Core beliefs and values are being challenged across the globe. With such a major change of direction happening, where are we headed?
The following are the five major events that will likely define our immediate future and impact world affairs for the foreseeable future. These are listed in the sequence they occurred, not necessarily the sequence of importance or impact:
1. China stock market crashes
2. Falling energy prices
3. Russian military intervention into the Middle East
4. Paris and San Bernardino terrorist attacks
5. The Trump candidacy
We will look at each of these for the message they have, but first we will briefly discuss the most basic change factor in world affairs—initiative. In military operations and world affairs, having the initiative is necessary for success. The one with the initiative can control the battle or geopolitical situation, requiring their opponent(s) to react to them rather than the other way around.
Therefore, those with the initiative have a major advantage in the confrontation. For this reason, the most important factors to look for to discern the nature of events and where they are heading are:
- Who has the initiative
- What are their intentions or goals
- What are their resources and strategies for sustaining the initiative
Now we'll look at each of the five events having a major impact on the world and their potential consequences:
1. The China stock market crash. China's economic growth has been a key factor impacting the world economy this century. Without it, the recovery after 9/11 or the crash of 2008 would have been more difficult if not impossible. China is now one of the biggest economic forces in the world, rivaling the impact of both the U.S. and Europe.
On June 12, 2015, The Shanghai Index lost one-third of its value. It rebounded, but this began the most turbulent volatility of a major market possibly in modern times, even eclipsing the 1929 crash. Understanding its cause and impact on the world economy is important for understanding what we can expect the world economy to do in the foreseeable future.
One report estimated that 100,000,000 Chinese investors were virtually wiped out in a day. Many more than this number were also severely hurt by this crash. The Chinese economy had produced more millionaires and billionaires and created and expanded a middle class more quickly than any economy in history. It delivered more people out of poverty in a shorter time—a truly remarkable achievement.
China also created a huge number of consumers who drove industry around the world. The June crash, dramatic recovery and then a worse crash over a few-week period unnerved more than the Chinese—it alarmed everyone who understood the interconnection of world economics. This will no doubt majorly impact the rapid growth of the Chinese's purchasing of the world's goods, with huge ramifications.
The Western media hardly covered this remarkable event, possibly because only about 1.5 percent of Chinese stocks are held outside of China. Another reason is China's control over its media. In the free media, panic can be created and driven by the media. China clamped down on their media, likely preventing a far worse catastrophe. They also quickly shut down trading by major companies and stockholders.
This strategy can work in the short term, but the lack of transparency also breeds suspicion, long-term concern or fear that can hurt a free market even more. The Chinese leadership is smart enough to know this, but the potential for catastrophe in the short term was so great, they felt they had to take drastic measures.
Chinese authorities blamed the crash on rumors and fear mongering. If true, fear and rumors will be a continuing problem for the Chinese without transparency. Their markets stabilized because of the controls, but when those controls were lifted a little, the markets fell another 40 percent. They've recovered some, but the factors that initiated these shockwaves have not been addressed—the lack of transparent accounting and the true value of their currency, the Yuan, that was arbitrarily set by the government.
Although it's impressive how well the Chinese government handled the crash without prior experience in anything like this, the IMF's recent decision to designate the Chinese Yuan a reserve currency seems to be more political than economic. This was likely a move to help stabilize the Yuan, but this too could have a destabilizing effect on other world currencies—we'll see.
It is no secret that the Chinese would like to see their currency replace the dollar as the world's top reserve currency. Even with their problems, they are headed that way because of the over-regulation and over-taxation shackling the U.S. economy.
This will not likely bode well for the U.S. dollar or economy. The potential effect of the Chinese market turmoil to destabilize the rest of the world is substantial. Again, Chinese economic growth, and the creation of such a huge middle class and consumer base, may be the single biggest factor sustaining the world economy after the 2008 crash. Basic economic indicators point to increasing weakness in the world economy at a time when one of its biggest economic engines, China, will slow down.
A slide into a recession in 2016 not only looks possible, but seems inevitable. The recovery since 2008 would not likely exist with China, and it has still only been a shallow, weak recovery. Now the world cannot count on growing Chinese consumption to bail them out.
The turmoil in China will impact the world economy negatively by slowing its consumer spending. At the same time, China is seizing the initiative to become the world's reserve currency, giving them increasing leverage over the world economy. This is not the result of strength in their economy as much as Chinese leadership and decisiveness. As Donald Trump accurately pointed out, "Their leaders have been smarter than ours."
