III Timothy

This blog is dedicated to helping youth pastors and young pastors improve their congregations and groups, and to provide analysis of world events. Brought to you by oddparts.com, the Christian Source for Bulk Inkjet Ink and Toner Refills.

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Location: The Warehouse, Ohio, United States

Our primary writer is a weatherbeaten veteran of the Rodent Wars, where he became highly decorated for the destruction of many vicious rodents. Now that he is retired, he sneaks onto his blog every night and writes about world events.

Wednesday, June 18, 2008

Oil, Credit, and the Economy

As I write this, oil is now just under $140 per barrel. The credit crunch is slowly moving through the economy, and layoffs are beginning to happen at an ever increasing rate. Another round of sanctions is expected toward Iran - if not war. Iran has just withdrawn $75 billion from Europe. The dollar continues to fall. Food prices are doubling around the globe. What is in store for us in the near future?

My view is that we are headed toward a speculative peak in oil over the next 6 months, driven largely by Iran's manipulation of oil prices through saber rattling. The Iranians make considerable profit by appearing belligerent and uncooperative; everytime the Iranian President makes a statement against Israel, oil prices go up. And that is what I believe is truly driving the upward push in oil prices: wise speculators expect that there will be a nasty Iranian war sometime in the next two years. The Russians are willing to cooperate with this psychological game, for it increases Russian power and profits also.

The effect of this oil runup is predictable. Millions of American, European, and Japanese workers will lose their jobs over the next two years. The effect upon China is less predictable. If China continues to subsidize oil prices, they will experience continued growth and gains in marketshare, but at a tremendous cost in fuel subsidies. If China allows gasoline and Diesel prices to rise, they may experience substantial social unrest as the impact leads to layoffs and squeezes farmers and city workers alike. If China merely freezes gasoline and Diesel prices without subsidizing their oil companies, then they will experience shortages, once again leading to unrest. Of course, all of China's subsidies may be in vain if the American and European slowdown leads to a substantial cut in Chinese exports. A round of layoffs in America means more people on unemployement. But a round of layoffs in China can mean starvation and major social upheaval.

What should the average person do?

1) I would begin to plan for a combination of high fuel prices and a layoff.
2) If you can afford to, purchase a new or slightly used high-mpg car when this summer's sales begin.
3) Look at saving money immediately by biking or walking to work. If you can, work from home. If you have the option, transfer to a job closer to home. This is particularly true if you work in an industry with many similar jobs such as teaching, medicine, food service, or retailing.
4) Start saving money now by looking at sales and buying in bulk. 25 pounds of rice is still a great buy and can feed a family of four for nearly a month.
5) If you haven't done it yet, start refilling your printer cartridges. $35 can buy enough ink to refill a common cartridge 15 times, whereas buying the new cartridges would cost you over $400.
6) Change from air conditioning to fans; from heating to sweaters.
7) Buy two tomato plants, plant them in pots, and move them indoors when the frost comes. Sell the extra tomatoes to your neighbors.
8) If you have space, go to Lowe's or Home Depot, buy a grape vine or two and plant them. Next year you will have grapes.
9) If you have space, plan a garden for next spring. Tilling the soil this year will make a tremendous difference for next spring. Buy some Roundup and kill the grass in your target area this fall. After a week, turn over the soil with a spade or borrow a rotatiller. A 10 x 40 foot plot of land can make a big difference to your food bills next summer. There are dozens of sources online for fruit and vegetable growing advice - for example, put into Google "growing tomatoes" or "planting grapes".
10) Join a church. A church can be a tremendous source of support in times of need.

Tuesday, May 20, 2008

The Best Movie I have ever Seen

The second installment of the Narnia series from Walden Media - Prince Caspian – is simply the best movie I have ever seen. Of course, it helps if you understand the back story that is The Lion, the Witch, and the Wardrobe, the blockbuster release from 2005.

