The stock market has been up each of the past three months, but I don't look for any long-term economic recovery. A mass of dark clouds on the horizon is headed our way.
Sometime this week, General Motors will likely file for Chapter 11. It will be the largest industrial bankruptcy in American history. Taxpayers will eventually own nearly three-quarters of GM, with a total government commitment of nearly $50 billion.
California is next in line for a bailout. The not-so Golden State is asking for Washington to act as a sort of co-signer on the state's borrowing, to be backed up with money from the Troubled Asset Relief Program. California is looking to get $30 billion to help keep it from insolvency.
All this money is not coming out of some giant cookie jar. It is the result of a mountain of IOUs that will someday have to be paid or rolled over.
America's debt burden has reached staggering levels. In 2008, the government took on $6.8 trillion in new obligations, pushing the total owed to a record $63.8 trillion. This current fiscal year will likely see the tab climb all the more higher. Federal obligations are now at a record $546,668 per household. That's quadruple what the average U.S. household owes for all mortgages, car loans, credit cards, and other debt combined. This number includes everything from Medicare to military pensions.
Russia's Pravda newspaper featured an article this week that warns of America's economic doom. It states:
"The final collapse has come with the election of Barack Obama. His speed in the past three months has been truly impressive. His spending and money printing has been record setting, not just in America's short history but in the world. If this keeps up for more than another year, and there is no sign that it will not, America at best will resemble the Wiemar Republic and at worst Zimbabwe."Our debt situation is made all the worse by the fact that there has been a huge decline in tax revenues. Federal tax income plunged $138 billion, or 34 percent, in April versus a year ago. It was the biggest decline in twenty-seven years. The lack of income could mean that the projected $1.8 trillion dollar deficit for 2009 is too low.
The dollar has been in a nosedive this past week. Sterling approached $1.62, almost an eight-month high. The euro has been rising steadily against the greenback as investors worry about our nation's debt load.
The U.S. bond market has had an equally rocky road. The ten-year Treasury note has seen a 1.4-percentage-point rise in yield this year. Treasuries have lost 5.1 percent in their worst annual start since Merrill Lynch & Co. began its Treasury Master Index in 1977. As interest rates rise, the government's cost of operation rises too.
The fate of the U.S. economy may ultimately be decided in Beijing. The Chinese government's purchase of U.S. Treasuries has been critical in the ability of our government to fund its debt obligations. As old debts come due and new Treasury notes come up for auction, the Chinese may finally say, “Thank you, we've had enough.”
In an interview with C-SPAN, President Obama made a rather surprising statement when asked about the government’s ability to spend more money. He said, "Well, we are out of money now." Any fool can tell you we never had money in the first place. It is rather chilling to have one of the most liberal, spend-happy politicians in Washington admitting we lack the ability to generate new cash.
Terry and I have debated several times the question, “Will America have some spectacular collapse ahead of the pre-tribulation Rapture?” We both agree that it doesn't seem likely that there would be a time of great financial unrest at the time Jesus comes for the church.
The time of our Lord’s return is described as being relatively calm. Jesus used the example of Noah to warn how He will catch the world completely off guard.
"But as the days of Noe were, so shall also the coming of the Son of man be. For as in the days that were before the flood they were eating and drinking, marrying and giving in marriage, until the day that Noe entered into the ark, And knew not until the flood came, and took them all away; so shall also the coming of the Son of man be" (Matthew 24:37-39).I sometimes wonder if it would be best if there were an economic calamity ahead of the Rapture. It would do wonders to shock people out of their comfort zone and force them to focus on what is coming our way.
Whatever scenario we're facing, it will soon play out before our eyes. I ask all my fellow believers to take an inventory of their lives by asking if you have a mindset that is focused on being ready for our Lord's return.
"Watch ye therefore, and pray always, that ye may be accounted worthy to escape all these things that shall come to pass, and to stand before the Son of man" (Luke 21:36).
Watch President Obama's remarks on the GM bankruptcy - USA Today
The California Bailout is Next on Obama's Spending Agenda - Business Media Institute
Chinese economists see risks in U.S. debt - UPI