Introduction and Background:

My name is Tim Walsh and yes, I am Brenda’s Walsh’s husband. Brenda is the producer of the 3ABN “Kid’s Time”, author and speaker.

On Sabbath afternoon, November 8, 2008 I made a presentation to the Highland Seventh Day Adventist Church in Portland, TN. The title of the presentation is “The Financial Crisis … Is The World Trapped?”

The presentation is divided into two main parts. The first part of the presentation is about the Financial Crisis and the second part of the presentation is Spiritual.

The topics in each part of the presentation are:

The Financial Crisis:

· For The Love Of Money

Spiritual:

· Where Are We In History

· Where Are We Going

· What We Have To Do

· There Is No More Time

An attendee took notes of the presentation. She gave them to her brother. Her brother sent her notes by email to friends under the subject “Are You Ready for the Depression”. Due to the subject matter and the times we are living in, it is natural to share information with others. It has received exceptionally wide circulation all over the world. However, many of these notes were out of context and present a picture that is incomplete. Personally, I believe these notes were sent in the spirit of sharing with others, what was heard and learned in the presentation, so that they too, maybe informed.

The purpose of this letter:

1. Provide a brief background about who I am

2. The purpose of the presentation

3. How is it that I am giving this presentation

4. Clarify, context for some of the comments and correct some of the inaccuracies

5. Provide several website links so you may stay informed of the fast changing world financial situation

Who I Am I:

I am a businessman who has held executive positions in two large Fortune 500 technology companies and I am currently the President of epipeline, inc. in Herndon, VA. epipeline provides research services for large and small corporations seeking to secure federal, state and local government contracts. To learn more about the company go to www.epipeline.com. I want to clearly state, I am not a paid advisor to the Federal Government. I and others in epipeline, in the course of doing business, are called on from time to time to provide information to government departments and agencies.

All my young and adult life, I have been personally interested in, studied and been educated in technology, business, international business management, economics, finance, financial markets and geo-politics. To ensure the success of the companies I have worked for and my intense interest of finance and economics, I have paid especially close attention, over the last 30 years, of the ever rapidly changing landscape of business, economics, finance and technology. It has been exciting to be a part of the exciting growth of technology, and the resulting benefits.

I am not claiming or professing to be a financial expert, but am willing to share the knowledge I have obtained through my everyday business experience and knowledge of how complex economic and financial markets work. It is my desire to help others understand how and why the world finds itself in this financial crisis and how God is fulfilling Bible prophecy.

How is it that I am giving this presentation?

The simple answer is I was asked by family, friends, acquaintances and business groups. First it started with a few people wanting to learn more about what is going on in the financial and stock markets to learn how they and their businesses can benefit, financially. In the last few months, because of the deepening financial crisis, I have been asked to speak more frequently and formally.

The Financial Crisis

Until early 2007, everything seem to be working so well, so much so, we were seeing high employment, multi-billion dollar mergers and acquisitions, high growth of developing countries, the emergence of poor countries, everyone was buying mac-mansions, computer games, flat screen TV’s and SUV’s. In early 2007, and; especially, in the last 120 days, we have come to experience and witness a dramatic change in the world’s financial condition, that is now being recognized by all, as a world in recession and a financial crisis still looking for a solution. Individually, people are losing their homes, their jobs, their retirement and pension plans have lost anywhere from 20% to as much as 90%.


Most people think this was caused by the sub-prime mortgage market. Yes, the sub-prime market contributed to the problem, but more importantly, it was the straw that broke the back and revealed a far larger and deeper problem that has been building up since 1980. Starting in 1980, individuals, businesses, institutions and governments through multiple financial instruments, started living on credit (debt), compounded by leverage, far beyond their ability to pay it back. The result is a world deep in highly leveraged depth to the tune of $1,400 Trillion. To put this in perspective, the World’s Gross Domestic Product is $53 Trillion. The following quote from Harvey Golub, the former Chairman and CEO of American Express, in an article in the November 5, 2008 Wall Street Journal, “I Vote No Confidence in Congress” made the following statement the really sums up the problem:

“The most fundamental economic problem we face as a nation is overleveraging – by our financial institutions, yes, but also by individuals and homeowners. In effect, we owe more than we can either repay or what is supported by the assets underlying their debt.”

I submit that this is not only our “nation’s” problem, but it is now a world problem as evidenced by the World Financial Summit meeting held in Washington, D.C. this weekend by the 20 heads of the world’s largest industrial nations (referred to as the G20) that represent over 80% of the world’s gross domestic product.

