemned to die.  There is absolutely nothing I can do to appease him or to escape.  But the text says that I am under grace.  To me, grace means that I’m being treated, not as I deserve, but with unlimited kindness and generosity.  There is no such thing as grace without there being behind it a very gracious person.  I see, standing nearby, this most gracious person.  He says to me, “You’re in deep trouble, but I can help you.  Do you want Me to help you?”  I say, “Please do.”  So, He steps in between me and this giant and He puts His arm around me.  “There is therefore now no condemnation to them which are in Christ Jesus, who walk not after flesh, but after the spirit.” [Romans 8:11].

 

The Most Precious Moment of Our Life

 

At that precious moment, I am safe to save – I am savable.  The moment that I accept God’s gracious offer to take over my life and to personally be my Savior, everything is right between God and myself and not one person in all this universe can say anything against me.  The law has nothing against me now, because God has taken full responsibility for my becoming fit for heaven.  God paid the full price for me by living a life without sinning and by His death, so that I can go clean and free.  What a precious gift!  And what a precious Savior!

 

How Can God Save Saddam Hussein?

 

Saddam Hussein has been portrayed (especially by the West) as being an exceptionally cruel national leader who would not only be willing to exterminate all the Kurds, but would enforce cruelty on his own people to achieve personal power and prestige.  He has a lot of blood on his hands!  (by the way, does God love Saddam Hussein as much as He loves Mother Teresa? Of course He does!)  Say that the Holy Spirit is able to touch Saddam Hussein’s heart and, miraculously, he accepts God’s gracious offer.  He is willing now to have God take complete charge of his life and also to take full responsibility of fitting him for heaven.  Now, let’s see how God does this.

 

Saddam Has No Sins?

 

That’s exactly right!  As soon as God is allowed to take over Saddam’s life (and how is this accomplished? Simply by Saddam praying and requesting that God will take over his life and really meaning it), He takes away all of Saddam’s sins.  “There is therefore now no condemnation to them which  are in Christ Jesus, who walk not after the flesh, but after the Spirit.”  [Romans 8:1].  This text means exactly what it says.  God not only takes away Saddam’s sins and completely frees him of the responsibility of all the sins he ever committed, but he graciously restores Saddam to his God-given dignity.  How is this accomplished?  Simply by connection – connection with God.  (It’s like a branch that’s connected to the vine).  It’s a precious gift from a gracious God.  Every good thing we have, or ever will have through all eternity, is a gift of love from our loving Creator.  Sad to say, Lucifer lost hold of this precious truth.  The wonderful and noble qualities of wisdom, beauty, talents, position, etc., that he possessed, he started regarding these as his naturally, instead of precious gifts from God.  We are not only seeing, but feeling, the disastrous results.

 

Day by day, the more Saddam walks with his God, the more thrilled he becomes as he sees the type of person God is.  He sees God as a fantastic person who actually has his best interest at heart.  As a national leader, Saddam always put himself first and his people second.  What a contrast!  And you can be sure that Satan spread enough lies about God to give the people the impression that God was totally selfish and arbitrary.  As I mentioned before, truth is on God’s side.  As the truth is known about God, there will be such a heart appreciation for this type of God that no one will ever want God to be any different. They will be thrilled to follow Him throughout eternity.  This is why sin shall not rise up again – EVER!

 

One of Heaven’s Greatest Surprises

 

One of the greatest surprises that heaven will have for us is learning how much it costs God to get us there.  Besides God paying a price on the cross that will never be fathomed, God has suffered unmerciful abuse, insults and criticisms of all kinds.  He is blamed and cursed for everything.  Here, at the nursing home, if the kitchen forgets to put a slab of margarine on a tray, God is cursed.  God is even blamed for all the forest fires.  In legal circles, it’s called “An Act of God”.

 

Years ago, I was working with a number of other different tradesmen in a building.  Usually, on a job like this, there is a certain amount of swearing going on.  But, on this particular day, it seemed that almost everyone was having a problem and God was getting blamed for it all.  The cursing was so bad that I stopped my work and just listened.  I thought to myself, “If there is this much cursing arising out of this one building, how much is rising out of the whole town of ?”  I had a very impressive picture of God in deep sorrow, bending over the world in loving concern.  With this picture in mind, I visualized millions and millions of angry voices in every language and dialect, in every part of the world, cursing God.  There is a deafening roar of curses constantly ascending up and hitting our gracious Creator right in the face.

 

But love is stronger than hate, and God is bent on saving us no matter what the cost; no matter how much pain He has to suffer; no matter how much He is insulted; no matter how much He is falsely accused; no matter how much He is hated and rejected.  Satan would have us to believe that God doesn’t care, but the very opposite is the truth.  For 6,000 years our gracious Creator has been lavishing His love upon us under such repulsive conditions.  After 6,000 years of presenting all of this evidence – this mountainous amount of visual demonstration, God has one question for you: “Now do you believe me?” 

 

Suffering is Priceless

 

One of the best things that ever happened to me was when I became terminally ill.  When I got sick and was suffering, it made God’s suffering very real to me.  I was absolutely overwhelmed that the Majesty of this whole vast universe with all His power and authority would even care about a person like me, let alone go through all that He was going through to save me.  God could not reveal His love for me any more powerfully or effectively than by His sacrifice and suffering.  This kind and gracious person touched my heart.  My religion now is a person.  My religion is a God.

 

Welcome Home

 

Do you think that you could find one person in God’s vast universe who would be willing to trade places with you, no matter what your condition or how much you are suffering?  The beautiful truth is that you could not find even one person who would not be willing to trade places with you.  How do I know this?  I know this because God is love and love is a principle that puts the other person first.  All of God’s children live by this beautiful principle of love.  The entire government of God is based on this wonderful principle.

No matter who you are, no matter what kind of life you have lived here, there will be an experience for you in heaven that is one of supreme happiness and total acceptance.  Whether you are looking into the eyes of your Creator or rubbing shoulders with the Holy Angels, one message will come through to you loud and clear, WELCOME HOME!!

 

John Balukian

V.A. Nursing Home

 

MEMORIAL

 

John Balukian went to his rest in Jesus on .  One of John’s favorite Bible verses can be found in 1 Thessalonians 4:16-18: “For the Lord himself shall descend from heaven with a shout, with the voice of the archangel, and with the trump of God; and the dead in Christ shall rise first: Then we which are alive and remain shall be caught up together with them in the clouds, to meet the Lord in the air; and so shall we ever be with the Lord.  Wherefore comfort one another with these words.”

 

It’s hard for us to understand sometimes, but the truth is that we (human beings) invited sin into this world.  God gave us a perfect world and we invited satan and sin into it.  God did not create a fallen world for us, the world was originally without sin.  What you see around you everyday is the result of our fateful decision – violence, death, destruction, misery, etc.  We brought this misery upon ourselves.  You may think that this was Adam and Eve’s fault, not yours…but we make similar choices everyday.  Instead of walking the narrow path and choosing God’s will for our lives and following His paths, we instead choose our own way and choose to sin against our Creator.  Fortunately for us, our Creator loves us so much that He has provided all of us a way back to Him.  Regardless of what you’ve done, regardless of what is happening in the world....He loves you and wants you to know Him.  There is only one way to Him, through faith that His Son Jesus gave His life for you.  You do not need anything in this world to be saved.  You do not need a church, a pastor, a priest or a religious ritual.  True men of God can help you, guide you and teach you, but they can’t save you.  The same is true of God’s church.  It’s important to remain close to believers, but simply being in close proximity to God’s children will not save you.  Only you can believe in God’s offer of salvation and accept it.  How do you do this?  You can do what I did.  Pray to your Father in Heaven.  Go someplace by yourself where it is quiet, fall on your knees, and tell Him that you believe that Jesus died for you, that you want to know Him, to see Him, to become what He created you to be.  He will hear you.  Tell Him your fears, ask Him for a stronger faith, for understanding….to be more like Him.  Ask Him for help against our enemy.  Seek Him.  If you truly want to know Him, you will find Him.  Believe in the Truth that is Jesus Christ.  Pray everyday…..and then listen.  Pay attention to the quiet, still voice inside you, pay attention to the circumstances in your life.  Expect Him to reveal Himself to you.  He knew everything about you before you were ever born….your strengths and weaknesses.  He will strengthen your faith, transform you and show you your true purpose….regardless of what you’ve done in your past.  He will replace the sand that has been the foundation of your life with the Rock that is Jesus Christ.  Your fear of this world will fade away and you will be set free.  “Therefore whoever hears these sayings of Mine, and does them, I will liken him to a wise man who built his house on the rock: and the rain descended, the floods came, and the winds blew and beat on that house; and it did not fall, for it was founded on the rock. “But everyone who hears these sayings of Mine, and does not do them, will be like a foolish man who built his house on the sand: and the rain descended, the floods came, and the winds blew and beat on that house; and it fell. And great was its fall.” Mathew 7:24-27.

 

It’s not always easy to look past the misery in this world to His kingdom, but that’s what we must do.  We must never lose the hope that exists for us.  It doesn’t matter how bad things get here, our Father has prepared a place for us in Heaven….never forget this.  I’m writing this post in April 2007.  I don’t know when you are reading this, but I do know that the Lord has given me these words to give to you.  You are reading these words because the Lord is communicating to you….specifically to you.  I am simply a humble messenger, doing what I’m asked to do. 

 

Regardless of how bad things may get in this fallen world, never forget:

 

"No eye has seen, no ear has heard, no mind has conceived what God has prepared for those who love him" 1 Corinthians 2:9.

Anyone who serves the Lord goes through tough times.  Hardship is not something that should surprise us in this world. If you’re going to do great things for God – you’re going to go through great trials.  This is how you become a ‘polished arrow’ in the verses below.  This is how God molds you into His image – this is how He instills His character in you.  This is how He prepares you to face our enemy and all of his schemes. 

There have been times over the past 4 years where I became so tired and frustrated with my circumstances – I wanted to give up.  I was tired of being broke and struggling to pay bills.  I was tired of not being able to do all of the things I wanted to do.  To be honest – I was tired of being tested – tired of the trials – tired of having the burden of knowing what was coming for us – tired of battling our enemy.

I wanted to walk away. 

I argued with God.

Why is this happening to me? I’ve done what you’ve asked and it has led me to financial ruin!

I felt like God was asking me to run the race – with a broken leg.

I wanted to stop analyzing the world’s economic system and what the global elite are doing to the world.  Most of the people in the world worship the world and the things in it – let them reap what they have sown.  I’m tired of telling people the truth – when they aren’t interested.  They are doomed – and I want out of here.

I felt like Job wrapped in sackcloth - sitting on a pile of ashes - wondering why this was happening to me – if I’m one of the good guys.

I think every person who ever served the Lord – has had similar thoughts and feelings about their circumstances and what they have been asked to do.  I also think that the Lord let’s us vent at times.  This world is hard – which is why our trials are tough – which is why the ‘narrow path’ is the most difficult path to take in this world – which is why few choose to follow Jesus.  It’s not easy – and it never will be.

Although I have struggled financially – I’ve somehow always managed to get by.  When I thought that no one was listening – I would get an email from someone who was encouraged by what I’ve written.

I rarely received what I wanted – but I have always received what I needed.  Remember this.

There have been times when I simply needed something to lift me up.  I needed a word from my Creator to let me know I was still on the right path.

Isaiah 49

The Servant of the LORD

 ¹ Listen to me, you islands;
       hear this, you distant nations:
       Before I was born the LORD called me;
       from my birth he has made mention of my name.

 ² He made my mouth like a sharpened sword,
       in the shadow of his hand he hid me;
       he made me into a polished arrow
       and concealed me in his quiver.

 ³ He said to me, "You are my servant,
       Israel, in whom I will display my splendor."

 ⁴ But I said, "I have labored to no purpose;
       I have spent my strength in vain and for nothing.
       Yet what is due me is in the LORD's hand,
       and my reward is with my God."

 ⁵ And now the LORD says—
       he who formed me in the womb to be his servant
       to bring Jacob back to him
       and gather Israel to himself,
       for I am honored in the eyes of the LORD
       and my God has been my strength-

 ⁶ he says:
       "It is too small a thing for you to be my servant
       to restore the tribes of Jacob
       and bring back those of Israel I have kept.
       I will also make you a light for the Gentiles,
       that you may bring my salvation to the ends of the earth."

 ⁷ This is what the LORD says—
       the Redeemer and Holy One of Israel—
       to him who was despised and abhorred by the nation,
       to the servant of rulers:
       "Kings will see you and rise up,
       princes will see and bow down,
       because of the LORD, who is faithful,
       the Holy One of Israel, who has chosen you."

If you regularly read the business section in your local newspaper or subscribe to the Wall Street Journal, then you have been reading over the past few years about the rise of ‘Private Equity’ and Hedge Funds.  We’re going to spend some time discussing these funds in this post along with an article that was published today in the Wall Street Journal.  If you are unfamiliar with these funds, you’ll gain a little insight into what they are and what they do.  We’re not going to go into details, we’ll simply look at what they do and apply to them what the Bible says about wealth and the accumulation of wealth.  If you are (or were) wealthy and invested in these funds, you are probably starting to feel a little uncomfortable - because you know where this is going……..

 

Hedge funds and private-equity funds are pools of private investor money.  They typically boast of very high returns and therefore, attract large amounts of cash from very wealthy investors.  There is a high degree of risk involved with these funds, but over recent years, the returns have been large enough to outweigh any perceived risk – and billions of dollars have flowed into them.  Because of the promised high returns, they charge very high fees which are typically 2% of assets under management every year and 20% of any profits.  So, they must be both aggressive and creative in order to make money for themselves and to keep their investors happy…..and from withdrawing their money.  They have made billions of dollars in recent years for themselves and their investors.  We’re going to take a brief look at how they have done this.

 

Have you ever been called by a hedge fund or private equity fund looking for new investment dollars?  The answer for the vast majority of us is – no.  The reason is that these funds cater to the rich.  They are looking for multi-million dollar initial investments, not the few dollars you and I would put into a mutual fund every month.  So, they are investment vehicles for the rich and are certainly influenced by very rich people.  What does the Bible say about the rich and the pursuit of riches?  We have already discussed this, so I will summarize here.  The Bible tells us that we should seek the Lord and His Righteousness first – other things we need will be given to us.  Do not love money, love the Lord.  He will take care of us and give us all we need.  What do you think the Lord sees when he looks at Wall Street and these funds?  He sees wealthy people pursuing ever more wealth.  Do these funds make money at the expense of the poor or less fortunate?  Yes – they do.  The pursuit of money has blinded us to how this money is made.  This is what we’re going to focus on.  Do you think the Lord approves of this type of behavior?  We’ve already covered this topic in previous posts and the Bible is clear – the love of money is the root of all evil.  It can’t get any clearer than this.  So, if these funds and Wall Street in general are pursuing riches at all costs, how long do you think the Lord will allow it to continue?  Will He allow the rich to continue to exploit the poor forever?  I believe we’re about to find out that the answer is no.  We are beginning to see this today – .  Let’s take a quick look at events that have transpired over the past few months that are beginning to have a very direct impact on Wall Street.

 

We discussed the current subprime mortgage problem in a previous post.  Let’s do a quick review of what has happened and what may happen in the future as a result of these events.   Subprime mortgages are mortgages that are given to homebuyers with poor credit.  These mortgages typically have much higher overall interest rates than mortgages given to consumers with good credit.  It appears that many of them are not fixed rate loans, but have adjustable interest rates so that the mortgage broker or bank can offer very low initial interest rates that will reset at a much higher rate at a later date.  It’s what many would call a ‘teaser’ rate that looks good to the borrower and sells more mortgages.  As the Federal Reserve has increased the Federal Funds Rate, many of these mortgages have reset at much higher interest rates which have then increased the monthly payments that many of these subprime borrowers must pay every month.  As a result, many of the subprime borrowers have been unable to make these increased payments leading to a very dramatic increase in home foreclosures.

 

You may be wondering how this has affected Wall Street and hedge funds.  Good question.  Until recently, a housing downturn could have affected Wall Street due to the overall impact to the economy, but now there is a much more direct correlation.  In recent years these loans have been sold by the banks who initiated the loans to the big Wall Street investment banks.  The Wall Street banks have then re-packaged these loans into investment securities called collateralized debt obligations or CDO’s.  These CDO’s have then been bought by many different hedge funds.  In recent years, these have been attractive to investors because they promised high returns and with the housing boom and low interest rates, the risk involved seemed muted.  With the downturn in the housing market and increased interest rates, it has become apparent that many subprime borrowers were issued loans they could not afford.  They can’t refinance because the value of their home has not appreciated (in some cases has depreciated) and interest rates are now higher than their initial rate….so they’re trapped.  With no options, they lose their homes in foreclosure.  We can talk about why this has happened, but the bottom line is that many have taken advantage of the poorest of us in the pursuit of wealth.  I’m sure that the borrowers, brokers, banks and Wall Street have all played a part in this, but the bottom line is that many wealthy people were profiting from these loans.  From what we read, there is very little concern about the people who have lost their homes as a result of this.  The vast majority of articles we read are about how this could affect hedge funds, the housing market and the stock market.  Ever wonder what the Bible says about loaning money to the poor at high interest rates?  The answer is there and remember, the Lord’s Word applies to us today, just as it applied to everyone alive when it was written.

 

“He who increases his wealth by exorbitant interest amasses it for another, who will be kind to the poor.” (Proverbs 28:8)

 

The Lord is clear: if you continue to exploit the poor, your wealth will be taken from you.

 

“You trample on the poor
       and force him to give you grain.
       Therefore, though you have built stone mansions,
       you will not live in them;
       though you have planted lush vineyards,
       you will not drink their wine.

For I know how many are your offenses
       and how great your sins.
       You oppress the righteous and take bribes
       and you deprive the poor of justice in the courts.

Therefore the prudent man keeps quiet in such times,
       for the times are evil.