In the first movie, a group of four London children are sent to the countryside to live with a kindly old professor in his huge house during the Bombing of London in 1941. While they are there, they discover a door into another world, the world of Narnia where animals talk and trees dance. In the first movie, the children help deliver the world from the wicked Ice Queen who has kept the world frozen for a hundred years. They also meet Aslan, who is the rightful ruler of Narnia – a Christ-like figure.

The author of the Narnia stories is C.S. Lewis, the Oxford professor who also delivered some of the most powerful defenses of Christianity in the 1940’s and 1950’s. Lewis said that he had considered that IF there were a world such as Narnia, and IF Christ chose to come to that world, then He surely would have come as the great lion, Aslan. And the first movie is a wonderful story of sin and salvation, of the cost of sin and the victory found when a person willingly gives His life for another.

In the current installment, the children find a new way back to Narnia. This story focuses upon the rewards for having faith and the consequences of losing that faith and relying too much upon our own swords. For me, the peak of the movie came when one little girl stands in front of an entire evil army, supported solely by her faith.

See the movie – take your kids and your parents. And while you are watching it, think about whether you really have faith -- or not.

Tuesday, May 6, 2008

Oil Pricing Driven by Pundits

As of today the price of oil is exceeding $120 per barrel. It is tempting to blame this completely on the greed of the oil companies. But, if this is such a profitable business, then why aren't people starting up new oil companies to provide cut-rate gasoline to everyone. I know that I would surely buy at a station that sold gasoline just 10 cents cheaper than the other stations. But the real causes of the high price of oil and of gasoline are much more complex.

First of all, we have the supply of oil. Bringing large new flows of oil into our system is a decade-long process. First, people have to explore for oil using seismic sensing and the other tools of the geologist. Then, test wells must be drilled to determine if there really is oil in suspected fields. Then, multiple wells must be drilled. If this is near an existing field in a developed area, this may not be a problem. But increasingly new oilfields are located in remote areas on land, in the Artic, and at sea. In these cases, not only must the wells be drilled, but roads must be created, pipelines laid, huge drilling platforms must be built (which takes years) and permits must be secured (which may never come.) The process of developing oil for the market takes years and years.

Then, we have demand. Both India and China's economies have hit a critical point in the last 5 years. Both of these huge countries have reached the point where there has been a surge in the membership in the middle class. No longer do people in these countries live a rural, subsistence existence. Instead, manufacturing and service jobs are multiplying at double-digit rates, bringing hundreds of millions of people to the point where they can afford modern Western-style homes, electrical appliances, and cars.

And it is not only China and India. Brazil is rapidly growing. Russian is turning the corner. Turkey is modernizing. Iran is modernizing. Korea is now a full member of the Internet Age, with a standard of living nearly equal to Japan. The other "Tigers" of Asia - Singapore, Malaysia, Thailand, Taiwan, Hong Kong, and the Phillipines - are nearly completely integrated into the world economy. Mexico is moving forward rapidly, and the Arab states are now building the world's tallest buildings. Vietnam is coming out of its isolation. The Third World is rapidly shrinking as more and more countries become workshops for other countries. And the effect is a tremendous growth in the demand for consumer goods, good food, and energy.

Oil demand is pushing supply. Formerly, Saudi Arabia had a surplus of some 4 million barrels a day capacity. Now, that surplus is measured in hundreds of thousands of barrels a day. But there is an even more important cause of this price rise.

When Europe finally developed a single currency a few years ago, it had a tremendous impact upon the costs of moving goods and services from country to country inside Europe. Suddenly, the cost to the French of buying German products dropped by 5 to 10 % because there was no longer any direct costs to exchanging money - or the indirect accounting costs associated with it. Similarly, French products became cheaper in Germany and the same scenario was played out throughout Europe. Spanish businesses expanded into Italy. Dutch businesses moved into France. American businesses with a toehold in Europe decided to put on a big push. Germans bought luxury homes in Spain. The price of real estate soared. And investors worldwide began to invest in European companies and move their money away from American companies.

To attract investors, American companies began to pay higher prices on their corporate bonds. This effect on interest rates led banks to increase their rates, particularly on variable rate mortgages. The early rise in gasoline prices hit about the same time. People began to default. Investors moved their money out of mortgage-backed securities. The housing market began to slow. Investors now had another reason to move their money to European investments.