From 1980 to 2005 the massive use of credit and leverage enabled the world to buy like there was no tomorrow, but in 2005/2006, it was becoming clear this was unsustainable. Because the banks are in trouble and there is a credit freeze; credit is no longer available or severely limited to individuals, businesses and even governments. Individuals, businesses and governments have significantly reduced their spending, resulting in stock markets all over the world to drop between 35% to 80%, governments are going bankrupt and borrowing funds from the IMF, individuals and businesses going bankrupt, rapid unemployment all over the world, nationalization of banks and businesses. The lack of buying is now plunging the world into a deflationary spiral that is creating what is referred to in economics as “destruction of aggregate demand”. Over the last 18 months the world has gone from high growth, to a slow down, to a recession, a deep prolonged recession and the potential of a depression.

The following quotes should help to put this in perspective:

· Consumers are tapped out, not just in the US, but in nearly every country on the planet. We had our party, and a fine party it was. However, the party is over and the bill is now past due. The price is a global recession. That price must be paid no matter what Central Banks do. Mike "Mish" Shedlock, 10/09/08

· At this point severe damage is done and one cannot rule out a systemic collapse and a global depression. Nouriel Roubini, Global Economist, New York University, RGE Monitor, Yahoo Finance, 10/08/2008 (Since this quote, Mr. Roubini provided testimony to the House Joint Economic Committee on Oct 30, 2008.)

· According to CreditSights, a research firm in New York and London, the U.S. government has put itself on the hook for some $5 trillion, so far, in an attempt to arrest a collapse of the financial system. Forbes, November 12, 2008.

· Underscoring how bad things have gotten this time, President George W. Bush, the summit host, said he had agreed to the recent $700 billion rescue plan for U.S. financial institutions only after being told the nation was at risk of falling into "a depression greater than the Great Depression." (Associated Press, Saturday, November 15th, 2008).

To prevent a world depression, the G20 countries, will be immediately initiating large stimulus packages, as evidenced by China’s announcement of a $550 Billion stimulus on November 10, 2008. The number one priority is to get credit back into the system so that individuals, businesses and governments will start buying, again. Unfortunately, this will create another problem:

· The current rescue plans, which will force governments to issue more debt, print money and flood the markets with liquidity, will flare up inflation after the crisis is over and will create worse problems, Rogers warned. "We're setting the stage for when we come out of this of a massive inflation holocaust," Jim Rogers, 10/10/2008


In the presentation, I provide a lot more detail that chronicles the series of events from 1980 to today, to help people understand how our financial system has come to the crisis we are now experiencing. We do have the “potential” of going into a depression. If solutions are not rapidly implemented, we can expect over the next few weeks and months a rapid deterioration of the economy which could take us into a depression and could take five to ten years to recover from.

There isn’t time to answer point by point the details of the email that is circulating, however I hope this answers some of your questions. If you wish to contact me feel free to email me at walshtim@comcast.net .

With Christian love and concern,

Most Sincerely,

Tim Walsh



A few Informative Website Links:



http://www.bloomberg.com



http://www.cnbc.com



http://www.foxbusiness.com/



http://globaleconomicanalysis.blogspot.com/



http://www.telegraph.co.uk/finance/



http://www.chinadaily.com.cn/



http://money.cnn.com/?cnn=yes

One of the problems is that this debt can not be paid off without severe deflation, because it exists in a form of bank money in the economy. Yet, I have not heard the pudits even mention the issue. Why is that?

Are you in general agreement with Tim Walsh's analysis and conclusions?

Not sure what he would say about why we hear very little about deflation. I am sure he has some ideas about that, of course. It might be interesting what he would say if you were to email him and ask him personally. He would probably be happy to write to you about that issue.

These are very common sense observations that don't really get to the core of the problem. 3 years ago when everyone was screaming that debt is good for our growth now turning around saying that debt is the problem. There are a couple problems that are hardly ever touched, and I would love for Christians to finally start noticing these elephants in the room

1) Fractional Reserve Banking. This is really the mechanism behind the crisis that we see today. If I would name one thing that brought about all of the uncertainty in the world markets... that thing would be it.

This is the mechanism by which banks create money, and the same mechanism by which they destroy money. The money supply is issued as debt, and then destroyed as debt paid. Yet the expansion has to be constant because as a whole... the debt is bigger than the money supply due to the compounding interest. So, debt can't be paid back. First, because it would create enormous deflationary effect... this is the reason behind the 1929 depression... banks stopped lending, and people paid back their debts, taking the money out of the circulation. Secondly, there has to be perpetual borrowing and expansion to make sure that the compounding interest is at least partially covered. If it is not, we have foreclosures and failed financial institutions. If the reserve ratio would be 50%-75%, I doubt we would have the problems we have today.