Seek good, not evil,
       that you may live.
       Then the LORD God Almighty will be with you,
       just as you say he is. “ (Amos 5:11-14)

 

“He oppresses the poor and needy.
       He commits robbery.
       He does not return what he took in pledge.
       He looks to the idols.
       He does detestable things.

He lends at usury and takes excessive interest. Will such a man live? He will not! Because he has done all these detestable things, he will surely be put to death and his blood will be on his own head.” (Ezekiel 18:12-13)

 

“The LORD takes his place in court;
       he rises to judge the people.

 The LORD enters into judgment
       against the elders and leaders of his people:
       "It is you who have ruined my vineyard;
       the plunder from the poor is in your houses.

 What do you mean by crushing my people
       and grinding the faces of the poor?"
       declares the Lord, the LORD Almighty.” (Isaiah 3:13-15)

 

There are many other verses, but we’ll stop there.  Where is this subprime problem leading?  Hedge funds that invested heavily in these subprime securities are closing.  Debt markets are tightening due to investor’s adversity to the perceived increase in risk.  This, in turn, is making it much harder for private equity companies to fund their buyout deals.  This issue, coupled with the housing downturn, is causing the stock market to fall (the NYSE dropped over 300 points yesterday).  It shouldn’t surprise anyone who is spiritually mature that the exploitation of the poor by the wealthy is turning around to bite the wealthy.  Will the current situation end softly or are we facing something much more dramatic?  I believe we are seeing the beginning of the end of the financial dominance of the United States.  What we are seeing is only the beginning as the Lord begins to redistribute wealth from those focused on themselves and the pursuit of money to those who are following Him and His kingdom.

 

The following article appeared in the Wall Street Journal today.  Take note of who is benefiting from the efforts of private equity and who is suffering.

 

IN THE TRENCHES
How a Blackstone Deal
Shook Up a Work Force

Layoffs at Travelport,
Dividend for Investors;
'On Pins and Needles'

By IANTHE JEANNE DUGAN
; Page A1

CENTENNIAL, Colo. -- Not long after the Blackstone Group bought Travelport Ltd. last August, workers at the company's office campus here began feeling the squeeze.

Two months after the deal closed, scores of employees were lugging boxes of personal belongings to their cars, having lost their jobs. Under Blackstone's ownership, the travel-reservations conglomerate has laid off 841 people, about 10% of its work force. Blackstone, a private-equity firm, has already recouped all of the money it invested in Travelport.

__________________________________

RAPID PACE

 

•  The Situation: After Blackstone Group bought Travelport, changes came swiftly for some workers.

•  The Background: To capitalize on their investments more quickly, private-equity firms have been overhauling companies faster.

•  The Bottom Line: Travelport has laid off 841 workers, and Blackstone has already recouped its investment.

_______________________________

Similar scenes have been unfolding at companies around the nation, a human toll of the corporate-buyout boom. Private-equity firms, which say they bring sorely needed financial discipline to poorly run companies, have been slashing costs and extracting profits at warp speed. As the cycle of buying and selling companies has intensified, life in the trenches can be unstable and traumatic.

By the end of 2007, Travelport expects to slash costs by $150 million. Last week, it brought public its online reservations unit, Orbitz Worldwide Inc., using the proceeds to pay off debt. Its Galileo unit, which feeds airline information to travel agents, is the focus of much of the overhaul. Many of the job cuts have occurred at the company's data-operations center here outside , where some jobs have been outmoded by shifts in technology and in the way people buy airline tickets and rent cars, executives say.

John Kliegel, 41 years old, a computer-systems analyst, and his twin, Russell, a technical writer, were both laid off. They're selling the house they share because they can no longer afford it. Don Kleppinger, a 46-year-old software engineer with five sons, lost his job, leaving him without health insurance for several months. Grace Covyeau, 63, who lost her job as a telecommunications engineer, took a part-time job last month making sandwiches and coffee at King Soopers grocery store.

"It came as a shock," says Michael Berson, 49, who lost his job as a data engineer in October, three years after receiving a "Super Star" award for saving the company $1.2 million on telecommunications costs. Mr. Berson has moved to , where he is looking for a new job.

In addition to the 841 layoffs, 1,500 Travelport workers have left voluntarily since the buyout. The company says it has hired 1,582 new workers during that period, and has invested heavily in new technology.

Travelport Chief Executive Jeff Clarke describes the Centennial operation as the "factory" through which thousands of transactions pass every second. "We need to shift into new technologies," he says. "Some require productivity improvements and often will lead to layoffs."

To complete their $4.3 billion Travelport purchase, Blackstone and Technology Crossover Ventures, a , venture-capital firm that now owns 11%, invested $1 billion and borrowed the rest. That debt landed on Travelport's balance sheet. In March, Travelport borrowed an additional $1.1 billion and paid it out as a dividend to the two firms, returning all their money in just seven months.

"This is likely one of the quickest returns of invested capital for a private-equity deal of its size," Travelport's new chief financial officer, Michael Rescoe, said in a May conference call with analysts.

The buyout boom has been lucrative for Blackstone partners and investors, which include large institutions such as pension funds. Last year, Blackstone managed assets valued at about $88 billion and earned $2.27 billion, according to a prospectus for its own initial public offering in June. Its chief executive, Stephen Schwarzman, who resides in a 35-room apartment, made more than $650 million on the offering and retained a 24% stake now worth more than $5 billion.

Such riches raise hackles among laid-off workers. "These investments are helping the fat cats by hurting the little guys," says Ms. Covyeau. "It'll make you sick."

Over the past five years, private-equity firms have bought more than 10,000 companies. This year, through June, 1,399 deals worth $582 billion have been announced, according to data provider Dealogic.

In order to recoup their investments quickly, buyout firms are speeding up everything -- closing deals more swiftly, cutting jobs and restructuring companies faster, and taking them public sooner. They've also been taking big cash payments out of the companies they buy, as Blackstone did with Travelport. These payments, known as "dividend recapitalizations," reached a record $25 billion in 2006, and are on pace to exceed that amount this year, according to Standard & Poor's Corp. In 2001, they amounted to just $1 billion. The payments increase pressure to cut costs.

"Layoffs are far more likely at firms that pay these dividends," says Steven Bavaria, who oversees bank-loan ratings at Standard & Poor's. "Employees left behind are doing more work, looking over their shoulders, feeling stressed."

At a congressional hearing in May, the Private Equity Council, a lobbying group, testified that buyouts often result in long-term job growth. It cited the Carlyle Group's 2005 purchase of auto-parts company AxleTech International Holdings Inc., which grew to 568 from 425 workers after it began supplying parts to military-vehicle makers.

In other cases, job cuts follow buyouts. After buying Hertz Global Holdings Inc. for $15 billion from Ford Motor Co. in late 2005, Clayton, Dubilier & Rice Inc. and a unit of Merrill Lynch & Co. collected a $1 billion dividend, then took the company public. This year, Hertz cut more than 2,000 jobs, or about 8% of its work force.

Last summer, Blackstone teamed up with Carlyle, Kohlberg Kravis Roberts & Co. and other buyout firms to buy VNU, the parent of Nielsen Media Research and ACNielsen, for about $10 billion. In December, the firm announced 4,100 job cuts, about 10% of its work force.

"None of us wants a single job to be cut," says Paul "Chip" Schorr IV, the Blackstone senior managing director who orchestrated the purchase of Travelport and now serves as its chairman. Mr. Schorr, 40, joined Blackstone in 2005 from the venture-capital arm of Citigroup Inc.

The layoffs at Travelport were one of many steps taken to revamp the company. All told, Travelport has reduced operating costs by 6%, the company says.

Before Blackstone bought it, Travelport was operating as the Travel Distribution Systems unit of Cendant Corp., a travel and real-estate conglomerate based in Cendant's founder and chief executive, Henry Silverman, a former Blackstone partner, had cobbled together Cendant's travel unit through a series of acquisitions.

Galileo, which Cendant bought in 2001, gets paid by airlines to feed information about airline schedules, pricing and inventory to travel agents. In addition, it runs the reservations system for United Airlines. Galileo is the largest contributor of Travelport revenue, which totaled $2.6 billion last year.

That business has been suffering. The Sept. 11 attacks curtailed airline travel, as did the outbreak of severe acute respiratory syndrome, or SARS. In 2003, struggling airlines reduced the fees they paid to middlemen such as Galileo.

Cendant also had gotten into the online travel-agency business by buying Orbitz, which competes with Travelocity, Expedia and others. Each time consumers use the site to book reservations for flights, rental cars and hotels, Orbitz collects a fee. As more consumers turned to the Internet for travel planning, the business grew.

But as airlines and hotels began handling reservations through their own Web sites, the middlemen lost business. In 2001, systems such as Galileo had handled 70% of airline reservations, according to Forrester Research, a market-research firm. These days, such systems handle just 50%. Cendant began laying off employees, and in 2005, it decided to split itself into four parts.

Mr. Schorr believed that Cendant hadn't fully integrated the systems behind the travel businesses it had acquired. "It was like having a house with eight kitchens," he says. If it eliminated overlapping systems, he believed, the business could become more efficient. He also saw growing opportunities in foreign markets such as the and .

On Aug. 23, the day Blackstone took over, Mr. Clarke wrote to employees on an internal blog: "For most of us, our jobs won't change." Mr. Clarke, who had become chief executive a few months earlier, previously held senior positions at Computer Associates and at Compaq Computer Corp.

Some employees believed Blackstone's arrival would ease the belt-tightening and stress that had begun under Cendant. "A lot of us thought these layoffs would stop," says Gina Fugazzi, 51, who oversaw the company's voice systems in the "There was no more to cut."

Others had heard enough about how private-equity firms operate to be concerned about their jobs. Ms. Covyeau, the telecommunications manager, says many employees were "aware that the pattern at private-equity firms was streamlining work forces." Anxiety, she says, began rising.

In the blog, Mr. Clarke noted to employees that Travelport intended to re-engineer operations to reduce overlap and to eliminate "activities that are not contributing to our success."

The company decided to overhaul the telecommunications center housed in Centennial. "We are automating work that was done manually," explains Mr. Clarke.

Within weeks of the buyout, at a meeting with employees in Centennial, some managers warned that more cuts were coming. Ms. Covyeau says she began packing her boxes and told a manager: "Please, just give me a severance package and let me out of here."

One morning in October, managers in Centennial sent emails instructing employees to report to various conference rooms and cafeterias. Ms. Fugazzi says her heart sank when she walked into her designated room and found only about 20 people. "I suddenly realized I was in a group getting laid off," she says. A colleague, she recalls, spotted a tray of bagels and coffee and chortled: "Looks like this is our last supper."

A manager told them their jobs were being cut for economic reasons, according to several people who were there. Some employees burst into tears; others stared stoically. "I was devastated," recalls Ms. Fugazzi, who says she had planned to retire in four years. "I had the mentality that if you worked hard, you could keep your job forever."

When they got back to their desks, their email had been disabled. Guards lingered while employees filled boxes with belongings. The company declined to provide written references. In the confusion, some employees say, they were inadvertently given a wrong number to call about benefits -- it was a sex line. A company spokesman says only eight employees received the incorrect number, and the company corrected the mistake right away.

All told, Travelport laid off about 500 people that month, including veterans in their 50s and 60s who say they had good performance reviews and relatively high salaries of about $100,000.

Most of the layoffs occurred at Galileo. Gordon Wilson, Galileo's London-based chief executive, said in a written statement that many of the jobs had been outmoded by technology. For example, travel agents used to connect to Galileo's system by phone. Now, many of them access it via the Internet.

The company offered laid-off employees two weeks severance for every year they worked, according to several employees. Mr. Wilson declined to provide details about the severance packages, which he called "generous."

In December, Travelport announced the acquisition of Worldspan, one of Galileo's chief competitors, for $1.4 billion. At a Christmas party at the Denver Museum of Nature and Science, a Travelport executive assured remaining employees that 2007 would be more stable, according to people who were there.

In January, Mr. Clarke, the chief executive, reorganized Travelport into three brands -- Orbitz, Galileo and Gullivers Travel Associates, a wholesaler of hotel rooms and group tours. The company continued to cut jobs.

Galileo's Mr. Wilson says he has warned employees of "further changes" as the company completes the Worldspan acquisition. The deal could produce about $100 million in cost savings through the consolidation of sales staffs, data centers, and other operations, Mr. Clarke says.

In this year's first quarter, Travelport's profits were up 36% over the year-earlier period, to $157 million. Half of the profit improvement was because of revenue growth, the company says, 25% was because of vendor-related cost reductions and 25% was from productivity improvements, including reductions in the work force.

Mr. Wilson says Travelport's debt load has made it more urgent to generate cash. "If we can accelerate the reduction of our debt and therefore lessen our interest payments," he says, "no one would expect management to do otherwise."

With the Worldspan merger looming, employees at both companies say they are worried about their jobs. "We are all on pins and needles," says one employee. "Everybody here feels it's only a matter of time."

For many laid-off employees, finding new jobs hasn't been easy. Danny Carrasco, a software developer in his 50s, searched for five months before finding a job at a telecommunications company. Technical analyst Robert Renwick, 30, sent out more than 100 résumés over four months before landing a job at the local school district. He and his wife, a first-grade teacher, put off having children, he says. "I can't believe they would ruin all these lives to make a couple extra pennies," he says.

John Kliegel is earning 33% less as a program manager at a satellite company. His twin, Russell, is juggling job hunting with free-lancing. Mr. Kleppinger, the software engineer, once expected to retire at Travelport. He's now earning 20% less at a new job.

After months of searching, writing résumés and reading books on how to interview, Ms. Fugazzi landed a job with the Colorado Department of Human Services. She earns about $33,000 less than she did at Travelport, counting her old bonus. But the government job, she says, "feels more secure."

Write to Ianthe Jeanne Dugan at ianthe.dugan@wsj.com

 The following article was printed today in the Wall Street Journal (August 7, 2007).  It does an excellent job of describing what has happened to credit markets over the past decade as a result of decisions made by the Federal Reserve and Wall Street investment banks.

 

It's obvious what is driving Wall Street - greed.  Why else would you push mortgage companies for loans (that could be repackaged as securities) with no income documentation from the borrower that covered 100% of the purchase price?  There has been no regard for the people who borrowed this money.  No consideration of what would happen when these 'introductory' rates reset at higher interest rates.  The only consideration was - how much money can I make?  I'm sure that there were people within Wall Street who probably sounded an alarm - but it's obvious that any objections were silenced by the people at the top.  What is the root of all evil?

 

We are led to believe that no one truly understands how our economy works (from the world's perspective) - it's simply too complicated.  If you only listen to the media and economic ‘experts’ and never study economic and monetary policy yourself, you’ll never understand the truth of the economic system you rely on.  I now believe that there are a few men in the world today who do understand and control much of the world’s economic activity.  Because this certainly relates to Biblical end time events – we’ll review the truth of our monetary system in the next post.

 

We have many ways to measure our economy and economic growth, but what really causes periods of growth and periods of recession?  What triggers a recession or a depression?  If the leaders of our nation really understood our economy and really cared about our livelihood, we'd obviously never have recessions or depressions.  Over the past few years, I've read many who believed we finally had it all figured out.  Now, uncertainty reigns again.  Derivatives, CLO's, CDO's & SIV’s supposedly spread risk around and protect investors....now it appears that everything is much more closely interconnected than anyone thought.  Based on what we've learned about wealth from the Bible, do you really want to align yourself with such greed by investing in Wall Street?  Take note of the section below entitled 'Casino Night'.  Do you really want to place your life savings on black and have someone spin the wheel?  At least in Vegas, you know your odds.

 

The actions of the Federal Reserve are more curious.  Let's disregard for a moment that the Federal Reserve is a private corporation with private owners and take a quick look at their actions over the past few years.  After Sept 11, 2001, the Fed reduced the Federal Funds Rate (rate charged to banks) to 1%.  This is what has contributed to the 'easy money' or liquidity flowing throughout the world (see article below for details).  As the economy has strengthened in recent years, the Federal Funds rate has steadily climbed to 5.25%.  This, in effect, has raised the cost of everything in this country.  The reason we are consistently given for this increase is that the Fed is concerned about inflation.  We are always told that inflation is the enemy and must be contained at all costs.  I agree, from an economic standpoint, inflation can destroy economic growth.  But the question we must ask is this - is the Fed truly concerned about inflation? 

 

Economists measure inflation in a couple of ways - the Consumer Price Index (CPI) and the Producer Price indexes (PPI) are two of the most prominent measures of inflation.  Both measure the change in prices (for consumers and businesses) over time.  What is something else that impacts the rate of inflation that doesn't get mentioned much in the media?  The money supply.  It stands to reason that as the supply of money in a nation increases, the chance of inflation increases.  If you place more money in the hands of consumers and businesses, then there is a very high probability that everyone will buy more and invest more and drive up the prices of everything from consumer goods and services to stocks.  Not sure whether this is an acceptable way to measure inflation?  It used to be a very accurate measure of inflation – by the Federal Reserve.  The following was taken from Wikipedia:

 

“In January 1987, with C.P.I. inflation down to only 1%, the Federal Reserve announced it was no longer going to use money supply aggregates, such as M2, as guidelines to control inflation, even though this method had been in use from 1979, apparently with great success. Previous to 1980, interest rates were used as guidelines; inflation was heavy. The Fed complained that the aggregates were confusing; Volcker was still chairman until August 1987, whereupon Alan Greenspan assumed the mantle, seven months after monetary aggregate policy had changed.”

 

Think about home equity loans.  Low interest rates coupled with a hot housing market (again, this is inflation) has enabled many people to cash out equity in their homes.  What have they done with this money?  From what I've read, many have bought more stuff.  This increases prices (supply and demand comes into play) and therefore, the rate of inflation increases. 

