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First there was the bursting of the housing bubble-over a year ago. Then, within the past year, the financial bubble followed. And now we are beginning to witness a third bubble bursting that could be the worst of all-a world trade bubble.
The figures are alarming. For January 2009 Japan's exports were down a whopping 47 percent; Germany's exports fell 20 percent; China's exports were down 17.5 percent; and U.S. exports fell 16.4 percent. According to the World Trade Organization, global trade volumes are expected to drop by an average of 9 percent in 2009, the sharpest fall since World War II-that was 70 years ago!
In April 2009 world leaders of the G20 nations met in London, amid some rabid protesters, to discuss the economic crisis and ways to avert a possible trade war. The G20 represent the financial leaders of 19 of the world's largest national economies plus the European Union.
Now comes news of the economic dire straits that Russia and some Eastern European countries are in. Nations such as Austria, Germany and Italy are also deeply exposed financially, having lent to many Eastern European nations that now appear unable to pay them back.
A recent Wall Street Journal article stated: "The economic distress and currency tumbles in Eastern Europe will 'trigger a write-down into the Western European banking system,' says Hans-Guenter Redeker, a currency strategist at BNP Paribas in London. 'The question is how much.' He says a conservative estimate would be about 20% of the total invested by such banks in the region. Moody's estimated the total at $1.3 trillion at the start of 2008" (Marc Champion, Joanna Slater and Carrick Mollenkamp, "Banks Reel on Eastern Europe's Bad News," Feb. 18, 2009).
One should take note of what this could mean during the rest of the year if world economic production and trade continue to skid downward. Already The Economist magazine is warning of the possible consequences-a looming trade war.
What would that mean for the world? And how are we to face such circumstances?
The February 2009 $787 billion U.S. stimulus program contained several "buy American" provisions. While this makes sense nationally, if all the nations begin to turn inward it would derail international commerce and produce an even bigger downward spiral.
In an article titled "Buying American," The Economist explains: "In 1929 Willis Hawley and Reed Smoot, two protectionist Republicans in Congress, sponsored a bill to raise [import] tariffs to the highest levels America had ever seen [-the goal of protectionism being to drive up the price of foreign goods to encourage consumers to buy domestic products instead]. And in the midst of economic distress, the protectionists won. The result was a round of reciprocal tariff hikes elsewhere, and a disastrous collapse in international trade ...
"[Now] House Democrats want to require that all iron and steel used in stimulus-funded infrastructure projects should be made in the United States .... But American exporters fear retaliation against their
goods, both in places like China, at whom the steel provisions are aimed, and in rich countries, which are already slipping domestic-purchasing requirements into their own stimulus packages" (Jan. 31, 2009, p. 40).
This, in economic terms, is called a "beggar thy neighbor" policy. As each nation strives to stem the political distress over the dire economic situation, it begins protecting and heavily subsidizing its own industries and raising protectionist tariffs. This raises the possibility of a trade war. More newspaper and magazine articles are appearing about this growing danger-and how real it is becoming.
The term "trade war" strikes a nerve in me. More than 30 years ago, I remember taking an economics class at college where the professor, an avid Bible prophecy reader, mentioned that the most feasible end-time scenario would be one where an international trade war begins the process.
We asked, "Why is that?" He answered, in effect, "Because it would disrupt the world economic system to the point where unemployment would reach unacceptable levels and nations would turn inward for solutions, hoarding the money for themselves and causing further economic decline. People would then demand that a different economic system emerge that placed jobs, security and order over freedom and a free-market system."
This is precisely what happened in Germany in the 1930s, as the trade war and economic and political weaknesses helped bring Adolf Hitler to power and led to World War II.
For several decades, we have not experienced the devastating effects of a trade war. As long as international trade continues, each country contributes to the welfare of the others and each can help prop the others up. But a trade war turns your economic friend into an adversary and generates much ill will. In a short time, a trade war can even lead to outright military conflict.