The dollar began to fall rapidly in value. Slowly at first, then rapidly, the dollar was able to buy less. This also applies to oil. Now, the supply and demand equation for oil isn't that important. Instead, the value of the dollar is more important. And as the rising price of oil slows down the US economy, interest rates continue to fall in the US, making investments in Europe more and more attractive. When will it end?

This sort of swing has happened before. However, with the spread of the Internet and sources such as the Drudge Report, Bloomberg, and the ability of Americans anywhere to read the Financial Times, the oil market has become a roller coaster, driven by rumors and emotion. And thus, the only way that things will change is for the emotion to change.

Around the end of April, it looked like the Fed and others were making a concerted effort to change the emotions. Predictions were being made of the immediate rise of the dollar. But to no avail. When will the dollar turn?

It may be years.

Sunday, December 9, 2007

The Golden Compass

The opening flop of the expensive fantasy epic, The Golden Compass, is a big embarrassment for New Line Cinema. New Line had learned a lesson: Big, epic, fantasy movies are big hits at the box office and can be made with big budgets - in this case $180 million. Unfortunately for New Line - but fortunately for the case of Truth - the real lesson that New Line should have learned and is now painfully learning is that content matters and parents are not stupid.

All studio executives should learn this lesson: Big, epic, fantasy movies are big hits at the box office - when they have a strong Christian theme of lostness and redemption.

Here's looking forward to Prince Caspian...

Monday, November 5, 2007

Chinese Stockmarket

The Chinese Stock Market is too high.A famous Chinese curse is "May you live in interesting times". The recent (article) runup in shares of Chinese oil giant PetroChina underscores the problems with maintaining currency controls while a country is a large net exporter. The oil giant is as of this writing valued at more than 2 and a half times the market value of Exxon-Mobil, yet has essentially equivalent oil reserves and one-quarter the revenue.
By rational standards, PetroChina should be valued somewhat less than Exxon-Mobil. Yet it is valued much higher. Why is this so?
The reason is that China is awash with dollars that have no place to be invested. Although currency controls have been relaxed to allow individual Chinese to invest in the Hong Kong stockmarket in a limited way ($50,000), flows of funds to the USA and other countries are still highly limited.
This was brought home to me this spring when a Chinese student friend of mine wanted to buy a car. Although he had access to large amounts of money in China, it was very difficult for him to receive the $10,000 he needed to buy a slightly used car here in America. And herein lies the huge, looming problem for the Chinese government.
The Chinese border has become a sort of semi-permeable membrane. Dollars can flow into the country, but not out of the country. Thus, the country continues to hold onto this huge and growing number of dollars, perhaps because there are those who hold to the old mercantilist idea that currency makes a country rich and strong. Soon, perhaps very soon, the Chinese will find that money is like manure: It does no good to keep it in your barn. You must spread it around to reap its benefits.
Basic macroeconomic theory states that under normal conditions, an efficient producing country will receive currency from a positive export balance. However, these gains will be self-correcting as the profits become re-invested through importing equipment, and through purchasing assets or luxuries from other countries. If the country does not want to or is incapable of sending the currency back across the border, then the exchange rate will move, weakening the trading partner's currency - in this case the dollar - and strengthening the exporter's currency - the yuan.
However, China has also chosen to control this safety valve, intentionally holding the yuan weak versus the dollar. And like any safety valve that is held closed, there can be difficult consequences. In the next year or so, this will likely lead to problems in the Chinese economy.
With all the riches floating around the Chinese economy, Chinese investors are expanding production at a dazzling rate. This is good. However, the Chinese's ability to expand production has now begun to exceed their ability to expand their world market share. In other words, they can't sell this production capability fast enough. Everyday, I have Chinese companies contacting me, looking for another customer for essentially the same goods that I can buy from 20 other Chinese companies. Because we simply can't use their production, individual company owners are now putting their profits into investments where they can't be active players: They are investing in the Shanghai stock market.
Rapidly rising share prices has led to a classic speculative bubble as everyone now looks at the tremendous returns that have been generated. When PetroChina offered shares, they were oversubscribed at a rate of 50:1. Imagine an oil company with a 55:1 valuation! That is almost equal to Google's valuation. This bubble, like all bubbles, will soon burst. And there will be tremendous social penalities to pay throughout China as the newly rich loose their riches.
For the other place the money has flowed to is to the purchase of those goods that Chinese think of as luxuries (and the Western consumers think of as ordinary goods). Autos, homes, dishwashers, computers, cell phones, and Internet access are being sold at a torrid pace in China, resulting in a double-digit inflation rate. And as that inflation booms, wages are also inflating. Soon, very soon, the historic Chinese labor cost advantage will be gone and those wonderful export orders will no longer be placed in SE China, but will instead flow to Bangladesh, Vietnam, and Indonesia. Oh, yeah! It's already happening.
Goods inflation combined with a booming, speculative stock market. Reminds me of the 1920's. If I were invested in China or depended upon a stable Chinese supplier base for my livelihood, I'd be looking for the exits. For it is only a matter of time now until the bubble bursts, resulting in loan defaults and thousands of shut factories with the resulting unemployment of millions of people.
Does China have a hope of surviving this crisis? Only if the authorities take quick action to relax currency controls and free the exchange rate. But I fear that the situation may have already passed the point of no return. Pray for China and the Chinese people. Interesting times are soon to be upon them.