 

So, does the Federal Reserve measure the overall money supply in the U.S.?  It did until March 23, 2006.  On this date, the Fed stopped publishing data on the M3 money supply (total measurement of our money supply).  The following information was taken from Wikipedia:

 

"The most common measures are named M0 (narrowest), M1, M2, and M3. In the United States they are defined by the Federal Reserve as follows:

 

M0: The total of all physical currency, plus accounts at the central bank that can be exchanged for physical currency.

 

M1: M0 - those portions of M0 held as reserves or vault cash + the amount in demand accounts ("checking" or "current" accounts).

 

M2: M1 + most savings accounts, money market accounts, small denomination time deposits and certificate of deposit accounts (CDs) of under $100,000.

 

M3: M2 + all other CDs, deposits of eurodollars and repurchase agreements.

 

As of March 23, 2006, information regarding M3 will no longer be published by the Federal Reserve, ostensibly because it costs a lot to collect the data but doesn't provide significantly useful data[1]. The other three money supply measures will continue to be provided in detail.

 

In an effort to reverse this change, Congressman Ron Paul introduced the now expired H.R.4892[2] on March 7th, 2006, and subsequently sponsored H.R.2754[3][4] on June 15th, 2007 which has been referred to the House Committee on Financial Services."

 

The Fed has said that M3 data is not significant.  Really?  Apparently, it was important from 1979 to 1987 when they used the money supply to measure inflation very effectively.  Why is it now not important?  By not publishing this data, we don't know how many dollars are in circulation throughout the world (coins, bills, checking accounts, foreign accounts, etc).  Theoretically, you could estimate M3 from the other measures, but it would take alot of time and would only be an approximation.  How much money are we talking about?  At the time the Fed stopped publishing M3 data (March 2006), the total amount of our money supply equaled 10 trillion dollars.  M3 data represented 3 trillion additional dollars in addition to M2.  Not reporting 30% of our money supply is not significant?  It is also interesting to note that the total value of our money supply has increased to 10 trillion dollars in 2006 from 4 trillion in 1990.  So, our total 'supply' of dollars has more than doubled in only 16 years.  Should it surprise us that the dollar is weakening against other currencies throughout the world?  If the Fed was really concerned about inflation, why have they flooded the world's markets with dollars and stopped publishing this data?

 

The final question we need to ask is this - is the Federal Reserve acting in our best interests (the nation) or is it acting in the interests of its owners?  Do private companies act in the best interests of everyone or do they act in the best interests of their shareholders?  What if the shareholders of the Fed have another motive for their actions?  Remember, we are not talking about Godly people.  If you are still not convinced that the Federal Reserve system is privately controlled, the following was taken from Wikipedia:

 

“In Lewis v. United States, the United States Court of Appeals for the Ninth Circuit stated that "the Reserve Banks are not federal instrumentalities for purposes of the FTCA [the Federal Tort Claims Act], but are independent, privately owned and locally controlled corporations."”

Let’s take a look at the Federal Reserve’s balance sheet.  This information is taken from Wikipedia.  The dollar amounts are in millions.

ASSETS: Gold certificate account   11,037 Special drawing rights certificate acct.   2,200 Coin   932 Securities, repos and loans   812,372    Securities held outright   790,439       U.S. Treasury   790,439          Bills   277,019          Notes and bonds   513,420    Repurchase agreements   21,000    Loans   933 Items in process of collection   4,524 Bank premises   2,036 Other assets   37,767 Total Assets   870,868

So, the Federal Reserve has over $870 Billion dollars in assets.

 

The following analysis is also taken from Wikipedia.  The figure that stands out to me is the amount of money the Federal Government (that’s you and me included) owes the Federal Reserve banking system.  At the time this article was written (June 2007), the United States Government owes the Federal Reserve $790 Billion dollars.  This represents 9% of our national debt.  That’s the price we pay to the Fed to create our currency and manage the banking system.  When the media discusses our national debt, why is this never mentioned?  People in high places would prefer that we didn’t know.

 

Analyzing the Federal Reserve's Balance Sheet reveals many interesting things:

• The Fed has over 11 billion in gold which is a holdover from the days the government used to back US Notes and Federal Reserve Notes with gold

• The Fed holds almost a billion in coinage not as a liability but as an asset. The Treasury Department is actually in charge of creating coins and US Notes. The Fed then buys coinage from the Treasury by increasing the liability assigned to the Treasury's account

• The Fed holds 790 billion in US debt which means part of the national debt is held privately by the Federal Reserve.

• The Fed has about 21 billion in assets from Overnight Repurchase agreements. Repurchase agreements are the primary asset of choice for the Fed in dealing in the Open Market. Repo assets are bought by creating 'Depository institution' liabilities and directed to the bank the Primary Dealer uses when they sell into the Open Market.

• The 976 billion in Federal Reserve Note liabilities represents the total value of all dollar bills in existence

• The 16 billion in deposit liabilities of 'Depository institutions' shows that dollar bills are not the only source of government money. Banks can swap 'Deposit Liabilities' of the Fed for 'Federal Reserve Notes' back and forth as needed to match demand from customers, and the Fed can have the 'Bureau of Engraving and Printing' create the paper bills as needed to match demand from banks for paper money. The amount of money printed has no relation to the growth of the monetary base (M0).

• The 6 billion in Treasury liabilities shows that the Treasury Department doesn't use a private banker but rather uses the Fed directly (the lone exception to this rule is Treasury Tax and Loan because government worries that pulling too much money out of the private banking system during tax time could be disruptive).
• The 96 million Foreign liability represents the amount of Federal Reserve deposits held by foreign central banks.

• The 6 billion in 'Other liabilities and accrued dividends' represents partly the amount of money owed so far in the year to private banks as part of the 6% dividend guarantee the Fed grants banks for not loaning out a percentage of their reserves

• Total capital represents the profit the Fed has earned which comes mostly from the assets they purchase with the deposit and note liabilities they create. Excess capital is then turned over to the Treasury Department and Congress to be included into the Federal Budget as "Miscellaneous Revenue".

The question becomes – should the United States Government pay a private corporation to manage its money?  I believe what we have all forgotten is that our money has no real value.  Since 1971, our money is no longer, in any way, tied to the value of gold.  So, our paper money is only good to use as long as everyone accepts it as money.  If the dollar crashes on world markets, what will happen to our banking system?  It won’t be good.

Starting to feel uncomfortable?

 

What if the private owners of the Federal Reserve are the same people who control much of our government behind the scenes?  If you study all of the events of 9/11/2001, you will find that there were many suspicious financial transactions taking place before the event.  Many 'puts' (bets that a stock will fall) were placed on airline stocks (including Boeing).  The number of puts placed before the attacks were many times higher than the norm.  Harddrives were recovered from ground zero that showed many millions of dollars in financial transactions related to the event that someone apparently thought would be 'covered up' and destroyed.  Where are the billions of dollars worth of gold that was stored in the vaults of the World Trade Center?  It seems to have vanished.  Why doesn't our mainstream media investigate these things?  Whether you want to believe it or not, many people had prior knowledge of this event.  It's hard to believe, but it's the truth.

 

So, what if this event was planned as a 'false flag' operation that would be used against us in order to slowly remove our freedoms in the name of the 'war on terror'?  Whether you want to believe it, this is exactly what is happening (Patriot and Military Commissions Act, the various 'executive orders' from President Bush).  Don't forget, we are dealing with very intelligent, deceptive people who place no value on your life or mine - they use our patriotism against us.  What if, in connection with this event, the Federal Reserve lowered interest rates for a long time to give the appearance that they were helping us, but were, in effect, setting up the world for a major financial crisis?  Is it a coincidence that at a time we are worrying about a future terrorist event, financial markets are experiencing a very high level of volatility?  It's as if we have been directed to the edge of a cliff, but we think that there's no way we're going over. It won't happen - we're America after all!  We think we're invincible.  We're being setup on many fronts - but are spiritually blind and can't see our enemy.  The world is going to tell us who can save us from these 'terrorists'.  The world will tell us who can restore financial stability.  As Jesus told us - the father of lies is ruler of this world. Don't trust the world.  Place your faith in God and His truth. 

 

Also keep in mind that President Bush has signed many executive orders that give him what amounts to dictatorship powers in the event of another 'terrorist' event.  I wonder why mainstream media never reports on these things? Do you see where this is going?  This 'event' will trigger not only the loss of our freedom, but could very well be the trigger for a worldwide financial collapse.  Based on what is at stake, who do you think will be behind this event?  What do you think will emerge from this event?  There are people walking around today that could tell you exactly what is planned. 

 

Still not convinced?  What do some of the men who helped created the Federal Reserve have to say on the subject? 

 

"Whoever controls the volume of money in any country is absolute master of all industry and commerce."(Paul Warburg, drafter of the Federal Reserve Act)

"Permit me to issue and control the money of a nation and I care not who makes its laws."(Mayer Amschel Rothschild)

It's time to stop focusing on our pursuit of worldly things.  God is giving us signs everywhere - we're simply not paying any attention.  This is going to change.

__________________________________________________

 

How Credit Got So Easy
And Why It's Tightening

By GREG IP and JON E. HILSENRATH
August 7, 2007; Page A1

 

An extraordinary credit boom that created many first-time homeowners and financed a wave of corporate takeovers seems to be waning. Home buyers with poor credit are having trouble borrowing. Institutional investors from Milwaukee to Düsseldorf to Sydney are reporting losses. Banks are stuck with corporate debt that investors won't buy. Stocks are on a roller coaster, with financial powerhouses like Bear Stearns Cos. and Blackstone Group coming under intense pressure.

 

The origins of the boom and this unfolding reversal predate last year's mistakes. They trace to changes in the banking system provoked by the collapse of the savings-and-loan industry in the 1980s, the reaction of governments to the Asian financial crisis of the late 1990s, and the Federal Reserve's response to the 2000-01 bursting of the tech-stock bubble.

 

When the Fed cut interest rates to the lowest level in a generation to avoid a severe downturn, then-Chairman Alan Greenspan anticipated that making short-term credit so cheap would have unintended consequences. "I don't know what it is, but we're doing some damage because this is not the way credit markets should operate," he and a colleague recall him saying at the time.

 

Now the consequences of moves the Fed and others made are becoming clearer.

Fourth in a series

• Page One: Mortgage Mess Shines Light on Brokers' Role
7/5/07

• Page One: How Wall Street Stoked The Mortgage Meltdown
6/27/07

• Page One: 'Subprime' Aftermath: Losing the Family Home
5/30/07

Low interest rates engineered by central banks and reinforced by a tidal wave of overseas savings fueled home prices and leveraged buyouts. Pension funds and endowments, unhappy with skimpy returns, shoved cash at hedge funds and private-equity firms, which borrowed heavily to make big bets. The investments of choice were opaque financial instruments that shifted default risk from lenders to global investors. The question now: When the dust settles, will the world be better off?

 

"These adverse periods are very painful, but they're inevitable if we choose to maintain a system in which people are free to take risks, a necessary condition for maximum sustainable economic growth," Mr. Greenspan says today. The evolving financial architecture is distributing risks away from highly leveraged banks toward investors better able to handle them, keeping the banks and economy more stable than in the past, he says. Economic growth, particularly outside the U.S., is strong, and even in the U.S., unemployment remains low. The financial system has absorbed the latest shock.

 

So far. But credit problems once seen as isolated to a few subprime-mortgage lenders are beginning to propagate across markets and borders in unpredicted ways and degrees. A system designed to distribute and absorb risk might, instead, have bred it, by making it so easy for investors to buy complex securities they didn't fully understand. And the interconnectedness of markets could mean that a sudden change in sentiment by investors in all sorts of markets could destabilize the financial system and hurt economic growth.

 

Side Effects of Deflation Fight

 

When a technology stock and investment plunge and the Sept. 11 terrorist attacks pushed the economy into recession in 2001, the Fed slashed interest rates. But even by mid-2003, job creation and business investment were still anemic, and the inflation rate was slipping toward 1%. The Fed began to study Japan's unhappy bout with deflation -- generally declining prices -- which made it harder to repay debts and left the central bank seemingly powerless to stimulate growth.

 

"Even though we perceive the risks [of deflation] as minor, the potential consequences are very substantial and could be quite negative," Mr. Greenspan said in May 2003. A month later, the Fed cut the target for its key federal-funds interest rate, a benchmark for all short-term rates, to 1%. It said the rate would stay there as long as necessary, figuring low rates would bolster housing and consumer spending until business investment and exports recovered. The rate stayed at 1% for a year.

 

Mr. Greenspan raised vague fears with colleagues over the possibility this policy could create distortions in the economy, but he says today that such risks were an acceptable price for insuring against deflation. "Central banks cannot avoid taking risks. Such trade-offs are an integral part of policy. We were always confronted with choices."

 

Fed officials who were there at the time generally maintain their policy was right, even in hindsight. The economy has grown steadily, avoiding both deflation and serious inflation. Yet some say they may have planted seeds of excess in the housing and subprime-loan markets.

 

Robert Eisenbeis, retired research director at the Federal Reserve Bank of Atlanta, says the Fed overreacted to the threat of deflation and kept rates low for too long. As a result, it "overstimulated the housing market, and now we're dealing with the consequences."

 

Edward Gramlich, a Fed governor in Washington from 1997 to 2005, says he failed to realize at the time that low rates were making it so easy for lenders to market subprime mortgages with low introductory rates. The Fed and other regulators could have prevented some of the resulting pain with more rigorous supervision of mortgage lenders besides banks, he says. "We didn't have that, and we're paying for it now."

 

In June 2004, the Fed began to raise the short-term target rate, eventually taking it to 5.25%, where it has been for the past year. Such a boost usually leads to a rise, as well, in long-term rates, which are important to rates on 30-year conventional mortgages and corporate bonds. This time, it didn't. Mr. Greenspan expressed concern that investors were willing to accept low returns for taking on risk. "What they perceive as newly abundant liquidity can readily disappear," he said in August 2005, six months before retiring. "History has not dealt kindly with the aftermath of protracted periods of low risk premiums."

 

Looking back, he says today: "We tried in 2004 to move long-term rates higher in order to get mortgage interest rates up and take some of the fizz out of the housing market. But we failed."

 

Something besides Fed policy was at work. Both Mr. Greenspan and his successor, Ben Bernanke, point to an unanticipated surge in capital pouring into the U.S. from overseas.

 

'Global Saving Glut'

In June 1998, U.S. Treasury officials made a plea to China that they would be reminded of repeatedly in the following years. Thailand had devalued its currency in 1997, touching off a crisis in the region that led other countries to devalue and in some cases default on foreign debt. The yen was sliding. Chinese officials, who pegged their currency to the U.S. dollar, "let it be known...that if things kept going this way they'd have no choice but to devalue," recalls Ted Truman, a Treasury official at the time. The U.S., fearing such a move would trigger another round of devaluations, urged the Chinese to hold their peg, and praised them when they did so.

The Journal's Jon Hilsenrath discusses the origins of the credit boom and some of the lessons to be learned from its demise.

But times changed. As recessions and depressed currencies held down imports and goosed exports in other Asian countries, the countries ran trade surpluses that replenished foreign-exchange reserves. Determined never to be so tied to the onerous conditions of the International Monetary Fund, they have kept those policies in place. Thai reserves, effectively exhausted in 1997, now stand at $73 billion.

 

Long after the crisis passed, China's economic fundamentals suggested its currency should rise against the dollar. China let it rise only slowly, continuing to juice exports and produce trade surpluses that pushed China's foreign-exchange reserves above $1 trillion. When the U.S. pressed China to let its currency float, China reminded the U.S. of the fixed exchange rate's stabilizing role in 1998. China put much of its cash -- part of what Mr. Bernanke has called a "global saving glut" -- into U.S. Treasurys, helping hold down long-term U.S. interest rates. Chinese government entities also recently poured $3 billion into U.S. private-equity firm Blackstone.

 

Mortgages for All

 

Lou Barnes, co-owner of a small Colorado mortgage bank called Boulder West Inc., has been in the mortgage business since the late 1970s. For most of that time, a borrower had to fully document his income. Lenders offered the first no-documentation loans in the mid-1990s, but for no more than 70% of the value of the house being purchased. A few years back, he says, that began to change as Wall Street investment banks and wholesalers demanded ever more mortgages from even the least creditworthy -- or "subprime" -- customers.

"All of us felt the suction from Wall Street. One day you would get an email saying, 'We will buy no-doc loans at 95% loan-to-value,' and an old-timer like me had never seen one," says Mr. Barnes. "It wasn't long before the no-doc emails said 100%."

 

Until the late 1990s, the subprime market was dominated by home-equity lines used by borrowers to consolidate debt and by loans on mobile homes. But when the Fed held rates down after 2001, lenders could offer borrowers with sketchy credit histories adjustable-rate mortgages with introductory rates that seemed affordable. Mr. Barnes says customers were asking about "2/28" subprime loans. These offered a low starter rate for two years, then adjusted for the remaining 28 to a rate that was often three percentage points higher than a prime customer normally paid. Customers, he says, seldom appreciated how high that rate could be once the Fed returned rates to normal levels.

 

Demand from consumers, on one side, and Wall Street and its customers on the other side prompted lenders to make more and more subprime loans. Originations rose to $600 billion or more in both 2005 and 2006 from $160 billion in 2001, according to Inside Mortgage Finance, an industry publication.

 

At first, delinquencies were surprisingly low. As a result, the credit ratings for bonds backed by the mortgages assumed a modest default rate. Standards for getting a mortgage fell. About 45% of all subprime loans in 2006 went to borrowers who didn't fully document their income, making it easier for them to overstate their creditworthiness.

 

The delinquency rate was a mirage: It was low mainly because home prices were rising so much that borrowers who fell behind could easily refinance. When home prices stopped rising in 2006, and fell in some regions, that game ended. Borrowers with subprime loans made in 2006 fell behind on monthly payments much more quickly than mortgages made a year or two earlier.

