Implosion

by Joel C. Rosenberg

  No American wants to believe such things. I certainly don’t. But these are the conclusions I have come to after studying and praying about these questions for many years.

  Often when I answer these questions at a conference or in a church or during an interview, the next questions are variations of the following: What do you think could happen to the U.S. to strip us of our status as the world’s economic and military superpower? What could cause America to wither or fade or utterly collapse?

  Without clear scriptural guidance, it is very difficult to say, of course. So long as you realize that I am speculating at this point, not teaching specific Bible prophecies, here are four scenarios I believe are possible that could make America unable—or unwilling—to play a key role in the unfolding prophetic events of the last days:

  • Economic Implosion—The United States implodes financially and economically.

  • War or Terrorism—The United States is devastated by a surprise military or terrorist attack or series of attacks.

  • Natural Disasters—The United States is devastated by an unprecedented series of natural disasters.

  • The Rapture—The United States suddenly loses millions, or tens of millions, of people when the Rapture happens, leaving the rest of the American people devastated and triggering any number of cataclysmic events.

  Of course, these are not the only things that could lead America to implode. Political paralysis is a real and present danger as well—we could become frozen in partisan political gridlock or be sidelined by widespread political apathy or a new wave of isolationism. But I believe these four scenarios pose the biggest and most dangerous threat to the American way of life as we have known it. In the next four chapters, we will take a closer look at these scenarios and attempt to assess the degree of danger each one poses.

  Bottom Line

  In the Old Testament book of Job, there is a very important verse about God’s sovereignty over men and nations: “He makes the nations great, then destroys them; He enlarges the nations, then leads them away” (Job 12:23).

  Some might say the Lord made America great because our founders built this nation upon the teachings of the Scriptures and because the American people responded to the First Great Awakening and the Second Great Awakening and other periods of moral and spiritual renewal. Others would say the Lord allowed America to become great for a time, despite our many mistakes, errors, and sins. Either way, we have now come to a point where people are actively discussing whether the Lord will proactively judge and destroy us or remove his hand of grace and blessing and let us implode, or whether he might give us a second chance—at least for a season—with a Third Great Awakening.

  One thing seems clear, however, to nearly all Americans: we are in grave danger both economically and spiritually.

  CHAPTER NINE

  THE FINANCIAL IMPLOSION SCENARIO

  It’s a scary feeling to wake up each morning without a job. Or to fear you’re about to lose the job you have, especially when you don’t know how you would get another one that could adequately provide for your family. It’s scary to be so deep in personal credit-card debt that you wake up in the middle of the night seized with anxiety and with no idea how you’ll ever climb your way out of the hole you’re in. It’s a scary thing not knowing whether you can still afford to pay the mortgage on your house, to fear the bank will foreclose, to see the value of your house collapse to the point where you literally can’t afford to sell it because you’d still owe the bank money when the transaction was all finished. It’s scarier still to already be past that point and to have seen the bank take away your home, to feel the shame of failure and try to explain to your spouse and your children that somehow—though honestly you don’t know how—it’s all going to be okay.

  Far too many Americans have experienced such fears firsthand in recent years. They know all too well that the U.S. economy is in serious trouble. They want to believe that with the right leadership in Washington and on Main Street and on Wall Street, we can turn this thing around. But they have also seen the politicians and the bankers and the CEOs blow it time and time again. And they sense intuitively that the situation could get much, much worse. They fear that even if leaders do emerge who demonstrate good ideas, solid experience, strong personal courage, and resolve to make bold changes, perhaps America has passed the point of no return. They worry that the problems we face might be so enormous that no matter how diligent we are as a nation in making critical changes, it might be too little too late. Americans don’t want to believe we are on the financial Titanic, but many fear we might be and that, even as we see the icebergs dead ahead, we may not have time to change course before we crash. Ocean liners don’t turn on a dime. Neither do nations.

  These are not minor fears held by a small percentage of Americans. As we noted earlier in this book, nearly eight in ten Americans in the spring of 2010 feared the U.S. economy could collapse entirely,[179] and in the summer of 2011, nearly half of all Americans feared the U.S. was heading for another Great Depression.[180] At the end of 2011, nearly eight in ten Americans believed the country was on the wrong track.[181] Even should these numbers recede somewhat in the short run, Americans will continue to worry about our nation’s long-term prospects.

  Yet honestly, most Americans don’t know the half of it. At best, they are aware of only the proverbial tip of the iceberg. If every person in the U.S. truly understood the magnitude of the icebergs we are racing toward at full steam, I suspect the number of Americans fearing our economy could collapse into a Great Depression would skyrocket.