Without a major change in U.S. economic policy, China is in the best position to take and hold the initiative in world economics for the foreseeable future. This is happening in spite of the fragile nature of the Yuan. Chinese equity markets have more to do with the incompetence of U.S. and European economic leadership than brilliance on the part of the Chinese. That China has seized the initiative in the world economy after suffering such dramatic turmoil in its own economy is a clear indication of the kind of jeopardy the world economy is in.
2. Falling energy prices. Along with the growth of Chinese consumerism, falling energy prices have been a major driver of the world's economy in recent times. The effect has been like having a trillion-dollar stimulus infused into the U.S. and EU economies each year. Combined with "Quantitative Easing" (QE), the artificial dumping of almost another trillion dollars into the economy each year, the U.S. economy is just barely inching along, indicating how gummed up the works are in our economic engine.
Falling energy prices may have bought us more time to fix serious issues in the economy, but without decisive leadership that will actually fix things, we will inevitably suffer the worst economic disaster in our history. Falling energy prices are mostly the result of falling demand for energy, a sure sign that much the world's economy is weakening.
3. Russian intervention in the Middle East. Russia's economy has been devastated because it is a petroleum-based economy, and falling energy prices have it near collapse. However, Putin has emerged as the most decisive world leader. He has seized initiative in world affairs and become a major player in world economics.
Putin's move into the Middle East was not just about propping up the Assad, a man Putin has shown disdain for, in Syria. Neither is his alliance with Iran the result of his love for that regime. He has brilliantly positioned Russia to use both of them in a bold move to threaten Saudi Arabia and the other oil producers in the region. This will drive up oil prices, thereby saving the Russian economy.
This is bold and brilliant, and a decisive man such as Putin will likely carry it out. The recent shooting down of a Russian plane by Turkey gave him more cards to play. Cutting off Russian tourism to Turkey can devastate that country's economy. It also has the potential to create major turmoil in NATO, ultimately securing the Russian southern flank by bringing a capitulating Turkey under Russian control. Putin is smart enough to play the cards he's dealt, and it's not likely the Russian/Turkish crisis will go away until Putin has gained a great deal.
Another factor is that almost all NATO countries are dependent on Middle Eastern oil. If Putin is ambitious (and he seems to be), he could break up NATO and bring many of the nations under Russian influence. This would force the E.U. to stand down and not interfere in his actions against Ukraine or other former Soviet states while freeing him for other adventures.
America alone has the power to counter Putin, but his decisiveness combined with the ineptness of American leadership could not be setting the tables better for him. The U.S. and Canada could now be producing enough energy to support the E.U. so that it does not have to depend on Saudi Arabia or Russian energy sources, strengthening NATO at a time when it is increasingly needed. Policies such as killing the Keystone Pipeline could have bad consequences. At the very least, this will likely prove a major missed opportunity strategically.
Expect energy prices to rebound in 2016, though they could drop even more before this happens because of the weakening world economy. When they start back up, they could return to previous levels faster than they fell. This will be like a reverse of the stimulus at the worst time for Western economies, wreaking economic havoc on the U.S., the EU and many other countries.
Russia does not need energy from outside sources, but they do need the price of energy to go up. China is desperate for dependable and cheap energy. They did not join Putin's Middle East adventure without a purpose. China will likely soon have virtual control over Saudi Arabia as part of this deal.
Understanding the power of the Russian/Chinese alliance combined with weak American resolve has much of the world looking to Russia and China for leadership. The end result could be the worst economic disaster in history for the U.S. and the EU At the same time, Russia can get back on its feet economically and China will be the most powerful economic force in the world as the stable source of cheap energy (for them).
Together, Russia and China are systematically and effectively seizing the initiative in the world economy, and by that world affairs. No other leadership in sight can counter it. This is the extraordinary geopolitical shift now taking place. Its implications are as far reaching as the fall of the Iron Curtain, but this time to the advantage of the former communist states. This leads us to the fourth factor to have a major impact on the trajectory of world affairs.
Tune in Wednesday for finale of this two-part series.
Rick Joyner is the founder and executive director of MorningStar Ministries and Heritage International Ministries and is the senior pastor of MorningStar Fellowship Church. He is the author of more than 40 books, including The Final Quest, A Prophetic History, and Church History. He is also the president of The OAK Initiative, an interdenominational movement that is mobilizing thousands of Christians to be engaged in the great issues of our times, being the salt and light that they are called to be. Rick and his wife, Julie, have five children: Anna, Aaryn, Amber, Ben and Sam.
For the original article, visit morningstarministries.org.
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