 

When banks get in trouble, federal deposit insurance encourages depositors not to flee, and in extreme circumstances, banks can borrow directly from the Fed. But banks are no longer the dominant lenders. After the S&L crisis in the 1980s and early 1990s, regulators insisted banks and thrifts hold more capital against risky loans. This tipped the playing field in favor of unregulated lenders. They financed themselves not by deposits but by Wall Street credit lines and by "securitization" of their loans -- in effect, the sale of the loans to investors.

The consequences proved painful. New Century Financial Corp., founded in 1995 by three former S&L executives, was the nation's second largest subprime lender by 2006. When its borrowers began falling behind, Wall Street cut off its lines of credit and forced it to buy back some of its poorly performing loans. New Century couldn't fall back on deposit insurance or the Fed. It filed for bankruptcy protection in April, wiping out shareholders and triggering market-wide fears about the health of the subprime business.

 

LBO Boom

 

Home buyers were not alone. In August 2002, Qwest Communications International Inc. -- heavily indebted, beaten down by the telecom bust and under investigation by the Securities and Exchange Commission -- decided to sell its Yellow Pages business. Private-equity firms Carlyle Group and Welsh, Carson, Anderson & Stowe agreed to buy it for $7 billion, about $5.5 billion of it borrowed. The business produced steady cash flow that could be used to pay down the debt.

 

The buyers were worried they might not be able to borrow as much as they needed. "We were coming out of a pretty bad credit cycle," says Daniel Toscano, managing director at Deutsche Bank, which helped to manage the fund-raising. Instead, they tapped into a gusher. Within a year, Dex Media Inc., as the business became known, was back in the market. It borrowed $889 million to pay a dividend to Carlyle and Welsh Carson, and then $250 million more to pay another dividend. In just 15 months, the private-equity buyers made back most of their investment and still owned the company.

 

By 2006, the volume of such leveraged buyouts was smashing records from the 1980s. Generous credit markets enabled private-equity firms to do larger deals and pay themselves bigger dividends. They boosted returns -- and attracted more investors, which enabled even bigger deals.

 

As in subprime mortgages, lenders began to ease borrowing requirements. They agreed, for instance, to "covenant-lite debt," which dropped once-standard performance requirements, and "PIK-toggle" notes, which allowed borrowers to toggle interest payments on and off like a faucet.

 

Bankers began marketing debt deals for companies that, unlike Yellow Pages, didn't have comfortable cash flow. There was Chrysler, burning cash rather than producing it. And there was First Data Corp., whose post-takeover cash flow would barely cover interest payments and capital spending, according to Standard & Poor's LCD, a unit of S&P which tracks the high-yield market.

 

Last month, investors began to balk. Now many banks find themselves having committed to lend about $200 billion that they had intended to turn over to investors, but can't.

 

Let's All Look Like Yale

 

The subprime and LBO booms required willing lenders. The stock-market collapse and low interest rates of 2001 to 2004 nurtured a class of investors and products to fill that role. Managers of pension and endowment funds long had divided their assets among domestic stocks, bonds and cash. The funds saw their performance suffer when the stock market and then bond yields tumbled.

 

A few endowments, most notably at Yale and Harvard, had for years been spreading their investments more broadly, going into hedge funds, real estate, foreign stocks, even timberland. The goal was holdings that wouldn't suffer in sync with stocks in a bear market. Sure enough, in 2000 and 2001, even as stocks tumbled, Harvard Management Co. earned returns of 32.2% and -2.7% respectively. Yale's returns were 41% and 9.2%.

 

Other institutions wanted their money managed the same way, seeding a flood of hedge funds that bought other untraditional investments such as credit derivatives. University endowments poured roughly $40 billion into hedge funds between 2000 and 2006, according to Hedge Fund Intelligence, a newsletter. "I call it the 'Let's all look like Yale effect,'" says Jeremy Grantham, chairman of Boston money manager GMO LLC.

 

Low interest rates made many investors willing to buy exotic securities in an effort to boost returns. Wall Street had just the vehicle: securitization, or turning loans that once sat quietly on banks' books into securities that can be sold in global markets.

 

Securitization, long common in conventional mortgages, had been supercharged in the early 1990s when the federal Resolution Trust Corp. took over S&Ls that held more than $400 billion of assets. Though some thought it would take the RTC a century to unload them, it took only a few years. The agency successfully securitized new classes of assets, such as delinquent home loans or commercial loans.

 

In the late 1990s, Wall Street went a step further, packaging bigger pools of securities into collateralized debt obligations, or CDOs, and carving them into "tranches," each with a different level of risk and return. Riskier tranches suffered the first losses if some underlying loans defaulted. Other tranches offered lower returns because riskier tranches would take the first hits if the business went sour.

 

Because of the way they were structured, some CDO tranches got triple-A ratings from Moody's Investors Service and Standard & Poor's even though they contained subprime loans. That lured traditionally conservative investors such as commercial banks, insurance companies and pension funds.

 

The upside was evident: Many borrowers got loans they wouldn't otherwise have had. The taxpayer-backed deposit fund was less likely to bear the cost of sloppy lending practices. Banks shifted risks to investors more willing to bear them -- leaving the banks able to make more loans. Investors could pick either more-risky or less-risky slices. And Wall Street middlemen made handsome profits.

 

Now the downside, too, is painfully evident. Final investors were so many steps removed from the original loans that it became hard for them to know the true value and risk of securities they bought. Some were satisfied with a triple-A rating on a CDO -- seemingly as safe as a U.S. Treasury bond but with more yield. Yet as defaults ate through the cushion of lower-rated tranches with unexpected speed, rating agencies were forced to rethink their models -- and lower the ratings on many of these investments.

 

Some structures were so opaque that markets couldn't value them. But ratings cuts sometimes forced an acknowledgment that securities owned weren't worth as much as thought. In May, Swiss bank UBS AG shut down a hedge fund after a $124 million loss. In June, two Bear Stearns hedge funds saw as much as $1.6 billion of investor capital wiped out by bad mortgage bets and pulled credit lines. The trouble spread to hedge funds in Sydney, Australia, a mortgage insurer in Milwaukee and a bank in Düsseldorf, Germany.

 

Even Harvard has been hit. The university lost about $350 million through an investment in Sowood Capital Management, a hedge-fund firm founded by one of the university's former in-house money managers.

 

Casino Night

 

Recent events show that financial innovations meant to distribute risk can end up multiplying it instead, in ways neither regulators nor investors fully understand. Mr. Grantham, the Boston money manager, says his portfolios are behaving in ways he hadn't expected.

 

Fed officials believe that even if their policies led to housing and debt bubbles, the strength of the overall economy shows that the policy was, on balance, the right one. Of course, that assumes the current problems don't culminate in a recession.

 

Market veterans predict the most egregious underwriting practices and products will disappear, but the benefits of innovation will continue.

 

Lessons have been learned -- the hard way. "The structures are here to stay," says Glenn Reynolds, chief executive of research firm CreditSights. "But you have to run it like a prudent risk-taking venture, not like it's casino night and you're on a bender."

 

Write to Greg Ip at greg.ip@wsj.com and Jon E. Hilsenrath at jon.hilsenrath@wsj.com

Wall St. Journal

 

The End

by Michael Lewis Nov 11 2008

The era that defined Wall Street is finally, officially over. Michael Lewis, who chronicled its excess in Liar’s Poker, returns to his old haunt to figure out what went wrong.

Photoillustration by: Ji Lee

To this day, the willingness of a Wall Street investment bank to pay me hundreds of thousands of dollars to dispense investment advice to grownups remains a mystery to me. I was 24 years old, with no experience of, or particular interest in, guessing which stocks and bonds would rise and which would fall. The essential function of Wall Street is to allocate capital—to decide who should get it and who should not. Believe me when I tell you that I hadn’t the first clue.

I’d never taken an accounting course, never run a business, never even had savings of my own to manage. I stumbled into a job at Salomon Brothers in 1985 and stumbled out much richer three years later, and even though I wrote a book about the experience, the whole thing still strikes me as preposterous—which is one of the reasons the money was so easy to walk away from. I figured the situation was unsustainable. Sooner rather than later, someone was going to identify me, along with a lot of people more or less like me, as a fraud. Sooner rather than later, there would come a Great Reckoning when Wall Street would wake up and hundreds if not thousands of young people like me, who had no business making huge bets with other people’s money, would be expelled from finance.

When I sat down to write my account of the experience in 1989—Liar’s Poker, it was called—it was in the spirit of a young man who thought he was getting out while the getting was good. I was merely scribbling down a message on my way out and stuffing it into a bottle for those who would pass through these parts in the far distant future.

Unless some insider got all of this down on paper, I figured, no future human would believe that it happened.

I thought I was writing a period piece about the 1980s in America. Not for a moment did I suspect that the financial 1980s would last two full decades longer or that the difference in degree between Wall Street and ordinary life would swell into a difference in kind. I expected readers of the future to be outraged that back in 1986, the C.E.O. of Salomon Brothers, John Gutfreund, was paid $3.1 million; I expected them to gape in horror when I reported that one of our traders, Howie Rubin, had moved to Merrill Lynch, where he lost $250 million; I assumed they’d be shocked to learn that a Wall Street C.E.O. had only the vaguest idea of the risks his traders were running. What I didn’t expect was that any future reader would look on my experience and say, “How quaint.”

I had no great agenda, apart from telling what I took to be a remarkable tale, but if you got a few drinks in me and then asked what effect I thought my book would have on the world, I might have said something like, “I hope that college students trying to figure out what to do with their lives will read it and decide that it’s silly to phony it up and abandon their passions to become financiers.” I hoped that some bright kid at, say, Ohio State University who really wanted to be an oceanographer would read my book, spurn the offer from Morgan Stanley, and set out to sea.

Somehow that message failed to come across. Six months after Liar’s Poker was published, I was knee-deep in letters from students at Ohio State who wanted to know if I had any other secrets to share about Wall Street. They’d read my book as a how-to manual.

In the two decades since then, I had been waiting for the end of Wall Street. The outrageous bonuses, the slender returns to shareholders, the never-ending scandals, the bursting of the internet bubble, the crisis following the collapse of Long-Term Capital Management: Over and over again, the big Wall Street investment banks would be, in some narrow way, discredited. Yet they just kept on growing, along with the sums of money that they doled out to 26-year-olds to perform tasks of no obvious social utility. The rebellion by American youth against the money culture never happened. Why bother to overturn your parents’ world when you can buy it, slice it up into tranches, and sell off the pieces?

At some point, I gave up waiting for the end. There was no scandal or reversal, I assumed, that could sink the system.

Then came Meredith Whitney with news. Whitney was an obscure analyst of financial firms for Oppenheimer Securities who, on October 31, 2007, ceased to be obscure. On that day, she predicted that Citigroup had so mismanaged its affairs that it would need to slash its dividend or go bust. It’s never entirely clear on any given day what causes what in the stock market, but it was pretty obvious that on October 31, Meredith Whitney caused the market in financial stocks to crash. By the end of the trading day, a woman whom basically no one had ever heard of had shaved $369 billion off the value of financial firms in the market. Four days later, Citigroup’s C.E.O., Chuck Prince, resigned. In January, Citigroup slashed its dividend.

From that moment, Whitney became E.F. Hutton: When she spoke, people listened. Her message was clear. If you want to know what these Wall Street firms are really worth, take a hard look at the crappy assets they bought with huge sums of ­borrowed money, and imagine what they’d fetch in a fire sale. The vast assemblages of highly paid people inside the firms were essentially worth nothing. For better than a year now, Whitney has responded to the claims by bankers and brokers that they had put their problems behind them with this write-down or that capital raise with a claim of her own: You’re wrong. You’re still not facing up to how badly you have mismanaged your business.

Rivals accused Whitney of being overrated; bloggers accused her of being lucky. What she was, mainly, was right. But it’s true that she was, in part, guessing. There was no way she could have known what was going to happen to these Wall Street firms. The C.E.O.’s themselves didn’t know.

Now, obviously, Meredith Whitney didn’t sink Wall Street. She just expressed most clearly and loudly a view that was, in retrospect, far more seditious to the financial order than, say, Eliot Spitzer’s campaign against Wall Street corruption. If mere scandal could have destroyed the big Wall Street investment banks, they’d have vanished long ago. This woman wasn’t saying that Wall Street bankers were corrupt. She was saying they were stupid. These people whose job it was to allocate capital apparently didn’t even know how to manage their own.

At some point, I could no longer contain myself: I called Whitney. This was back in March, when Wall Street’s fate still hung in the balance. I thought, If she’s right, then this really could be the end of Wall Street as we’ve known it. I was curious to see if she made sense but also to know where this young woman who was crashing the stock market with her every utterance had come from.

It turned out that she made a great deal of sense and that she’d arrived on Wall Street in 1993, from the Brown University history department. “I got to New York, and I didn’t even know research existed,” she says. She’d wound up at Oppenheimer and had the most incredible piece of luck: to be trained by a man who helped her establish not merely a career but a worldview. His name, she says, was Steve Eisman.

Eisman had moved on, but they kept in touch. “After I made the Citi call,” she says, “one of the best things that happened was when Steve called and told me how proud he was of me.”

Having never heard of Eisman, I didn’t think anything of this. But a few months later, I called Whitney again and asked her, as I was asking others, whom she knew who had anticipated the cataclysm and set themselves up to make a fortune from it. There’s a long list of people who now say they saw it coming all along but a far shorter one of people who actually did. Of those, even fewer had the nerve to bet on their vision. It’s not easy to stand apart from mass hysteria—to believe that most of what’s in the financial news is wrong or distorted, to believe that most important financial people are either lying or deluded—without actually being insane. A handful of people had been inside the black box, understood how it worked, and bet on it blowing up. Whitney rattled off a list with a half-dozen names on it. At the top was Steve Eisman.

Steve Eisman entered finance about the time I exited it. He’d grown up in New York City and gone to a Jewish day school, the University of Pennsylvania, and Harvard Law School. In 1991, he was a 30-year-old corporate lawyer. “I hated it,” he says. “I hated being a lawyer. My parents worked as brokers at Oppenheimer. They managed to finagle me a job. It’s not pretty, but that’s what happened.”

He was hired as a junior equity analyst, a helpmate who didn’t actually offer his opinions. That changed in December 1991, less than a year into his new job, when a subprime mortgage lender called Ames Financial went public and no one at Oppenheimer particularly cared to express an opinion about it. One of Oppenheimer’s investment bankers stomped around the research department looking for anyone who knew anything about the mortgage business. Recalls Eisman: “I’m a junior analyst and just trying to figure out which end is up, but I told him that as a lawyer I’d worked on a deal for the Money Store.” He was promptly appointed the lead analyst for Ames Financial. “What I didn’t tell him was that my job had been to proofread the ­documents and that I hadn’t understood a word of the [obscenity deleted] things.”

Ames Financial belonged to a category of firms known as nonbank financial institutions. The category didn’t include J.P. Morgan, but it did encompass many little-known companies that one way or another were involved in the early-1990s boom in subprime mortgage lending—the lower class of American finance.

The second company for which Eisman was given sole responsibility was Lomas Financial, which had just emerged from bankruptcy. “I put a sell rating on the thing because it was a piece of [obscenity deleted],” Eisman says. “I didn’t know that you weren’t supposed to put a sell rating on companies. I thought there were three boxes—buy, hold, sell—and you could pick the one you thought you should.” He was pressured generally to be a bit more upbeat, but upbeat wasn’t Steve Eisman’s style. Upbeat and Eisman didn’t occupy the same planet. A hedge fund manager who counts Eisman as a friend set out to explain him to me but quit a minute into it. After describing how Eisman exposed various important people as either liars or idiots, the hedge fund manager started to laugh. “He’s sort of a [obscenity deleted] in a way, but he’s smart and honest and fearless.”

“A lot of people don’t get Steve,” Whitney says. “But the people who get him love him.” Eisman stuck to his sell rating on Lomas Financial, even after the company announced that investors needn’t worry about its financial condition, as it had hedged its market risk. “The single greatest line I ever wrote as an analyst,” says Eisman, “was after Lomas said they were hedged.” He recited the line from memory: “ ‘The Lomas Financial Corp. is a perfectly hedged financial institution: It loses money in every conceivable interest-rate environment.’ I enjoyed writing that sentence more than any sentence I ever wrote.” A few months after he’d delivered that line in his report, Lomas Financial returned to bankruptcy.

Eisman wasn’t, in short, an analyst with a sunny disposition who expected the best of his fellow financial man and the companies he created. “You have to understand,” Eisman says in his defense, “I did subprime first. I lived with the worst first. These guys lied to infinity. What I learned from that experience was that Wall Street didn’t give a [obscenity deleted] what it sold.”

Harboring suspicions about ­people’s morals and telling investors that companies don’t deserve their capital wasn’t, in the 1990s or at any other time, the fast track to success on Wall Street. Eisman quit Oppenheimer in 2001 to work as an analyst at a hedge fund, but what he really wanted to do was run money. FrontPoint Partners, another hedge fund, hired him in 2004 to invest in financial stocks. Eisman’s brief was to evaluate Wall Street banks, homebuilders, mortgage originators, and any company (General Electric or General Motors, for instance) with a big financial-services division—anyone who touched American finance. An insurance company backed him with $50 million, a paltry sum. “Basically, we tried to raise money and didn't really do it,” Eisman says.

Instead of money, he attracted people whose worldviews were as shaded as his own—Vincent Daniel, for instance, who became a partner and an analyst in charge of the mortgage sector. Now 36, Daniel grew up a lower-middle-class kid in Queens. One of his first jobs, as a junior accountant at Arthur Andersen, was to audit Salomon Brothers’ books. “It was shocking,” he says. “No one could explain to me what they were doing.” He left accounting in the middle of the internet boom to become a research analyst, looking at companies that made subprime loans. “I was the only guy I knew covering companies that were all going to go bust,” he says. “I saw how the sausage was made in the economy, and it was really freaky.”