  “Economic Disaster on an Epic Scale”

  It is difficult to overstate just how much trouble the American economy is in. According to a growing number of experts, if we don’t drastically reduce government spending, balance the federal budget, and make sweeping, fundamental reforms to save and protect Social Security, Medicare, and Medicaid—just to name a few of our biggest fiscal challenges—then the federal debt will continue to explode, and the American economy will soon implode. Consider just a few such experts’ statements:

  • “These deficits are like a cancer [and] they will truly destroy this country from within if we don’t take care of them,” warned Erskine Bowles, the Democrat cochair of President Obama’s National Commission on Fiscal Responsibility and Reform in 2010.[182]

  • “We are accumulating debt burdens that will rival a third-world nation within ten years,” warned David Walker in 2010. Walker was appointed by President Bill Clinton to serve as the comptroller general of the United States—essentially the nation’s chief financial auditor—and served in that role from 1998 to 2008. “Once you end up losing the confidence of the markets, things happen very suddenly and very dramatically. We’ve seen that in Greece, we’ve seen it in Ireland, and we must not see it happen in the United States.”[183]

  • “We are steadily becoming more vulnerable to economic disaster on an epic scale,” said Simon Johnson, a highly respected economist at Massachusetts Institute of Technology’s Sloan School of Management and an advisor to the Congressional Budget Office, in testimony before the Senate Budget Committee in 2010.[184]

  • America is on an “unsustainable fiscal course” after going through the “worst economic crisis since the Great Depression,” wrote the Turkish-born American economist Nouriel Roubini, professor of economics and international business at New York University’s Stern School of Business, in an October 2010 op-ed in the Financial Times. Roubini, who accurately predicted the collapse of the housing markets and the financial disaster on Wall Street in 2008, believes the U.S. is heading toward a “fiscal train wreck” and that “the risk . . . is that something on the fiscal side will snap.”[185]

  • “The United States cannot go on borrowing at projected rates,” warned Alice Rivlin, a Democrat on the president’s Debt Commission and the founding director of the Congressional Budget Office, in testimony before the Senate Budget Committee in 2011. “Without major polic
y changes, we risk a debt crisis that could severely damage our economy and weaken our influence in the world. . . . We face the prospect of debt crisis and economic disaster if we do not act.”[186]

  • “It is only a matter of time until our financial house collapses,” wrote Stuart Butler of the Heritage Foundation in his 2011 report, “Saving the American Dream: The Heritage Plan to Fix the Debt, Cut Spending, and Restore Prosperity.” “We are living on borrowed time and risk an economic catastrophe unless somebody in government exercises real leadership to reduce spending and borrowing.”[187]

  • “We know we’re going to have an economic collapse if we stay on the path we are on,” Wisconsin’s Republican congressman Paul Ryan, chairman of the House Budget Committee, warned in a 2011 interview with Christiane Amanpour of ABC’s This Week. “And so to me it’s unconscionable as an elected representative of people to know that that’s coming and not try to do something to prevent it from happening.”[188]

  • “This debt is a mortal threat to our country,” warned Ohio’s Republican congressman John Boehner, Speaker of the House of Representatives, in a 2011 interview. “It is also a moral threat. It is immoral to bind our children to as leeching and destructive a force as debt. It is immoral to rob our children’s future and make them beholden to China. No society is worthy that treats its children so shabbily.”[189]

  How Bad Is America’s Economy Today?

  In a moment, we will look at the specific numbers and fiscal projections that are causing so many experts to warn of the very real possibility of a coming financial implosion. First, however, let’s look at a snapshot of just how much Americans are hurting economically.

  • In 2011, nearly 14 million Americans were unemployed, and an additional 8.5 million Americans were underemployed, meaning they were working part-time because they couldn’t find a full-time job.[190]

  • Since 2006, more than 3 million American families have suffered foreclosures—that is, they have seen their houses repossessed by banks because they could not keep up with their mortgage payments.[191]

  • In 2008 alone, foreclosures shot up 81 percent—a single-year record—resulting in 861,664 families losing their homes.[192]

  • In 2009, another 918,000 American families lost their homes to foreclosure.[193]

  • In 2010, another 1.05 million American families lost their homes to foreclosure, shattering all previous records.[194]

  • In 2011, another 804,423 American families lost their homes to foreclosure, and nearly 1.9 million American homeowners received notices from their banks that they were in danger of foreclosure.[195]

  • An estimated 7 to 8 million homes in the U.S. now stand vacant or in the foreclosure process.[196]

  • Even those Americans who still own their homes have suffered significant losses, as average home values across the country in 2011 plunged back to 2004 levels, a loss of some 33 percent from peak values.[197]

  • Americans’ household net worth has plunged precipitously in recent years, driven down by the implosion of home values and by huge losses in the stock markets. According to Federal Reserve data, between 2007 and 2009, household wealth plunged 23 percent.[198]

  • Approximately 7 million Americans filed for personal bankruptcy between 2006 and 2011, and the rate shot up by more than 150 percent during that time.[199]

  • Since 2001, some 42,400 American factories have closed their doors.[200]

  • A record 45.8 million Americans used government-funded food stamps in 2011 to help put food on their families’ tables.[201]