2) Dollar hegemony. Without dollar being the global reserve currency I doubt we would see US plunge and become the biggest debtor nation.

3) Fascist economics. Only few people that I interviewed for documentary so far had enough bravado to admit that US has been practicing economics of fascism since the New Deal. Of course it was not alone in doing so... as many bought into the Keynesian idea of expansion via government spending. In Keyenes' mind the fascism could be used as instrument for good, as long as it is conducted by the righteous governments.

Really the idea is that government expands the economy through deficit spending and then in his mind the deficit will be paid back by increased taxed revenues from the booming economy. Of course, the military spending is a large factor of fascist economy, and we see US spending nearly 950 billion on military. That's 54% of the budget! With 20% being taken by the debt servise.. there's only 25% left for anything else. Overspending on military is one of the marks of the fascist economy.

People think that fascism automatically means Nazi Germany... but that's not true. Fascism does not have to be all dark and gloomy, and it really originates with Rome under emperors. I contend that where're many of elements of fascism in US economy... and it is both problematic and worrisome.

Actually, Jim Kramer of "Mad Money" on CNBC was just this morning on the Today Show speaking of the impending serious deflation. This was a major fact in the Great Depression.

How many times did Jim ever mention Fractional Reserve banking that is responsible for fluctuating money supply and inflationary and deflationary cycles? Have you ever heard anyone speak about from the mainstream media financial punditry team unless they are asked by a someone else?



That's what Bernanke and likes are doing right now... trying to put out fire by throwing paper in it. When all settles in, we will have massive inflationary cycle on our hands as a result of the amount of money being thrown into the system.

For example... prior to October economic events hit the fan, we had 14 trillion of M3 supply measured (aka... total money in circulation). Since then fed injected 3 trillion and who knows how much more. That's more than fifth of the existing supply. But of course they will justify that by telling you that there are trillions of wealth being "destroyed" by means of market devaluation... and they are lying to you with bold faces.

No wealth is destroyed. When you buy a stock and it looses value... it's a transfer of your money to the seller. The seller gains, you loose. That goes for real estate, and other assets. The money does not leave the system. It is concentrated and hedged elsewhere.

Now, since you have lost the money... your economic sector experiences deflation... because you can't pay your workers, and the workers can not buy products, and the producers have to scale down while reducing the prices of goods to liquidate the overflown inventories. That does not mean that money somehow disappeared as pundits are presenting the situation. It flows somewhere and certain people get immensely rich right now because of all of this.

Now, to fight the "deflation" the fed will most likely lower the rates even further and start lending money at no interest... free money so to speak. That's when the inflation kicks in. Once another bubble inside of this bubble forms.

You can't fight the fire with gasoline. We need to raise the bank reserve rates. This is the only thing at this point that will encourage people to save, and banks to lend the real money... not the one they create through fractional reserve lending.

I agree 90% with Tim Walsh's email. Here is my reply to him:

It warms my heart to read your email. Kudos to you for taking great risks in helping others financially and making your personal email available to us. I want to add some ideas to your recommendations - I would like to share with you how I am investing successfully in these treacherous times - so that you can share with your friends.

My credibility? My best performing stock account, praise the Lord, grew from $5,000 to $42,000 - a 600% return in a year. I do not advocate my investments to anyone as I am not an investment professional. However, I just want to share with you how I achieved such incredible returns. Maybe there are others out there, whom you are helping, who need a way to rescue their savings and IRA’s.

I read about how our church pension plan was hit by the recent stock crashes. I emailed Review and Herald immediately and offered them my service for free.

1) I wanted to recommend to them to monitor my reliable news sources. The report said the treasurers were "monitoring the situation" . Well, obviously they were monitoring the wrong places.

2) I wanted to tell the church treasurers that I bought inverse ETF’s such as symbols SRS and SKF. I told them to hurry and call me when these were selling for about $120 around the first week of November. I invested my money into these myself and yesterday, 12/21/08, they went up as high as $297 or more. That’s more than 100% return in over a month. I could have rescued SDA church’s pension plan – Review and Herald replied to my email saying they would forward my offer of service but I never heard back from our church treasurers. If you look at the stock chart of, you will see how I did it - I bought when SKF fell below $130 and sold when it went above $180. Since I expect stocks to fall another 10% the next couple of months and another 20% after that, I would therefore expect SKF to bounce once more between $140 to $340, so I am planning to buy below $150 and sell above $300. I usually hold ETF's from 6 months to 3 year.