Danny Moses, who became Eisman’s head trader, was another who shared his perspective. Raised in Georgia, Moses, the son of a finance professor, was a bit less fatalistic than Daniel or Eisman, but he nevertheless shared a general sense that bad things can and do happen. When a Wall Street firm helped him get into a trade that seemed perfect in every way, he said to the salesman, “I appreciate this, but I just want to know one thing: How are you going to screw me?”

Heh heh heh, c’mon. We’d never do that, the trader started to say, but Moses was politely insistent: We both know that unadulterated good things like this trade don’t just happen between little hedge funds and big Wall Street firms. I’ll do it, but only after you explain to me how you are going to screw me. And the salesman explained how he was going to screw him. And Moses did the trade.

Both Daniel and Moses enjoyed, immensely, working with Steve Eisman. He put a fine point on the absurdity they saw everywhere around them. “Steve’s fun to take to any Wall Street meeting,” Daniel says. “Because he’ll say ‘Explain that to me’ 30 different times. Or ‘Could you explain that more, in English?’ Because once you do that, there’s a few things you learn. For a start, you figure out if they even know what they’re talking about. And a lot of times, they don’t!”

At the end of 2004, Eisman, Moses, and Daniel shared a sense that unhealthy things were going on in the U.S. housing market: Lots of firms were lending money to people who shouldn’t have been borrowing it. They thought Alan Greenspan’s decision after the internet bust to lower interest rates to 1 percent was a travesty that would lead to some terrible day of reckoning. Neither of these insights was entirely original. Ivy Zelman, at the time the housing-market analyst at Credit Suisse, had seen the bubble forming very early on. There’s a simple measure of sanity in housing prices: the ratio of median home price to income. Historically, it runs around 3 to 1; by late 2004, it had risen nationally to 4 to 1. “All these people were saying it was nearly as high in some other countries,” Zelman says. “But the problem wasn’t just that it was 4 to 1. In Los Angeles, it was 10 to 1, and in Miami, 8.5 to 1. And then you coupled that with the buyers. They weren’t real buyers. They were speculators.” Zelman alienated clients with her pessimism, but she couldn’t pretend everything was good. “It wasn’t that hard in hindsight to see it,” she says. “It was very hard to know when it would stop.” Zelman spoke occasionally with Eisman and always left these conversations feeling better about her views and worse about the world. “You needed the occasional assurance that you weren’t nuts,” she says. She wasn’t nuts. The world was.

By the spring of 2005, FrontPoint was fairly convinced that something was very screwed up not merely in a handful of companies but in the financial underpinnings of the entire U.S. mortgage market. In 2000, there had been $130 billion in subprime mortgage lending, with $55 billion of that repackaged as mortgage bonds. But in 2005, there was $625 billion in subprime mortgage loans, $507 billion of which found its way into mortgage bonds. Eisman couldn’t understand who was making all these loans or why. He had a from-the-ground-up understanding of both the U.S. housing market and Wall Street. But he’d spent his life in the stock market, and it was clear that the stock market was, in this story, largely irrelevant. “What most people don’t realize is that the fixed-income world dwarfs the equity world,” he says. “The equity world is like a [obscenity deleted] zit compared with the bond market.” He shorted companies that originated subprime loans, like New Century and Indy Mac, and companies that built the houses bought with the loans, such as Toll Brothers. Smart as these trades proved to be, they weren’t entirely satisfying. These companies paid high dividends, and their shares were often expensive to borrow; selling them short was a costly proposition.

 

Enter Greg Lippman, a mortgage-bond trader at Deutsche Bank. He arrived at FrontPoint bearing a 66-page presentation that described a better way for the fund to put its view of both Wall Street and the U.S. housing market into action. The smart trade, Lippman argued, was to sell short not New Century’s stock but its bonds that were backed by the subprime loans it had made. Eisman hadn’t known this was even possible—because until recently, it hadn’t been. But Lippman, along with traders at other Wall Street investment banks, had created a way to short the subprime bond market with precision.

Here’s where financial technology became suddenly, urgently relevant. The typical mortgage bond was still structured in much the same way it had been when I worked at Salomon Brothers. The loans went into a trust that was designed to pay off its investors not all at once but according to their rankings. The investors in the top tranche, rated AAA, received the first payment from the trust and, because their investment was the least risky, received the lowest interest rate on their money. The investors who held the trusts’ BBB tranche got the last payments—and bore the brunt of the first defaults. Because they were taking the most risk, they received the highest return. Eisman wanted to bet that some subprime borrowers would default, causing the trust to suffer losses. The way to express this view was to short the BBB tranche. The trouble was that the BBB tranche was only a tiny slice of the deal.

But the scarcity of truly crappy subprime-mortgage bonds no longer mattered. The big Wall Street firms had just made it possible to short even the tiniest and most obscure subprime-mortgage-backed bond by creating, in effect, a market of side bets. Instead of shorting the actual BBB bond, you could now enter into an agreement for a credit-default swap with Deutsche Bank or Goldman Sachs. It cost money to make this side bet, but nothing like what it cost to short the stocks, and the upside was far greater.  

The arrangement bore the same relation to actual finance as fantasy football bears to the N.F.L. Eisman was perplexed in particular about why Wall Street firms would be coming to him and asking him to sell short. “What Lippman did, to his credit, was he came around several times to me and said, ‘Short this market,’ ” Eisman says. “In my entire life, I never saw a sell-side guy come in and say, ‘Short my market.’ ”

And short Eisman did—then he tried to get his mind around what he’d just done so he could do it better. He’d call over to a big firm and ask for a list of mortgage bonds from all over the country. The juiciest shorts—the bonds ultimately backed by the mortgages most likely to default—had several characteristics. They’d be in what Wall Street people were now calling the sand states: Arizona, California, Florida, Nevada. The loans would have been made by one of the more dubious mortgage lenders; Long Beach Financial, wholly owned by Washington Mutual, was a great example. Long Beach Financial was moving money out the door as fast as it could, few questions asked, in loans built to self-destruct. It specialized in asking home­owners with bad credit and no proof of income to put no money down and defer interest payments for as long as possible. In Bakersfield, California, a Mexican strawberry picker with an income of $14,000 and no English was lent every penny he needed to buy a house for $720,000.

More generally, the subprime market tapped a tranche of the American public that did not typically have anything to do with Wall Street. Lenders were making loans to people who, based on their credit ratings, were less creditworthy than 71 percent of the population. Eisman knew some of these people. One day, his housekeeper, a South American woman, told him that she was planning to buy a townhouse in Queens. “The price was absurd, and they were giving her a low-down-payment option-ARM,” says Eisman, who talked her into taking out a conventional fixed-rate mortgage. Next, the baby nurse he’d hired back in 1997 to take care of his newborn twin daughters phoned him. “She was this lovely woman from Jamaica,” he says. “One day she calls me and says she and her sister own five townhouses in Queens. I said, ‘How did that happen?’ ” It happened because after they bought the first one and its value rose, the lenders came and suggested they refinance and take out $250,000, which they used to buy another one. Then the price of that one rose too, and they repeated the experiment. “By the time they were done,” Eisman says, “they owned five of them, the market was falling, and they couldn’t make any of the payments.”

In retrospect, pretty much all of the riskiest subprime-backed bonds were worth betting against; they would all one day be worth zero. But at the time Eisman began to do it, in the fall of 2006, that wasn’t clear. He and his team set out to find the smelliest pile of loans they could so that they could make side bets against them with Goldman Sachs or Deutsche Bank. What they were doing, oddly enough, was the analysis of subprime lending that should have been done before the loans were made: Which poor Americans were likely to jump which way with their finances? How much did home prices need to fall for these loans to blow up? (It turned out they didn’t have to fall; they merely needed to stay flat.) The default rate in Georgia was five times higher than that in Florida even though the two states had the same unemployment rate. Why? Indiana had a 25 percent default rate; California’s was only 5 percent. Why?

Moses actually flew down to Miami and wandered around neighborhoods built with subprime loans to see how bad things were. “He’d call me and say, ‘Oh my God, this is a calamity here,’ ” recalls Eisman. All that was required for the BBB bonds to go to zero was for the default rate on the underlying loans to reach 14 percent. Eisman thought that, in certain sections of the country, it would go far, far higher.

The funny thing, looking back on it, is how long it took for even someone who predicted the disaster to grasp its root causes. They were learning about this on the fly, shorting the bonds and then trying to figure out what they had done. Eisman knew subprime lenders could be scumbags. What he underestimated was the total unabashed complicity of the upper class of American capitalism. For instance, he knew that the big Wall Street investment banks took huge piles of loans that in and of themselves might be rated BBB, threw them into a trust, carved the trust into tranches, and wound up with 60 percent of the new total being rated AAA.

But he couldn’t figure out exactly how the rating agencies justified turning BBB loans into AAA-rated bonds. “I didn’t understand how they were turning all this garbage into gold,” he says. He brought some of the bond people from Goldman Sachs, Lehman Brothers, and UBS over for a visit. “We always asked the same question,” says Eisman. “Where are the rating agencies in all of this? And I’d always get the same reaction. It was a smirk.” He called Standard & Poor’s and asked what would happen to default rates if real estate prices fell. The man at S&P couldn’t say; its model for home prices had no ability to accept a negative number. “They were just assuming home prices would keep going up,” Eisman says.

As an investor, Eisman was allowed on the quarterly conference calls held by Moody’s but not allowed to ask questions. The people at Moody’s were polite about their brush-off, however. The C.E.O. even invited Eisman and his team to his office for a visit in June 2007. By then, Eisman was so certain that the world had been turned upside down that he just assumed this guy must know it too. “But we’re sitting there,” Daniel recalls, “and he says to us, like he actually means it, ‘I truly believe that our rating will prove accurate.’ And Steve shoots up in his chair and asks, ‘What did you just say?’ as if the guy had just uttered the most preposterous statement in the history of finance. He repeated it. And Eisman just laughed at him.”

“With all due respect, sir,” Daniel told the C.E.O. deferentially as they left the meeting, “you’re delusional.”
This wasn’t Fitch or even S&P. This was Moody’s, the aristocrats of the rating business, 20 percent owned by Warren Buffett. And the company’s C.E.O. was being told he was either a fool or a crook by one Vincent Daniel, from Queens.

A full nine months earlier, Daniel and ­Moses had flown to Orlando for an industry conference. It had a grand title—the American Securitization Forum—but it was essentially a trade show for the ­subprime-mortgage business: the people who originated subprime mortgages, the Wall Street firms that packaged and sold subprime mortgages, the fund managers who invested in nothing but subprime-mortgage-backed bonds, the agencies that rated subprime-­mortgage bonds, the lawyers who did whatever the lawyers did. Daniel and Moses thought they were paying a courtesy call on a cottage industry, but the cottage had become a castle. “There were like 6,000 people there,” Daniel says. “There were so many people being fed by this industry. The entire fixed-income department of each brokerage firm is built on this. Everyone there was the long side of the trade. The wrong side of the trade. And then there was us. That’s when the picture really started to become clearer, and we started to get more cynical, if that was possible. We went back home and said to Steve, ‘You gotta see this.’ ”

Eisman, Daniel, and Moses then flew out to Las Vegas for an even bigger subprime conference. By now, Eisman knew everything he needed to know about the quality of the loans being made. He still didn’t fully understand how the apparatus worked, but he knew that Wall Street had built a doomsday machine. He was at once opportunistic and outraged.

Their first stop was a speech given by the C.E.O. of Option One, the mortgage originator owned by H&R Block. When the guy got to the part of his speech about Option One’s subprime-loan portfolio, he claimed to be expecting a modest default rate of 5 percent. Eisman raised his hand. Moses and Daniel sank into their chairs. “It wasn’t a Q&A,” says Moses. “The guy was giving a speech. He sees Steve’s hand and says, ‘Yes?’”

“Would you say that 5 percent is a probability or a possibility?” Eisman asked.

A probability, said the C.E.O., and he continued his speech.

Eisman had his hand up in the air again, waving it around. Oh, no, Moses thought. “The one thing Steve always says,” Daniel explains, “is you must assume they are lying to you. They will always lie to you.” Moses and Daniel both knew what Eisman thought of these subprime lenders but didn’t see the need for him to express it here in this manner. For Eisman wasn’t raising his hand to ask a question. He had his thumb and index finger in a big circle. He was using his fingers to speak on his behalf. Zero! they said.

 “Yes?” the C.E.O. said, obviously irritated. “Is that another question?”

“No,” said Eisman. “It’s a zero. There is zero probability that your default rate will be 5 percent.” The losses on subprime loans would be much, much greater. Before the guy could reply, Eisman’s cell phone rang. Instead of shutting it off, Eisman reached into his pocket and answered it. “Excuse me,” he said, standing up. “But I need to take this call.” And with that, he walked out.

Eisman’s willingness to be abrasive in order to get to the heart of the matter was obvious to all; what was harder to see was his credulity: He actually wanted to believe in the system. As quick as he was to cry [obscenity deleted] when he saw it, he was still shocked by bad behavior. That night in Vegas, he was seated at dinner beside a really nice guy who invested in mortgage C.D.O.’s—collateralized debt obligations. By then, Eisman thought he knew what he needed to know about C.D.O.’s. He didn’t, it turned out.  

Later, when I sit down with Eisman, the very first thing he wants to explain is the importance of the mezzanine C.D.O. What you notice first about Eisman is his lips. He holds them pursed, waiting to speak. The second thing you notice is his short, light hair, cropped in a manner that suggests he cut it himself while thinking about something else. “You have to understand this,” he says. “This was the engine of doom.” Then he draws a picture of several towers of debt. The first tower is made of the original subprime loans that had been piled together. At the top of this tower is the AAA tranche, just below it the AA tranche, and so on down to the riskiest, the BBB tranche—the bonds Eisman had shorted. But Wall Street had used these BBB tranches—the worst of the worst—to build yet another tower of bonds: a “particularly egregious” C.D.O. The reason they did this was that the rating agencies, presented with the pile of bonds backed by dubious loans, would pronounce most of them AAA. These bonds could then be sold to investors—pension funds, insurance companies—who were allowed to invest only in highly rated securities. “I cannot [obscenity deleted] believe this is allowed—I must have said that a thousand times in the past two years,” Eisman says.

His dinner companion in Las Vegas ran a fund of about $15 billion and managed C.D.O.’s backed by the BBB tranche of a mortgage bond, or as Eisman puts it, “the equivalent of three levels of dog [obscenity deleted] lower than the original bonds.”

FrontPoint had spent a lot of time digging around in the dog [obscenity deleted] and knew that the default rates were already sufficient to wipe out this guy’s entire portfolio. “God, you must be having a hard time,” Eisman told his dinner companion.
 
“No,” the guy said, “I’ve sold everything out.”

After taking a fee, he passed them on to other investors. His job was to be the C.D.O. “expert,” but he actually didn’t spend any time at all thinking about what was in the C.D.O.’s. “He managed the C.D.O.’s,” says Eisman, “but managed what? I was just appalled. People would pay up to have someone manage their C.D.O.’s—as if this moron was helping you. I thought, You [obscenity deleted], you don’t give a [obscenity deleted] about the investors in this thing.”

Whatever rising anger Eisman felt was offset by the man’s genial disposition. Not only did he not mind that Eisman took a dim view of his C.D.O.’s; he saw it as a basis for friendship. “Then he said something that blew my mind,” Eisman tells me. “He says, ‘I love guys like you who short my market. Without you, I don’t have anything to buy.’ ”
 

That’s when Eisman finally got it. Here he’d been making these side bets with Goldman Sachs and Deutsche Bank on the fate of the BBB tranche without fully understanding why those firms were so eager to make the bets. Now he saw. There weren’t enough Americans with [obscenity deleted] credit taking out loans to satisfy investors’ appetite for the end product. The firms used Eisman’s bet to synthesize more of them. Here, then, was the difference between fantasy finance and fantasy football: When a fantasy player drafts Peyton Manning, he doesn’t create a second Peyton Manning to inflate the league’s stats. But when Eisman bought a credit-default swap, he enabled Deutsche Bank to create another bond identical in every respect but one to the original. The only difference was that there was no actual homebuyer or borrower. The only assets backing the bonds were the side bets Eisman and others made with firms like Goldman Sachs. Eisman, in effect, was paying to Goldman the interest on a subprime mortgage. In fact, there was no mortgage at all. “They weren’t satisfied getting lots of unqualified borrowers to borrow money to buy a house they couldn’t afford,” Eisman says. “They were creating them out of whole cloth. One hundred times over! That’s why the losses are so much greater than the loans. But that’s when I realized they needed us to keep the machine running. I was like, This is allowed?”

This particular dinner was hosted by Deutsche Bank, whose head trader, Greg Lippman, was the fellow who had introduced Eisman to the subprime bond market. Eisman went and found Lippman, pointed back to his own dinner companion, and said, “I want to short him.” Lippman thought he was joking; he wasn’t. “Greg, I want to short his paper,” Eisman repeated. “Sight unseen.”

Eisman started out running a $60 million equity fund but was now short around $600 million of various ­subprime-related securities. In the spring of 2007, the market strengthened. But, says Eisman, “credit quality always gets better in March and April. And the reason it always gets better in March and April is that people get their tax refunds. You would think people in the securitization world would know this. We just thought that was moronic.”

He was already short the stocks of mortgage originators and the homebuilders. Now he took short positions in the rating agencies—“they were making 10 times more rating C.D.O.’s than they were rating G.M. bonds, and it was all going to end”—and, finally, the biggest Wall Street firms because of their exposure to C.D.O.’s. He wasn’t allowed to short Morgan Stanley because it owned a stake in his fund. But he shorted UBS, Lehman Brothers, and a few others. Not long after that, FrontPoint had a visit from Sanford C. Bernstein’s Brad Hintz, a prominent analyst who covered Wall Street firms. Hintz wanted to know what Eisman was up to. “We just shorted Merrill Lynch,” Eisman told him.