  Tragically, Washington has been deeply divided as to how to turn the economy around and get the private sector growing again. Democrats have by and large insisted that trillions of dollars in new federal spending would jump-start the stalled economy and create millions of new jobs—even if that money had to be borrowed from foreign lenders. Republicans have argued that such massive spending has not significantly lowered the unemployment rate or triggered sustained economic growth and that extensive new federal regulation—including President Obama’s aggressive environmental regulations and restructuring of the American health care industry (“ObamaCare”)—has severely harmed American companies, especially small businesses and entrepreneurs. As the political debates have gotten hotter and the rhetoric has grown more intense, many Americans have become concerned that Washington may not know how to restore the conditions for private-sector growth and job creation, exacerbating fears not only about how America can fully recover, but whether we can. Compounding these fears even further is the issue of our staggering national debt.

  How Bad Is America’s Debt Crisis?

  For the first two hundred years or so of our history, Americans hated the notion of Washington overspending and borrowing, except in extreme national emergencies. Now, we are addicted to both, and the debt crisis has become its own national emergency.

  America’s Debt History

  Let’s make sure we begin by putting current events in context. In the first sixty years of our national existence—between 1789 and 1849—the U.S. government accrued a budget surplus of some $70 million, according to a report from the White House’s Office of Management and Budget. Over the next half century—between 1850 and 1900—a series of emergencies such as the Spanish-American War and the Civil War required Washington to spend more than it took in, and we accumulated a federal deficit of nearly $1 billion. Yet once the emergencies were over, Washington wisely moved to get its fiscal house back in balance.[202]

  “Between 1901 and 1916, the budget hovered very close to balance every year,” the report noted. “World War I brought large deficits that totaled $23 billion over the 1917–1919 period. The budget was then in surplus throughout the 1920s. However, the combination of the Great Depression followed by World War II resulted in a long, unbroken string of deficits that were historically unprecedented in magnitude. As a result, federal debt held by the public mushroomed from less than $3 billion in 1917 to $16 billion in 1930 and then to $242 billion by 1946. In relation to the size of the economy, debt held by the public grew from 16 percent of GDP [gross domestic product] in 1930 to 109 percent in 1946.”[203]

  The good news is that once Nazi Germany and Imperial Japan were defeated and World War II ended victoriously for the U.S. and our allies, the Greatest Generation returned home to start growing families and businesses. As a result, the American economy boomed. Tax revenues to Washington surged. Budget deficits were minimal—there were often surpluses—and the federal debt as a percentage of our economy dropped dramatically. But then came the Korean War, the Vietnam War, the Cold War, and the first Gulf War. As a result of these wars, but also of the compounding effects of the New Deal and Great Society policies in Washington, federal spending grew enormously, as did the federal deficit and national debt.

  By the early 1990s, Americans were deeply frustrated by the overspending. In the 1994 fall elections, the Democratic Party lost control of the U.S. House of Representatives and the Senate, though President Bill Clinton, also a Democrat, was reelected in 1996. The battle between congressional Republicans and a Democrat in the White House created a dramatic freeze on spending, with both sides resisting each other’s spending priorities but also pledging to balance the budget. By 1998, bipartisan efforts in Washington succeeded, and the federal government posted its first surplus ($69 billion) in decades. For four straight years, the federal government continued to post budget surpluses, hitting a high of $236 billion in the year 2000.[204]

  All told, between 1789 and 2000—a period of 211 years—the U.S. federal government racked up a national debt of $3.4 trillion.[205] That’s an awful lot of money, to be sure. But to put it in context, because our national economy had grown so far and so fast during that time, our federal debt was just 34 percent of our gross domestic product in 2000.[206]

  That was barely a decade ago. How quickly things changed.

  The Debt Crisis Worsens

  President George W. Bush faced numerous
extraordinary challenges during his eight years in office, including the terrorist attacks on September 11, 2001, subsequent wars in Afghanistan and Iraq, and a severe recession at the end of his second term. Unfortunately, he also massively overspent and refused to veto big spending bills coming from Congress, even when Congress was controlled by his own political party. By the time he left the White House after the 2008 elections, the federal debt had risen 71 percent to $5.8 trillion.[207] This was a terrible failure of President Bush, for whom I otherwise have great respect. But again, let’s keep it in context. Because the U.S. economy had grown so rapidly for most of the Bush presidency (until the end), the federal debt was still only 40.2 percent of GDP.[208] That was a significant increase from when Bush came into office, to be sure, but it was still manageable in historical terms.

  To win the presidency, then-Senator Barack Obama, the Illinois Democrat, sharply and consistently (and rightly) criticized President Bush for creating such large budget deficits, driving up the national debt, and having to repeatedly borrow so much money. In 2006, for example, Senator Obama refused to vote in favor of raising the debt ceiling to permit the federal government to borrow more money. “The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure,” Obama said. “It is a sign that the U.S. government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our government’s reckless fiscal policies. . . . Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here.’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.”[209]