I think you had advised listeners to go into cash and CD’s. Please make sure they do not invest in money market funds – those are invested in mortgage derivatives etc. and so can lose value. Also, it is advisable to hold cash in your home – enough to pay two months of expenses. I heard the best mutual fund for gold is CEF – Central fund of Canada, but it is better to hold gold coins in your home’s safe.

I’m not trying to brag about how God has blessed me. I had been warning all my family and friends for over year and half about this series of crisis that is about to hit us.

I want to save the finances of my family and friends and was able to rescue a few savings account. It was very heart warming to have friends walk up to me, shake my hands and thank me from the bottom of their hearts for helping them.

I would like to recommend a few more trustworthy websites that I use for my news sources.. I primarily use

http://globaleconomicanalysis.blogspot.com/

and
http://boombustblog.com/

http://evilspeculator.com/
http://www.rgemonitor.com/
www.bloomberg.com lower on my list of “must reads”

Once in a while I would check into:

http://mrmortgage.ml-implode.com/

http://www.telegraph.co.uk/finance/

However, for my PUT options, short term swings in stocks can kill their value. I rely on the following two websites for short-term timings:

http://evilspeculator.com/

http://slopeofhope.com/index.htm

Even though the above use charts extensively, I do not believe anyone can predict the future, so I read their analysis with lots of skepticism. I do find “support and resistance” to be helpful in buying and selling ETF’s and PUT options.

I humbly disagree with your citing of the other web links such as cnbc as news sources. They have a lot of conflicting and unreliable interpretation of news causing more harm to investors than good. Your readers are going to be confused by some of the spin from their “news”. Furthermore, no one has time to read all those links. I’m a busy person and barely have time to skim through news – so I keep to my shortlist above.

Adventists had many edges (advantages) over and above the best investors in the world.

1) They believe Mrs. White’s prophesy about an impending financial collapse

2) They know that over 80% of churches and religions distort the truth. So it is easy for them to believe that over 80% of politicians/FED, news media are spinning. They can easily believe (or already know) that 80% of what they read and hear are lies or distortion of truth.

3) They know how to discern truth from lies. Truth has a certain “ring” to it.

4) They will follow the truth and hold on to their convictions - even in face of ridicule and mass unbelief. When I sent out emails to my family and friends warning them of impending financial doom, I got a few hackles. They are not heckling me anymore but busy nursing their financial wounds.


One last resource I would like to mention - Chris is not an SDA but he quotes from the Bible. I am subscribed to his service for over 2 years but he does give free commentaries. Here is one:

http://www.kitco.com/ind/Laird/nov202008.html
http://www.kitco.com/ind/Laird/nov062008.html

He allows you to access to older public articles of his.)


Chris researches and culls news for you so you don’t have to waste time searching for them. You also get timely alerts when relevant news breaks out.

His research took him to move out of “the grid” into countryside living in Missouri – something that Mrs. White has foretold us to do but most of us are not following.


(You can pay $110 a year to subscribe to his newsletter at http://www.prudentsquirrel.com/ )

I presently sold all my SKF and SRS and will buy them below $150 or $140. I will keep adding even if they fall to $110. I presently hold inverse ETF’s of China and Europe such as EFU and EEV.

However, ETFs are not how I got my incredible returns. I use “insurance” instruments called PUT options and they work just like insurance policies. I bought 6 months insurance (PUT) on all investment banks like Bear Stearns, Lehman and presently hold insurance on Morgan Stanley and Goldman Sachs. I bought PUTs on all major banks such as Countrywide, C, and presently hold puts on JP Morgan, Wells Fargo and PNC. My SDA friend chided me for profiting with these but what does he want me to do? Buy stocks in these catastrophic times and crash like everyone else? He buys insurance for his car, home and life; and so why can’t I buy insurance on my investments. It may surprise everyone to hear that even the much revered Warren Buffet protects his investments using PUTs.

You can buy these ETFs and PUTs in your IRA and sometimes even in your 401K. My company uses Charles Schwab 401K account who allows you to buy and sell any stocks and ETF’s . However, after trying about 10 major brokerage firms, my favorite stock broker is www.thinkorswim.com. That information alone will save you hundreds of dollars. The cheapest broker (Interactive Brokers) I used actually costed me more as they had a lot of hidden charges and bad fills.

Welcome to the forum.

I'm just wondering what do you think is the future of the US economy, and how that relates to the US domestic market?

No one knows the future save the Lord. I'm depending on the weblinks I recommended, so please read them for I am following their leads.
My gut feeling - Citibank/GM/big three are too big to save. Morgan Stanley, Goldman Sachs, Bank of America are next. Things are headed down fast.