“Why?” asked Hintz.

“We have a simple thesis,” Eisman explained. “There is going to be a calamity, and whenever there is a calamity, Merrill is there.” When it came time to bankrupt Orange County with bad advice, Merrill was there. When the internet went bust, Merrill was there. Way back in the 1980s, when the first bond trader was let off his leash and lost hundreds of millions of dollars, Merrill was there to take the hit. That was Eisman’s logic—the logic of Wall Street’s pecking order. Goldman Sachs was the big kid who ran the games in this neighborhood. Merrill Lynch was the little fat kid assigned the least pleasant roles, just happy to be a part of things. The game, as Eisman saw it, was Crack the Whip. He assumed Merrill Lynch had taken its assigned place at the end of the chain.

There was only one thing that bothered Eisman, and it continued to trouble him as late as May 2007. “The thing we couldn’t figure out is: It’s so obvious. Why hasn’t everyone else figured out that the machine is done?” Eisman had long subscribed to Grant’s Interest Rate Observer, a newsletter famous in Wall Street circles and obscure outside them. Jim Grant, its editor, had been prophesying doom ever since the great debt cycle began, in the mid-1980s. In late 2006, he decided to investigate these things called C.D.O.’s. Or rather, he had asked his young assistant, Dan Gertner, a chemical engineer with an M.B.A., to see if he could understand them. Gertner went off with the documents that purported to explain C.D.O.’s to potential investors and for several days sweated and groaned and heaved and suffered. “Then he came back,” says Grant, “and said, ‘I can’t figure this thing out.’ And I said, ‘I think we have our story.’ ”

Eisman read Grant’s piece as independent confirmation of what he knew in his bones about the C.D.O.’s he had shorted. “When I read it, I thought, Oh my God. This is like owning a gold mine. When I read that, I was the only guy in the equity world who almost had an [obscenity deleted].”

On July 19, 2007, the same day that Federal Reserve Chairman Ben Bernanke told the U.S. Senate that he anticipated as much as $100 billion in losses in the subprime-mortgage market, FrontPoint did something unusual: It hosted its own conference call. It had had calls with its tiny population of investors, but this time FrontPoint opened it up. Steve Eisman had become a poorly kept secret. Five hundred people called in to hear what he had to say, and another 500 logged on afterward to listen to a recording of it. He explained the strange alchemy of the C.D.O. and said that he expected losses of up to $300 billion from this sliver of the market alone. To evaluate the situation, he urged his audience to “just throw your model in the garbage can. The models are all backward-looking.

The models don’t have any idea of what this world has become…. For the first time in their lives, people in the asset-backed-securitization world are actually having to think.” He explained that the rating agencies were morally bankrupt and living in fear of becoming actually bankrupt. “The rating agencies are scared to death,” he said. “They’re scared to death about doing nothing because they’ll look like fools if they do nothing.”

On September 18, 2008, Danny Moses came to work as usual at 6:30 a.m. Earlier that week, Lehman Brothers had filed for bankruptcy. The day before, the Dow had fallen 449 points to its lowest level in four years. Overnight, European governments announced a ban on short-selling, but that served as faint warning for what happened next.

At the market opening in the U.S., everything—every financial asset—went into free fall. “All hell was breaking loose in a way I had never seen in my career,” Moses says. FrontPoint was net short the market, so this total collapse should have given Moses pleasure. He might have been forgiven if he stood up and cheered. After all, he’d been betting for two years that this sort of thing could happen, and now it was, more dramatically than he had ever imagined. Instead, he felt this terrifying shudder run through him. He had maybe 100 trades on, and he worked hard to keep a handle on them all. “I spent my morning trying to control all this energy and all this information,” he says, “and I lost control. I looked at the screens. I was staring into the abyss. The end. I felt this shooting pain in my head. I don’t get headaches. At first, I thought I was having an aneurysm.”

Moses stood up, wobbled, then turned to Daniel and said, “I gotta leave. Get out of here. Now.” Daniel thought about calling an ambulance but instead took Moses out for a walk.

Outside it was gorgeous, the blue sky reaching down through the tall buildings and warming the soul. Eisman was at a Goldman Sachs conference for hedge fund managers, raising capital. Moses and Daniel got him on the phone, and he left the conference and met them on the steps of St. Patrick’s Cathedral. “We just sat there,” Moses says. “Watching the people pass.”

This was what they had been waiting for: total collapse. “The investment-banking industry is [obscenity deleted],” Eisman had told me a few weeks earlier. “These guys are only beginning to understand how [obscenity deleted] they are. It’s like being a Scholastic, prior to Newton. Newton comes along, and one morning you wake up: ‘Holy [obscenity deleted], I’m wrong!’ ” Now Lehman Brothers had vanished, Merrill had surrendered, and Goldman Sachs and Morgan Stanley were just a week away from ceasing to be investment banks. The investment banks were not just [obscenity deleted]; they were extinct.
 
Not so for hedge fund managers who had seen it coming. “As we sat there, we were weirdly calm,” Moses says. “We felt insulated from the whole market reality. It was an out-of-body experience. We just sat and watched the people pass and talked about what might happen next. How many of these people were going to lose their jobs. Who was going to rent these buildings after all the Wall Street firms collapsed.” Eisman was appalled. “Look,” he said. “I’m short. I don’t want the country to go into a depression. I just want it to [obscenity deleted] deleverage.” He had tried a thousand times in a thousand ways to explain how screwed up the business was, and no one wanted to hear it. “That Wall Street has gone down because of this is justice,” he says. “They [obscenity deleted] people. They built a castle to rip people off. Not once in all these years have I come across a person inside a big Wall Street firm who was having a crisis of conscience.”

Truth to tell, there wasn’t a whole lot of hand-wringing inside FrontPoint either. The only one among them who wrestled a bit with his conscience was Daniel. “Vinny, being from Queens, needs to see the dark side of everything,” Eisman says. To which Daniel replies, “The way we thought about it was, ‘By shorting this market we’re creating the liquidity to keep the market going.’ ”

“It was like feeding the monster,” Eisman says of the market for subprime bonds. “We fed the monster until it blew up.”

About the time they were sitting on the steps of the midtown cathedral, I sat in a booth in a restaurant on the East Side, waiting for John Gutfreund to arrive for lunch, and wondered, among other things, why any restaurant would seat side by side two men without the slightest interest in touching each other.

There was an umbilical cord running from the belly of the exploded beast back to the financial 1980s. A friend of mine created the first mortgage derivative in 1986, a year after we left the Salomon Brothers trading program. (“The problem isn’t the tools,” he likes to say. “It’s who is using the tools. Derivatives are like guns.”)

When I published my book, the 1980s were supposed to be ending. I received a lot of undeserved credit for my timing. The social disruption caused by the collapse of the savings-and-loan industry and the rise of hostile takeovers and leveraged buyouts had given way to a brief period of recriminations. Just as most students at Ohio State read Liar’s Poker as a manual, most TV and radio interviewers regarded me as a whistleblower. (The big exception was Geraldo Rivera. He put me on a show called “People Who Succeed Too Early in Life” along with some child actors who’d gone on to become drug addicts.) Anti-Wall Street feeling ran high—high enough for Rudy Giuliani to float a political career on it—but the result felt more like a witch hunt than an honest reappraisal of the financial order. The public lynchings of Gutfreund and junk-bond king Michael Milken were excuses not to deal with the disturbing forces underpinning their rise. Ditto the cleaning up of Wall Street’s trading culture. The surface rippled, but down below, in the depths, the bonus pool remained undisturbed. Wall Street firms would soon be frowning upon profanity, firing traders for so much as glancing at a stripper, and forcing male employees to treat women almost as equals. Lehman Brothers circa 2008 more closely resembled a normal corporation with solid American values than did any Wall Street firm circa 1985.

The changes were camouflage. They helped distract outsiders from the truly profane event: the growing misalignment of interests between the people who trafficked in financial risk and the wider culture.

I’d not seen Gutfreund since I quit Wall Street. I’d met him, nervously, a couple of times on the trading floor. A few months before I left, my bosses asked me to explain to Gutfreund what at the time seemed like exotic trades in derivatives I’d done with a European hedge fund. I tried. He claimed not to be smart enough to understand any of it, and I assumed that was how a Wall Street C.E.O. showed he was the boss, by rising above the details. There was no reason for him to remember any of these encounters, and he didn’t: When my book came out and became a public-relations nuisance to him, he told reporters we’d never met.

Over the years, I’d heard bits and pieces about Gutfreund. I knew that after he’d been forced to resign from Salomon Brothers he’d fallen on harder times. I heard later that a few years ago he’d sat on a panel about Wall Street at Columbia Business School. When his turn came to speak, he advised students to find something more meaningful to do with their lives. As he began to describe his career, he broke down and wept.

When I emailed him to invite him to lunch, he could not have been more polite or more gracious. That attitude persisted as he was escorted to the table, made chitchat with the owner, and ordered his food. He’d lost a half-step and was more deliberate in his movements, but otherwise he was completely recognizable. The same veneer of denatured courtliness masked the same animal need to see the world as it was, rather than as it should be.

We spent 20 minutes or so determining that our presence at the same lunch table was not going to cause the earth to explode. We discovered we had a mutual acquaintance in New Orleans. We agreed that the Wall Street C.E.O. had no real ability to keep track of the frantic innovation occurring inside his firm. (“I didn’t understand all the product lines, and they don’t either,” he said.) We agreed, further, that the chief of the Wall Street investment bank had little control over his subordinates. (“They’re buttering you up and then doing whatever the [obscenity deleted] they want to do.”) He thought the cause of the financial crisis was “simple. Greed on both sides—greed of investors and the greed of the bankers.” I thought it was more complicated. Greed on Wall Street was a given—almost an obligation. The problem was the system of incentives that channeled the greed.
 
But I didn’t argue with him. For just as you revert to being about nine years old when you visit your parents, you revert to total subordination when you are in the presence of your former C.E.O. John Gutfreund was still the King of Wall Street, and I was still a geek. He spoke in declarative statements; I spoke in questions.

But as he spoke, my eyes kept drifting to his hands. His alarmingly thick and meaty hands. They weren’t the hands of a soft Wall Street banker but of a boxer. I looked up. The boxer was smiling—though it was less a smile than a placeholder expression. And he was saying, very deliberately, “Your…[obscenity deleted]…book.”

I smiled back, though it wasn’t quite a smile.

“Your [obscenity deleted] book destroyed my career, and it made yours,” he said.

I didn’t think of it that way and said so, sort of.

“Why did you ask me to lunch?” he asked, though pleasantly. He was genuinely curious.

You can’t really tell someone that you asked him to lunch to let him know that you don’t think of him as evil. Nor can you tell him that you asked him to lunch because you thought that you could trace the biggest financial crisis in the history of the world back to a decision he had made. John Gutfreund did violence to the Wall Street social order—and got himself dubbed the King of Wall Street—when he turned Salomon Brothers from a private partnership into Wall Street’s first public corporation. He ignored the outrage of Salomon’s retired partners. (“I was disgusted by his materialism,” William Salomon, the son of the firm’s founder, who had made Gutfreund C.E.O. only after he’d promised never to sell the firm, had told me.) He lifted a giant middle finger at the moral disapproval of his fellow Wall Street C.E.O.’s. And he seized the day. He and the other partners not only made a quick killing; they transferred the ultimate financial risk from themselves to their shareholders. It didn’t, in the end, make a great deal of sense for the shareholders. (A share of Salomon Brothers purchased when I arrived on the trading floor, in 1986, at a then market price of $42, would be worth 2.26 shares of Citigroup today—market value: $27.) But it made fantastic sense for the investment bankers.

From that moment, though, the Wall Street firm became a black box. The shareholders who financed the risks had no real understanding of what the risk takers were doing, and as the risk-taking grew ever more complex, their understanding diminished. The moment Salomon Brothers demonstrated the potential gains to be had by the investment bank as public corporation, the psychological foundations of Wall Street shifted from trust to blind faith.

No investment bank owned by its employees would have levered itself 35 to 1 or bought and held $50 billion in mezzanine C.D.O.’s. I doubt any partnership would have sought to game the rating agencies or leap into bed with loan sharks or even allow mezzanine C.D.O.’s to be sold to its customers. The hoped-for short-term gain would not have justified the long-term hit.

No partnership, for that matter, would have hired me or anyone remotely like me. Was there ever any correlation between the ability to get in and out of Princeton and a talent for taking financial risk?

Now I asked Gutfreund about his biggest decision. “Yes,” he said. “They—the heads of the other Wall Street firms—all said what an awful thing it was to go public and how could you do such a thing. But when the temptation arose, they all gave in to it.” He agreed that the main effect of turning a partnership into a corporation was to transfer the financial risk to the shareholders. “When things go wrong, it’s their problem,” he said—and obviously not theirs alone. When a Wall Street investment bank screwed up badly enough, its risks became the problem of the U.S. government. “It’s laissez-faire until you get in deep [obscenity deleted],” he said, with a half chuckle. He was out of the game.

It was now all someone else’s fault.

He watched me curiously as I scribbled down his words. “What’s this for?” he asked.

I told him I thought it might be worth revisiting the world I’d described in Liar’s Poker, now that it was finally dying. Maybe bring out a 20th-anniversary edition.

“That’s nauseating,” he said.

Hard as it was for him to enjoy my company, it was harder for me not to enjoy his. He was still tough, as straight and blunt as a butcher. He’d helped create a monster, but he still had in him a lot of the old Wall Street, where people said things like “A man’s word is his bond.” On that Wall Street, people didn’t walk out of their firms and cause trouble for their former bosses by writing books about them. “No,” he said, “I think we can agree about this: Your [obscenity deleted] book destroyed my career, and it made yours.” With that, the former king of a former Wall Street lifted the plate that held his appetizer and asked sweetly, “Would you like a deviled egg?”
 
Until that moment, I hadn’t paid much attention to what he’d been eating. Now I saw he’d ordered the best thing in the house, this gorgeous frothy confection of an earlier age. Who ever dreamed up the deviled egg? Who knew that a simple egg could be made so complicated and yet so appealing? I reached over and took one. Something for nothing. It never loses its charm. 

 

Have you ever been addicted to something – alcohol, drugs, pornography, etc.?  Has a particular sin been very difficult for you to overcome?  If you’ve ever tried to overcome your weaknesses on your own (all of us attempt to overcome on our own at some point in our lives) – then you know how difficult it can be.  Maybe you are a recovering alcoholic who gave up drinking for a few months and thought you were free – only to have a few friends call and ask if you wanted to go out…….and you end up right where you started.

 

As you read the paragraph above – I’m willing to bet that you immediately thought of something(s) in your life that holds some degree of control over you.  Ever wonder why it is so difficult?  Just when you think you are free – something (a person, a situation, an object, an image, etc.) shows up at just the wrong time – to tempt you back into bondage.

 

The reason it is so difficult for us is because we are battling a very powerful, very evil spiritual being who looks at our lives and knows our weaknesses.  Most of us have very little, if any, knowledge of the spiritual realm – so we think that we are only battling ourselves.  If we can somehow find a way in this world to stop thinking about our weakness, stop doing evil things, stop thinking about our sins – we can get free.  Meanwhile, the devil laughs at our feeble attempts to resist his temptations.

 

So – how do we overcome such a powerful, evil being?  If you think it’s easy – the Bible is full of stories of men of God who were, at some point in their lives, overcome by our enemy.  Samson, David, Solomon, many kings of Israel – all were seduced and corrupted by Satan.  This doesn’t mean that God will not forgive us if we fail (albeit with consequences), but our goal should be to resist our enemy at all times. 

 

So – how do we do this? 

 

As always – let’s look to the words of Jesus Christ to find the answer.  Matthew 20:22 begins with the Pharisees accusing Jesus of driving out demons by the power of Satan.  Notice carefully how Jesus responds.

 

‘Then they brought him a demon-possessed man who was blind and mute, and Jesus healed him, so that he could both talk and see. All the people were astonished and said, "Could this be the Son of David?"

 But when the Pharisees heard this, they said, "It is only by Beelzebub, the prince of demons, that this fellow drives out demons."

 Jesus knew their thoughts and said to them, "Every kingdom divided against itself will be ruined, and every city or household divided against itself will not stand. If Satan drives out Satan, he is divided against himself. How then can his kingdom stand? And if I drive out demons by Beelzebub, by whom do your people drive them out? So then, they will be your judges. But if I drive out demons by the Spirit of God, then the kingdom of God has come upon you.

 "Or again, how can anyone enter a strong man's house and carry off his possessions unless he first ties up the strong man? Then he can rob his house.”’ (Matthew 20:22-29)

 Who is the strong man in the verses above?  Satan.  What we’re told here is this – if you are living according to your flesh (your sin nature) – then Satan has free reign over your life.  Regardless of what you try to do in this life to get free of the world’s hold on you – eventually you will fail because you are not living by the Spirit of God – your focus is on the world.  Without seeking the Lord’s guidance – you are trying to take on someone who is much more powerful than yourself.  Our enemy will pressure you, lean on you – until you eventually fall.  If you think it’s hard now – just wait until you become a servant of God.  As I’ve said before – Satan is a real spiritual being.  If he sees you focusing on God and His plan for you – our enemy will not simply leave you alone – you become a target.  The reason is because your focus is no longer on the world – your focus is on God.  Satan knows that once you are born again – you are going to do what God calls you to do – which will involve destroying the devil’s works. Jesus came to us to destroy the works of Satan – and He will ask you to do the same.