Friday, July 20, 2007

Summer Breaks?

At many churches we've attended, we've noticed that the habit of the church is to take a break from many church activities during the summer. The choir stops performing; the Bible studies stop meeting.

When I've asked "why?", I usually get an answer something like this:
"Nobody wants to come in the summer."
"We need a break."
"Attendance is down during the summer."

Undoubtedly this is so. But I've also seen this become a self-fulfilling prophecy. When you cut out the normal routine for the summer, you send the message that summer services are optional, that Bible studies are optional. Your average attendance will naturally fall as people begin to go to the lake rather than go to church. Unfortunately, some of those people won't return in September.

But what else can you do?

Take advantage of the fact that many people have extra time during the summer. School children and schoolteachers are not working their normal routine, so many extra activities can be scheduled.

Consider this:
  • In addition to the normal Vacation Bible School, have special weekday sessions for the children. Let one person teach handbells to the kids - let another work up a really good kids musical program. Add an ongoing kids class one day a week to prepare for first communion or for baptism.
  • Have a Mother's day out program for the Mothers.
  • Pull together a woman's chorus just for the summer composed of those that can meet during the day.
  • Invite in students from a local Christian college or seminary to handle services.
  • Schedule traveling Gospel groups.
  • Add a regular Christian movie night on a weekday evening during the summer. Take a classic movie, introduce it, watch it, and talk about it.

In short, change your program, but keep up attendance through new and creative ideas!

Thursday, July 5, 2007

Getting Some Excitement in a church

The first thing that is needed in a Congregation is excitement. The people need to have a sense that there is a strong purpose for coming to the church. And the biggest, easiest way to get excitement in a Congregation is to let people know the good things that are happening in their friends lives.

In many small churches and groups, the first order of business is "prayer requests." The next thing we hear is a list of cancers, heart attacks, car wrecks, and other physical problems recited by members. What a way to enliven a service! Start with a bunch of people who have been happily talking to each other and remind them of how bad things are!

In good churches, we start a bit differently. The first order of business is "Tell us what good things you have to be thankful for this week!" Encourage a recitation of birthdays, anniverseries, sunny weather, "rain for the lawn", visitors who came in from out-of-town, answers to prayer, etc. Take 5 minutes to tell the good things that God has done. (Then, you can go to the cancer list recitation.)

Emphasize baptisms and people joining the church. Make them an important event at each service. Let people talk who have newly committed to Christ. They are excited and that excitement will transfer to others.

Talk about successful events - don't emphasize the fact "we raised $465 for the new carpet", but emphasize the fact that "over fifty people showed up, including about 10 new visitors".