In Daniel 7:2-3, we read of four great empires represented as wild beasts emerging from the churning "Great Sea" (the Mediterranean Sea). This "stirring" of the Great Sea seems to indicate serious unrest of peoples and nations.
In Revelation 13:1, we also read of the emergence of a great power at the end time as coming out of the sea, likely from a restless society. The apostle John said: "Then I stood on the sand of the sea. And I saw a beast rising up out of the sea, having seven heads and ten horns, and on his horns ten crowns, and on his heads a blasphemous name" (Revelation 13:1).
The sudden emergence of a new geopolitical power, symbolized by a strange beast, will certainly take the world by surprise. It is called "Babylon" in Revelation 18, and it has to do, among other things, with a resurgence of world trade. We read how the merchants will lament over her demise: "And the merchants of the earth will weep and mourn over her, for no one buys their merchandise anymore . . . The merchants of these things, who became rich by her, will stand at a distance for fear of her torment, weeping and wailing" (verses 11,15).
We hope that the looming trade war does not materialize at the present time. But what can we do if it does?
In the short term, you can prepare financially for the present recession by reading and applying the information in our free booklet Managing Your Finances. It is certainly time to get our financial houses in order. And to help you get your spiritual house in order, you may also wish to contact one of our ministers and start attending one of our local congregations. This information is located on our www.ucg.org Web site, under "Contact" and "Local Congregations."
Indeed, in the long term, we must be ready spiritually if the coming events lead to an end-time scenario. When we pray to God each day, "Your kingdom come" (Matthew 6:10), we are reminded that He is ultimately in charge of everything, and His coming Kingdom will solve all the world's ills under the righteous government of Jesus Christ. This is very comforting to know!
Jesus Himself gave specific admonition regarding conditions at the end of this age of human misrule: "But take heed to yourselves, lest your hearts be weighed down with carousing, drunkenness, and cares of this life, and that Day come on you unexpectedly. For it will come as a snare on all those who dwell on the face of the whole earth. Watch therefore, and pray always that you may be counted worthy to escape all these things that will come to pass, and to stand before the Son of Man" (Luke 21:34-36).
We can break down Christ's admonition into eight points:
1. We need to first examine ourselves spiritually and see how we are doing before God.
2. We need to make sure we are not so absorbed in the daily cares of life that we aren't concerned about Bible prophecy. True, we shouldn't get wrapped up in Bible prophecy to the point that we forget to take care of our physical needs, but going to the opposite ditch is just as damaging.
3. We need to realize that "that Day" of God's direct intervention in human affairs is coming, whether we like it or not or whether we're ready or not. To stick our heads in the sand like the proverbial ostrich is not a sound way to deal with the reality of what will come to pass.
4. We need to realize that most of the world will be unaware of the coming of "that Day," just as they were in Noah's time regarding the coming Flood (Luke 17:26-27). Noah, after all, was a "doom-and-gloomer" who got it right!
5. We need to watch world events to see the signs appearing before "that Day"-compared to looking to the condition of fig leaves as an indicator of the seasons in Mark 13:28-31. Considering world events in light of Bible prophecy is one of the main purposes of this magazine.
6. We need to "pray always." Don't let down in your spiritual life. Whether we realize it or not, we need God's help more than ever!
7. We need to focus on the hope "that you may be counted worthy to escape all these things that will come to pass" (Luke 21:36). This means God offers protection from the coming world-shaking events (compare Zephaniah 2:3; Revelation 12:14).
8. We need to remember the all-important purpose of our lives: "To stand before the Son of Man" (Luke 21:36). Jesus Christ has promised to return, and He wants us to humbly stand before Him to receive His promised reward. We won't be ashamed in "that Day" if we put God first in our lives now and fulfill His work here on earth-helping the true gospel go out to the world and helping to prepare a people for Him as He establishes His Kingdom of peace, love and joy.
There is plenty for each of us to do, then, as we continue to watch these disconcerting and unprecedented world events! GN
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Keywords: trade war world economy global economy trade world trade protectionism
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