“Dear children, do not let anyone lead you astray. He who does what is right is righteous, just as he is righteous. He who does what is sinful is of the devil, because the devil has been sinning from the beginning. The reason the Son of God appeared was to destroy the devil's work. No one who is born of God will continue to sin, because God's seed remains in him; he cannot go on sinning, because he has been born of God.” (1 John 3:7-9)

You can’t do God’s will if you are not born again by God – because you will be constantly tossed around by the world and its ruler.  If you will not allow God to change your character into the image of His own – then you will not resist our enemy’s schemes against you.  You will eventually chase after money, alcohol, drugs, sexual immorality – any of the things that you are susceptible to – that will cause your downfall. 

The only way to overcome our enemy and find God’s plan for you is by the power of God.  If you want to overcome the evil, power spiritual being ruling over this fallen world – then you must seek the One spiritual being more powerful than your enemy.  It begins with humility.  Tired of being tossed around by the world?  Tired of having your world crash around you time and again?  You must ask God for forgiveness through His Son. You must be born again by God’s Spirit.  This is the only way to overcome the world’s grip on you.  You must allow God to change your character to match His own.  You must allow God to arm you with the spiritual weapons required to stand against our enemy.

 

“Finally, be strong in the Lord and in his mighty power. Put on the full armor of God so that you can take your stand against the devil's schemes. For our struggle is not against flesh and blood, but against the rulers, against the authorities, against the powers of this dark world and against the spiritual forces of evil in the heavenly realms. Therefore put on the full armor of God, so that when the day of evil comes, you may be able to stand your ground, and after you have done everything, to stand. Stand firm then, with the belt of truth buckled around your waist, with the breastplate of righteousness in place, and with your feet fitted with the readiness that comes from the gospel of peace. In addition to all this, take up the shield of faith, with which you can extinguish all the flaming arrows of the evil one. Take the helmet of salvation and the sword of the Spirit, which is the word of God. And pray in the Spirit on all occasions with all kinds of prayers and requests. With this in mind, be alert and always keep on praying for all the saints. (Ephesians 6:10-18)”

 

This is how you tie up the strong man who opposes you.  Do you want to understand how the Devil is scheming against you?  Do you want the ability to see and understand the spiritual world around you?  Do you want to be able to resist our enemy?  Do you truly want to be free of the world?  It starts with repentance and truly wanting to know your Creator.  You must get free of the world if you want to follow our Lord Jesus Christ and tear down the works of Satan.  Once you tie him up – you are free to rob his house.

 

“This is love for God: to obey his commands. And his commands are not burdensome, for everyone born of God overcomes the world. This is the victory that has overcome the world, even our faith. Who is it that overcomes the world? Only he who believes that Jesus is the Son of God.” (1 John 5:3-5)

 

Jesus answered, "I am the way and the truth and the life. No one comes to the Father except through me.” (John 14:6)

 

To the Jews who had believed him, Jesus said, "If you hold to my teaching, you are really my disciples. Then you will know the truth, and the truth will set you free." (John 8:31-32)

 

I received the following email this week (God’s Daily Promise).

 

jg – July 5, 2009

 

This week's promise: God will guard you from the evil one

 

Do I need to fear the devil's intrusion?

 

"But if I am casting out demons by the power of God, then the Kingdom of God has arrived among you. For when Satan, who is completely armed, guards his palace, it is safe—until someone who is stronger attacks and overpowers him, strips him of his weapons, and carries off his belongings."

Luke 11:20-22 NLT

 

The Stronger Man

 

Do not be misled: Satan is strong in power and cunning. He has laid low some of God's choicest servants because they underestimated him and overestimated themselves. Even Samson with all his strength was no match for Satan. Nor was Solomon with all his wisdom.

 

So how can you keep the devil and his buddies out of your "house"? A man stronger than the one who controls you must deliver you. Only one qualifies as stronger than Satan: Jesus Christ.

 

I want to make it clear that genuine Christians need not fear being possessed or controlled by demons; Jesus is not into a time-sharing program with Satan. The Bible tells us, "He who has been born of God keeps himself, and the wicked one does not touch him." (1 John 5:18)

 

Oh, Satan may knock on the doors and rattle the windows. He may threaten to "huff and puff and blow the house down." But he cannot enter because someone stronger has taken up residence. "Greater is He that is in you, than he that is in the world." (1 John 4:4 KJV)

 

 

I want to spend some time discussing true faith.  How do we attain a faith that will move mountains?  If you attend a Christian church today, you will hear about faith in God and faith in Jesus, but what does this really mean?  Most churches will tell you that it means that you believe Jesus died for you and that he is always with you, regardless of your present circumstances – and their discussion of faith ends there.  This is true, you must have faith in Jesus to be saved, but a true, strong, unshakable faith goes much deeper.  A true, strong faith is not a blind faith.  You may tell me that you have a strong faith that Jesus died for you, but what if you lost everything – your home, your money, all of your material wealth – would your faith remain unwavering?  What if you lost loved ones – could you remain faithful until the end?  If you are threatened because of your faith in Jesus – could you remain with the Lord? If the Lord asked you to do things to further His kingdom – things that would seem crazy to non-believers – could you do it?  Could you remain focused on Him with a rock-solid faith that was unwavering regardless of your circumstances, regardless of what happens in this world? 

How does the Bible define faith?

 

"Now faith is the substance of things hoped for, the evidence of things not seen." (Hebrews 11:1)

 

Faith is not only the substance of things we hope for, but is the evidence of things not seen.  Don’t miss this very important point.  True faith is not blind.  If you truly seek the Lord, you will be given evidence of His work in the world.  You will be given evidence that He is communicating with you.  Did Abraham, Noah, the prophets and every other person mentioned in the Bible do what they did purely on blind faith?  Of course not.  The Lord called to them and by their initial faith, were given evidence of things not seen – which strengthened their faith.  They, in turn, believed all the Lord told them.  In the end, they moved mountains by their faith, a faith strengthened by the Lord.

 

Is faith required of us?  Yes.

 

"And without faith it is impossible to please God, because anyone who comes to him must believe that he exists and that he rewards those who earnestly seek him." (Hebrews 11:6)

 

We are also given many examples of faith in the Bible:

 

"By faith Noah, when warned about things not yet seen, in holy fear built an ark to save his family. By his faith he condemned the world and became heir of the righteousness that comes by faith.

By faith Abraham, when called to go to a place he would later receive as his inheritance, obeyed and went, even though he did not know where he was going. By faith he made his home in the promised land like a stranger in a foreign country; he lived in tents, as did Isaac and Jacob, who were heirs with him of the same promise. For he was looking forward to the city with foundations, whose architect and builder is God.

 

By faith Abraham, even though he was past age—and Sarah herself was barren—was enabled to become a father because he considered him faithful who had made the promise. And so from this one man, and he as good as dead, came descendants as numerous as the stars in the sky and as countless as the sand on the seashore.

 

All these people were still living by faith when they died. They did not receive the things promised; they only saw them and welcomed them from a distance. And they admitted that they were aliens and strangers on earth. People who say such things show that they are looking for a country of their own. If they had been thinking of the country they had left, they would have had opportunity to return. Instead, they were longing for a better country—a heavenly one. Therefore God is not ashamed to be called their God, for he has prepared a city for them.

 

By faith Abraham, when God tested him, offered Isaac as a sacrifice. He who had received the promises was about to sacrifice his one and only son, even though God had said to him, "It is through Isaac that your offspring will be reckoned." Abraham reasoned that God could raise the dead, and figuratively speaking, he did receive Isaac back from death.

 

By faith Isaac blessed Jacob and Esau in regard to their future.

 

By faith Jacob, when he was dying, blessed each of Joseph's sons, and worshiped as he leaned on the top of his staff.

 

By faith Joseph, when his end was near, spoke about the exodus of the Israelites from and gave instructions about his bones.

 

By faith Moses' parents hid him for three months after he was born, because they saw he was no ordinary child, and they were not afraid of the king's edict.

 

By faith Moses, when he had grown up, refused to be known as the son of Pharaoh's daughter. He chose to be mistreated along with the people of God rather than to enjoy the pleasures of sin for a short time. He regarded disgrace for the sake of Christ as of greater value than the treasures of , because he was looking ahead to his reward. By faith he left , not fearing the king's anger; he persevered because he saw him who is invisible. By faith he kept the Passover and the sprinkling of blood, so that the destroyer of the firstborn would not touch the firstborn of .

 

By faith the people passed through the as on dry land; but when the Egyptians tried to do so, they were drowned.

 

By faith the walls of fell, after the people had marched around them for seven days.

 

By faith the prostitute Rahab, because she welcomed the spies, was not killed with those who were disobedient.

 

And what more shall I say? I do not have time to tell about Gideon, Barak, Samson, Jephthah, David, Samuel and the prophets, who through faith conquered kingdoms, administered justice, and gained what was promised; who shut the mouths of lions, quenched the fury of the flames, and escaped the edge of the sword; whose weakness was turned to strength; and who became powerful in battle and routed foreign armies. Women received back their dead, raised to life again. Others were tortured and refused to be released, so that they might gain a better resurrection. Some faced jeers and flogging, while still others were chained and put in prison. They were stoned; they were sawed in two; they were put to death by the sword. They went about in sheepskins and goatskins, destitute, persecuted and mistreated— the world was not worthy of them. They wandered in deserts and mountains, and in caves and holes in the ground.

 

These were all commended for their faith, yet none of them received what had been promised. God had planned something better for us so that only together with us would they be made perfect." (Hebrews 11:7-40)

 

I used to believe that I had a strong faith.  I believed that Jesus died on the cross, but I led my life my way and felt that since I believed in Him, I was free to do whatever I wanted since I was saved.  The truth was that I didn’t know the Lord, didn’t draw close to Him, and as a result, I felt like I was on my own in this world.  He was up there and I was down here – taking on the world myself. I didn’t invite him into my life so I would be happy when things were going well, then down when things weren’t going my way.  What does the Bible say about living our lives like this?

 

“Consider it pure joy, my brothers, whenever you face trials of many kinds, because you know that the testing of your faith develops perseverance. Perseverance must finish its work so that you may be mature and complete, not lacking anything. If any of you lacks wisdom, he should ask God, who gives generously to all without finding fault, and it will be given to him. But when he asks, he must believe and not doubt, because he who doubts is like a wave of the sea, blown and tossed by the wind. That man should not think he will receive anything from the Lord; he is a double-minded man, unstable in all he does.” (James 1:2-8)

 

I was like many believers today – double minded.  I would go to church and disregard what I learned so that I could do things my way.  I prayed occasionally, but I never really believed that God would do anything.  Everyone viewed me as a good, church-going man, but the truth was - I was not following the Lord.  As a result, I would be tossed around by the events in the world.  My faith could not stand against adversity.  I viewed trials in my life as pure hardship.  The Lord tells us that when we face adversity, we should rejoice, because our faith will be strengthened.  He will mature us spiritually through hardship – we will develop a true faith that will allow us to persevere through any circumstance.  He will bring you through valleys so that your faith can move mountains.  Two years ago I had very little faith and no Godly wisdom.  Everything changed for me with prayer and truly seeking the Lord.  Do you want true faith and true wisdom?  You must ask the Lord to come into your life and begin changing you. 

 

Let’s take a look at what Jesus had to say on the subject of faith:

 

When they came to the crowd, a man approached Jesus and knelt before him. "Lord, have mercy on my son," he said. "He has seizures and is suffering greatly. He often falls into the fire or into the water. I brought him to your disciples, but they could not heal him." "O unbelieving and perverse generation," Jesus replied, "how long shall I stay with you? How long shall I put up with you? Bring the boy here to me." Jesus rebuked the demon, and it came out of the boy, and he was healed from that moment. Then the disciples came to Jesus in private and asked, "Why couldn't we drive it out?" He replied, "Because you have so little faith. I tell you the truth, if you have faith as small as a mustard seed, you can say to this mountain, 'Move from here to there' and it will move. Nothing will be impossible for you." (Mathew 17:14-21)

‘The apostles said to the Lord, "Increase our faith!" He replied, "If you have faith as small as a mustard seed, you can say to this mulberry tree, 'Be uprooted and planted in the sea,' and it will obey you.’ (Luke 17:5-6)

 

On more than one occasion, Jesus used a mustard seed to describe faith.  The apostles asked for greater faith and Jesus replied that they only needed faith as small as a mustard seed. Why? 

 

‘Again he said, "What shall we say the is like, or what parable shall we use to describe it? It is like a mustard seed, which is the smallest seed you plant in the ground. Yet when planted, it grows and becomes the largest of all garden plants, with such big branches that the birds of the air can perch in its shade.’ (Mark 4:30-32)

 

I believe that Jesus responded in this manner to give all of us the key to greater faith.  Have you ever looked at a mustard seed?  It’s a very small seed, but it grows into a plant large enough that birds can make it their home.  In the same way, Jesus is telling us that we don’t need to start with a great faith, and if you ask for greater faith it’s not going to happen all at once.  If you initially have faith to seek Him and then continue to draw close to Him through prayer and obedience, you will eventually be given great faith as the Lord works through you and your faith grows.  If you plant this seed of faith in your life through prayer and by reading the Lord’s Word, He will grow your faith to the point that nothing will be able to shake you. 

 

In the world today, we expect things to happen now – on our timetable.  You must be prepared to do things on the Lord’s timetable.  Don’t think that you’ll pray for greater faith and then you’ll have it the very next moment (as the Apostle’s believed would happen).  The Lord will mature you over time, according to His will for your life.  You must realize that He will also use adversity to strengthen your faith.  He will bring you through tough times and then bring you out to show you that you can trust Him – regardless of the circumstances.  Whether we go through good times or bad, we must always remain close to Him.

 

How has the Lord strengthened my faith?  I’ll briefly explain some of the circumstances that have brought me to this point.  All of these things happened – I’m not nearly creative enough to invent any of this.  It all began with humbling myself and prayer.

 

As I’ve mentioned before, my life began to change in May 2005.  After 34 years of leading a lukewarm spiritual life, I began to see that I was a spiritual child – not at all mature.  After researching some events taking place in the world (), I began to sense that we were much closer to the end of this age than I thought.  I began to see that if I continued on my current path, I would never know the Lord and His will for my life because the world was my master.  I wanted to believe that I was a Godly person, but in reality, I was an enemy of God.  I was not following Him, but the world.  So, I began to pray.  I no longer wanted to be focused on the world.  I asked the Lord to come into my life and give me His purpose.  I began to see how meaningless worldly pursuits actually were and asked the Lord to use me according to his will.  I began praying everyday. 

 

After a few weeks, in addition to daily prayers, I began asking the Lord what I should pray for.  The response was immediate – wisdom, knowledge, and understanding.  I was directly told – ‘Ask the Lord the questions that enter your mind, for it has been given to you to get the answers.’  At times, it seemed overwhelming.  It was overwhelming in the sense that the truth of what was going on in the world was so vastly different from what I had been told my entire life.  For awhile, I struggled to come to terms with what was really happening and what I was being asked to do.  I was given brief glimpses into my future, but I couldn’t see how I could possibly get to that point.  Again, the answer was clear – ‘be obedient – I have never left you or forsaken you, trust in ’  Always remember, anything is possible with God – no matter how impossible it looks to you.

 

‘Jesus looked at them and said, "With man this is impossible, but with God all things are possible."’ (Mathew 19:26)

 

So, I began praying for knowledge and wisdom regarding the Lord’s prophecies.  How are events in the world today related to your Word?  Help me to understand.  Who is the true antichrist?  Who are the beasts?  What is the image of the beast?  Is the Illuminati real?  Strengthen my faith….and I prayed these things everyday.

 

In August 2005, I attended a Lionheart ministries revival at Thompson Boling Arena in called ‘Fire in the Valley’.  I spent most of the day there listening to various pastors and many different Christian musicians.  It was on this day that I first met Mike McClung and purchased a few of his CD’s on spiritual warfare.  I noticed at the end of the day, a ‘healing rooms’ ministry was being offered for those who needed physical healing.  Even though I didn’t need healing, I felt the Lord leading me to this ministry, so I signed up to attend at 4:30p.  When I arrived at , three people took me into a room that was divided into cubicles.  There were 5-6 groups of people praying.  I told the people with me that I didn’t have any problems that needed healing, but that I did want to pray for the daughter of a co-worker who was struggling with Crohn’s disease.  They took a few moments preparing themselves by praying silently and then began praying out loud….but they didn’t start with healing prayers for me or the daughter of my co-worker.

 

They started praying by telling me what the Lord was communicating to them….that I was a spiritual warrior, that the Lord was preparing me for coming battles, that I would grow strong in the Lord and stand against our enemy.  They continued this for almost 10 minutes.  The woman behind me kept removing her hands from me as if I was hot to the touch.  She asked the other two on more than one occasion – ‘do you feel that?’ At one point I began wondering if they were somehow getting their spiritual antennas crossed with someone else in the room.  I’m just an ordinary guy – I wasn’t sure I was the right material for coming spiritual ‘battles’.  At the end of these initial prayers they mentioned something that I will remember for the rest of my life – ‘someday you will come face to face with evil and evil forces, but you will stand against the enemy and will not fall because the Lord will be with you.’  It was exciting to hear and a little unnerving.  I realized that the Lord’s path for me was going to take me places I would never have chosen on my own.  I would have to trust Him completely.  I had no idea just how important this would be – but I was about to find out.

 

I continued to pray everyday and a few more days passed.  During this time I began to get the message that I needed to write down the things I had been shown and send the message to friends and family.  I also had the same recurring thoughts over and over again – ‘you’ve been successful in business, you’ve been active in your community, but in the greatest game of all, you’re standing on the sidelines.  It’s time to stop being a spectator, get off the sidelines and get in the game.’  Over and over these thoughts ran through my mind.  I believed these thoughts were mine – I have played sports my whole life – sounded like a good analogy for me.  I was about to discover that a much higher power was at work in my life.

 

So, after a few more days, my wife and I attended Church on a Sunday.  I now realize that everything that happened to me from May through August was leading up to this day.  With the Lord, timing is everything.  We dropped our kids off in the nursery and proceeded to the sanctuary.  I forgot that the UT football team was in attendance - our pastor knew the head football coach and had invited the team to church before the upcoming season started.  As a result, the sanctuary was packed.  As we walked in the door, I looked around for a couple of open seats and was stopped cold by what I saw on the two large overhead screens hanging from the ceiling at the front of the sanctuary.  In big, red block letters was written – ‘GET IN THE GAME’.

 

My mind began racing.  Was this for me?  Was our Creator sending me a message?  I couldn’t be sure.  This was all very new to me.  It sure seemed strange that the exact same message had been running through my mind for days.  I decided that the sermon and what followed would determine if this was truly a message from the Lord.  So, with anticipation, we found our seats….and I waited for the sermon to begin.

 

Our pastor began with a couple of football jokes and I started to think that maybe I wasn’t receiving a message.  This changed once he started the sermon.  Our pastor always gave good sermons, but in the four years I attended this church, I never heard a sermon on spiritual warfare.  On this day, he launched into a very serious sermon on spiritual warfare and how as Christians, we should not just spend one hour of every week in church, but fight the good fight of faith everyday.  Seek the Lord and His plan for your life.  It was a very powerful message.  My mind continued to race and as if the Lord knew I needed an exclamation point to this message, our pastor finished his sermon by saying, ‘I don’t know who this is for, but I have a message from the Lord for someone here today.’  He then paused for a few seconds.  As I sat on the edge of my chair, it seemed as if time had stopped as I focused on what he was about to say.  He then said, ‘you’re standing on the sidelines of the spiritual war being waged in the world, it’s time to stop being a spectator, it’s time to get off the sidelines and get in the game.’  The exact words that had been running through my mind for days.  I became vaguely aware of people getting up and making their way to the exits, but I remained seated – staring at the big, red letters on the overhead screens – ‘GET IN THE GAME’….and a small, quiet voice confirming that this message was for me.  It was time to write the letter.  It was time to get in the greatest game of all.

I have mentioned in previous posts that our current President (George W. Bush) and other leaders of our nation are not following the Lord.  If they are not following God, there is only one other spiritual being who is influencing them and he is our enemy.  I realize this is very difficult to believe and understand.  As always, let’s not rely on our own understanding, but seek what the Lord says on this subject.  How do we know if our leaders are following the Lord?  We hear them speak of faith (George Bush will tell you he’s a man of faith), but what are their true intentions?  How do we know if they are truly men and women of faith?  Once you have studied the Bible, it’s not hard to answer these questions.  Let’s start with a basic understanding of what separates the Godly from those who are not following the Lord:

 

“Dear friends, do not believe every spirit, but test the spirits to see whether they are from God, because many false prophets have gone out into the world. This is how you can recognize the Spirit of God: Every spirit that acknowledges that Jesus Christ has come in the flesh is from God, but every spirit that does not acknowledge Jesus is not from God. This is the spirit of the antichrist, which you have heard is coming and even now is already in the world.” (1 John 4:1-3)

 

The Bible makes it clear – those that acknowledge Jesus has come in the flesh are from God, those that do not acknowledge Jesus are not from God.  It doesn’t matter if someone claims to believe in God, if they deny Jesus came in the flesh, they are not from God.  We hear political and religious leaders proclaim a belief in God, but the Bible is crystal clear on this subject – if they do not acknowledge Jesus Christ, they are of the spirit of antichrist.  So, this is one way for us to determine if someone (leader or not), is following God.  Now, if someone does proclaim faith in Jesus, does this mean they are from God?  No.  Remember, even though there is much deception in the world, the Lord has given us all of the information we need to see through these deceptions.  Take note of Jesus’ words to us:

 

"Watch out for false prophets. They come to you in sheep's clothing, but inwardly they are ferocious wolves. By their fruit you will recognize them. Do people pick grapes from thornbushes, or figs from thistles? Likewise every good tree bears good fruit, but a bad tree bears bad fruit. A good tree cannot bear bad fruit, and a bad tree cannot bear good fruit. Every tree that does not bear good fruit is cut down and thrown into the fire. Thus, by their fruit you will recognize them.

 "Not everyone who says to me, 'Lord, Lord,' will enter the kingdom of heaven, but only he who does the will of my Father who is in heaven. Many will say to me on that day, 'Lord, Lord, did we not prophesy in your name, and in your name drive out demons and perform many miracles?' Then I will tell them plainly, 'I never knew you. Away from me, you evildoers!'” (Mathew 7:15-23)

What are we told here?  First, we are told to watch out for false prophets.  Do not let your guard down, but be aware of these people who speak lies.  Based on the Bible, anyone who does not follow Jesus Christ can be considered a false prophet.  A false prophet can be a ‘religious’ person in the world today, but the Bible’s definition of a false prophet is not limited to ‘religious’ people.  They can be political leaders who use God and His Word for their own purposes.  We are told that these false prophets come to us in ‘sheep’s clothing’, but are actually ‘ferocious wolves’.  What does this mean?  It means that they will tell us what we want to hear and appear to be doing things that are in our best interests.  They will appear to follow God and speak encouraging words.  By all appearances, they will seem friendly to us.  How can we tell their true intentions?  Jesus makes it clear – “By their fruit you will recognize them.”  Jesus is telling us that their actions and the results of these actions will give them away. Every person who follows God produces good fruit (contributing to His kingdom), those of the antichrist spirit produce bad fruit (worldly pursuits and actions).  Jesus also makes it very clear that those who do not follow the will of God will not enter the kingdom of heaven.  So, with these things in mind, let’s take a look at our leaders and the world today.

If you’ve read some of my other posts, then you know a little about secret societies and the Illuminati.  You certainly won’t hear anything about these societies and their members in the main stream media.  You won’t hear that George H. Bush, George W. Bush, John Kerry and other leaders of our nation are members of Skull & Bones and other secret societies.  You may believe that these are just like any other fraternity, but you’d be wrong.  I won’t go into details here, but let’s take a look at what it means for our leaders to be members of these organizations.

If you spend some time studying these ‘societies’, you will find that each society requires you to complete an initiation and sign on oath.  These oaths supersede any other oaths taken by these men.  Many of the initiation rituals (and other rituals) are satanic in nature.  You may be thinking – ‘What about the oath of the President of the United States?’  Yes, a secret society oath supersedes even this oath.  What does this really mean?  It means that the objectives of the ‘society’ take precedence over the objectives of our nation.  In fact, anyone belonging to these ‘societies’ will use their positions of power to further the objectives of the society above all else – including the President of the United States.  So, by his action of joining the Order of Skull & Bones, our current President has placed the objectives of a few men above everything – including our nation.  I realize that this is very difficult to believe, but it’s the truth.  Anytime the President has been asked about his membership in Skull & Bones (which has only happened a couple of times by mainstream media), his immediate response has been – ‘It’s so secret that I can’t talk about it’.  I believe this is the same line he used in his autobiography to describe his membership in Skull & Bones.  The same thing applies to John Kerry or any of our other leaders who have joined these societies.  What does the Bible say about this?  Should anyone who claims to be a faithful follower of the Lord join these societies?  Once again, the Bible is clear:

“Do not be yoked together with unbelievers. For what do righteousness and wickedness have in common? Or what fellowship can light have with darkness? What harmony is there between Christ and Belial? What does a believer have in common with an unbeliever? What agreement is there between the temple of God and idols? For we are the temple of the living God. As God has said: "I will live with them and walk among them, and I will be their God, and they will be my people."
 "Therefore come out from them
      and be separate, says the Lord.
   Touch no unclean thing,
      and I will receive you.”
 "I will be a Father to you,
      and you will be my sons and daughters, says the Lord Almighty." (2 Corinthians 6:14-18)

Again, we must look at actions, not words of those who claim to be faithful.  If our President was truly a man of God, would he yoke himself to a secretive worldly organization that practices satanic rituals?  Absolutely not! He would be repulsed by this organization.  I voted for George Bush – twice.  Being a conservative, this seemed like the right thing to do.  Given my choices, I thought George Bush would be better.  I now know that our nation has reached the point of deception that it does not matter who I vote for – Bush or Kerry – the same secret agenda would have been followed either way.

What happens when we yoke ourselves to the world and its ruler?

“They yoked themselves to the Baal of Peor
       and ate sacrifices offered to lifeless gods;

 they provoked the LORD to anger by their wicked deeds,
       and a plague broke out among them.” (Psalm 106:28-29)

If we yoke ourselves with evil and worldly pursuits, the Lord will turn away from us - with disastrous results….but the Lord is quick to forgive and will return to us if we turn away from evil.

“For I will forgive their wickedness
      and will remember their sins no more." (Hebrews 11:12)

“If we confess our sins, he is faithful and just and will forgive us our sins and purify us from all unrighteousness.” (1 John 1:9)

Whether you realize it or not, you are yoked to the world and our enemy or to Jesus Christ.  There are only two choices.  What does Jesus tell us about this?

"Come to me, all you who are weary and burdened, and I will give you rest. Take my yoke upon you and learn from me, for I am gentle and humble in heart, and you will find rest for your souls. For my yoke is easy and my burden is light." (Mathew 11:28-30)

Let’s continue with our discussion of our President.  What other actions has our President taken that are not Biblical?  We have attacked Afghanistan and Iraq.  We have briefly discussed this in previous posts, but let’s take a closer look.   Our President and the world will tell you we must kill our enemies or be killed.  What does the Bible say on this subject?

“But love your enemies, do good to them, and lend to them without expecting to get anything back. Then your reward will be great, and you will be sons of the Most High, because he is kind to the ungrateful and wicked. Be merciful, just as your Father is merciful.” (Luke 6:35-36)

Have we been merciful?  How many have died in both countries as a result of our actions?  Is this good fruit or bad?  It’s not hard to see.  These countries are no better off after our attacks because we have matched evil for evil and expected a different result.  What has happened to us as a result?  We are spending billions of dollars (putting even more stress on our national finances), many of our soldiers and Iraqi citizens continue to die and our nation has become divided. Since we have become more aggressive, full of pride and more deceitful – the world has risen up against us. 

“Dear friend, do not imitate what is evil but what is good. Anyone who does what is good is from God. Anyone who does what is evil has not seen God.” (3 John 1:11)

Don’t miss the importance of this verse.  Anyone who does evil has not seen God.

“Bless those who persecute you; bless and do not curse. Rejoice with those who rejoice; mourn with those who mourn. Live in harmony with one another. Do not be proud, but be willing to associate with people of low position. Do not be conceited.“

“Do not repay anyone evil for evil. Be careful to do what is right in the eyes of everybody. If it is possible, as far as it depends on you, live at peace with everyone. Do not take revenge, my friends, but leave room for God's wrath, for it is written: "It is mine to avenge; I will repay," says the Lord. On the contrary:
   "If your enemy is hungry, feed him;
      if he is thirsty, give him something to drink.
In doing this, you will heap burning coals on his head." Do not be overcome by evil, but overcome evil with good.” (Romans 12:14-21)

The Lord tells us not to respond to evil with evil.  Respond with love and kindness.  Leave judgment to the Lord for He alone is a righteous Judge.  If you respond with evil, you are traveling down the same dark paths as your enemies…..with the same results.

We are repeatedly told by the leaders of our nation (President included) that we must respond to threats (terrorism or others) with force.  Arrogance and pride flow from Washington D.C.  Anyone who has experience in politics knows that our current system has become corrupt.  What we hear in the news (bribery, adultery, power, pride, etc) is only a tiny fraction of what is actually going on.  How long can this continue?  Our leaders do not tell us what we need to hear, but what they think we want to hear.  Everyone seems to be in this game to see what they can get for themselves – wealth, power, etc.  We have become so corrupt that we don’t even know what the truth is….yet the truth never changes.

“Woe to those who call evil good
       and good evil,
       who put darkness for light
       and light for darkness,
       who put bitter for sweet
       and sweet for bitter.

 Woe to those who are wise in their own eyes
       and clever in their own sight.” (Isaiah 5:20-21)

The Lord makes it clear how to tell who is following Jesus Christ and is led by His spirit and who continues to follow their sinful nature.  As you read the verses below, think about the leaders of our country.  Are they following the Lord’s spirit or are they following their sinful nature? In addition, as you read these verses ask yourself who is leading you.

“So I say, live by the Spirit, and you will not gratify the desires of the sinful nature. For the sinful nature desires what is contrary to the Spirit, and the Spirit what is contrary to the sinful nature. They are in conflict with each other, so that you do not do what you want. But if you are led by the Spirit, you are not under law.

The acts of the sinful nature are obvious: sexual immorality, impurity and debauchery; idolatry and witchcraft; hatred, discord, jealousy, fits of rage, selfish ambition, dissensions, factions and envy; drunkenness, orgies, and the like. I warn you, as I did before, that those who live like this will not inherit the kingdom of God.

But the fruit of the Spirit is love, joy, peace, patience, kindness, goodness, faithfulness, gentleness and self-control. Against such things there is no law. Those who belong to Christ Jesus have crucified the sinful nature with its passions and desires. Since we live by the Spirit, let us keep in step with the Spirit. Let us not become conceited, provoking and envying each other. (Galatians 5:16-26)

Think about what we’re told by leaders of our nation – some say that abortion is ok (even though the Bible does not differentiate from a child inside or outside the womb), some say that homosexuality is an appropriate lifestyle (even though the Bible tells us otherwise), killing others is ok as long as it’s approved by our leaders (contrary to the Bible), and we’re told countless lies on a daily basis regarding our nation’s motives for the Patriot Act, Military Commissions Act and the wars in Afghanistan and Iraq.  All of these things are happening because our nation is going its own way and has turned away from God.  We are following worldly plans and desires and allowing our pride to cloud our vision.

“The highway of the upright is to depart from evil;
      He who keeps his way preserves his soul.
Pride goes before destruction,
      And a haughty spirit before a fall.
Better to be of a humble spirit with the lowly,
      Than to divide the spoil with the proud.” (Proverbs 16:17-19)

Does our President seem humble or full of pride?  It’s rare to hear any of our leaders in Washington D.C. speak with humility.  It has become a rare commodity in today’s world.

So, if we add up just a few things that our President has done (war on terror, Patriot Act, Military Commissions Act, Skull & Bones, wars in Afghanistan & Iraq, push for a North American Union), we see a man whose actions speak louder than his words.  Jesus warned us about people like this and unfortunately, many of our current leaders fit this mold.  You might say that our President is Pro-Life and that points to faith.  The problem is that you are either of God or not of God.  We’re never told in the Bible that it’s ok to do some evil if you do some good.  You are either one or the other, not both.  My belief is that the President is pro-life because he is a Republican, and to be elected as a Republican, he had to be pro-life.  This may sound harsh, but I don’t believe that the President really cares about abortion.  Anyone who could give orders that resulted in the deaths of thousands of Americans and tens of thousands of Iraqis does not place a high value on life.  If you are truly a child of God, then all life is precious to you.

The next time you hear one of our leaders speak, or listen to Presidential candidates in a debate, remember these words from Jesus.  When asked a question, how do they respond most of the time?  Do they give a straight, honest answer or do they use deceptive words in an attempt to tell us what they think we want to hear?  The question we must ask is – do they even care about the truth?  Do they uphold God’s truth above all else or are they chasing after their own goals and agendas?  Once you read the Bible, it’s very easy to discern their motives.  If they are after power and glory for themselves and use deceptive tactics to attain these goals – who are they listening to?  The verse below gives us the answer. 

“Simply let your 'Yes' be 'Yes,' and your 'No,' 'No'; anything beyond this comes from the evil one.” (Mathew 5:37)

If you are reading this blog and are part of the Illuminati, these words have been given for you:

"This is what the LORD says—
       your Redeemer, who formed you in the womb:
       I am the LORD,
       who has made all things,
       who alone stretched out the heavens,
       who spread out the earth by myself,

who foils the signs of false prophets
       and makes fools of diviners,
       who overthrows the learning of the wise
       and turns it into nonsense,

who carries out the words of his servants
       and fulfills the predictions of his messengers,
       who says of Jerusalem, 'It shall be inhabited,'
       of the towns of Judah, 'They shall be built,'
       and of their ruins, 'I will restore them,' (Isaiah 44:24-26)

O LORD, the God who avenges,
       O God who avenges, shine forth.

 Rise up, O Judge of the earth;
       pay back to the proud what they deserve.

 How long will the wicked, O LORD,
       how long will the wicked be jubilant?

 They pour out arrogant words;
       all the evildoers are full of boasting.

 They crush your people, O LORD;
       they oppress your inheritance.

 They slay the widow and the alien;
       they murder the fatherless.

 They say, "The LORD does not see;
       the God of Jacob pays no heed."

 Take heed, you senseless ones among the people;
       you fools, when will you become wise?

 Does he who implanted the ear not hear?
       Does he who formed the eye not see?

 Does he who disciplines nations not punish?
       Does he who teaches man lack knowledge?

 The LORD knows the thoughts of man;
       he knows that they are futile.

 Blessed is the man you discipline, O LORD,
       the man you teach from your law;

 you grant him relief from days of trouble,
       till a pit is dug for the wicked.

 For the LORD will not reject his people;
       he will never forsake his inheritance.

 Judgment will again be founded on righteousness,
       and all the upright in heart will follow it.

 Who will rise up for me against the wicked?
       Who will take a stand for me against evildoers?

 Unless the LORD had given me help,
       I would soon have dwelt in the silence of death.

 When I said, "My foot is slipping,"
       your love, O LORD, supported me.

 When anxiety was great within me,
       your consolation brought joy to my soul.

 Can a corrupt throne be allied with you—
       one that brings on misery by its decrees?

 They band together against the righteous
       and condemn the innocent to death.

 But the LORD has become my fortress,
       and my God the rock in whom I take refuge.

 He will repay them for their sins
       and destroy them for their wickedness;
       the LORD our God will destroy them.

(Psalm 94)