As summer approaches it is time to take stock of some critical issues facing America and the world at this time. Christ warned
His generation to discern the times and look around at what was
happening in their world. Our world today is filled with several
critical issues and it is vital that you discern what is happening and
what lies ahead.This series will focus on Biblical principles and
prophecies coming to pass today.
There are several economic issues facing America right now. In this post I’d like to focus on the trade deficit we have with other nations.
We have reported on this blog the views of financial guru Warren Buffet. Mr Buffet is the Chairman and CEO of Berkshire Hathaway, an investment fund company. Mr. Buffet sees a big problem with America’s trade deficit. America has a trade deficit of 6 percent of gross domestic product and has gone on for 29 consecutive years. Buffet said in his annual report to shareholders that we are in danger of becoming a “share cropper nation”. Here are additional comments from a recent interview :
“Everyone says that what is going on can’t go on forever. We had, you know, $618 billion trade deficit last year, and it’s already grown a little bit this year. The standard line is, it can’t go on forever, but no one seems to give an answer of what is going to be done about it. We exported $1.1 trillion last year, and we imported over $1.7 trillion. We are running up obligations to the rest of the word, and they are buying our assets at the rate of almost $2 billion a day. And that will have consequences. We have a lot of assets to trade, and people will take our IOUs. Right now our net position versus the rest of the world is they own $3 trillion more of us than we own of them, and that number grows every day, and at some point economists talk about a soft landing. Maybe there will be a soft landing, but you know, who knows”?
Buffet is both alarmist about the current problem yet optimistic that it can be solved. But people do not want to deal with it, and most discussions result in a benign neglect, people are just not interested. There is more talk about the likely 100 billion annual deficit of Social Security in the next twenty years, yet today we have annual budget deficit of $400 billion dollars. It is hard to get discussion on this massive deficit.
Returning to the trade deficit Buffet shows what would happen if it continues on the present course
“Well, if we keep doing what we’re doing — and we have shown no signs of slowing down—the world will own a substantially greater percentage of this country or have our IOUs in the form of government bonds 10 years from now than now,and the cost of servicing the debt or the cost of paying dividends on the ownership will mean that we will send abroad a few percent of our GDP every year just to service debts that arose from the over-consumption that has taken place currently. So, our sons will pay for the sins of their fathers, to a degree. Now, we’ll always have a rich country. This is the best country in the world”.
Did you note that, “our sons will pay for the sins of their fathers…” That is Biblical language for not living righteously today, putting off the day of judgment on the next generation. That reluctance is another type of fiscal and moral problem. Whether or not we’ll “always be a rich country” is uncertain. If these trends continue it is hard to imagine how we could maintain the high standard of living we have.
Buffet’s solution to the trade deficit is an import certificate that is broad based and does not target specific countries or goods. It may not sound exactly like a trade tariff but who is to say how other nations would react if their goods were to be taxed or singled out for extra import duty. Tariffs of any kind can lead to a trade war which can upset the present world order.
Today the United States imposed limits on clothing imports from China. The Wall Street Journal reported:
The Bush administration said Wednesday it will impose new limits on imports of clothing from China. The action follows complaints that a surge of Chinese apparel to the U.S. was hurting American firms.
The administration will restrict a number of items that China can ship to the U.S.: men’s and boys cotton and man-made fiber shirts, man-made fiber trousers, man-made fiber knit shirts and blouses and combed cotton yarn”. (Wall Street Journal, May 19, 2005)
This follows quotas imposed last week on other clothing items. The American textile industry has been deviated by cheaper imported clothing from China and other nations. This move, belatedly, attempts to address this problem.
Leviticus 26:17 says “you shall sow your seed in vain, for your enemies shall eat it”. We could yet see a time when our economic prosperity would be eclipsed by those who wish us ill.
When a family spends more than it takes in and has to service a large debt with high interest payments it inevitably declares bankruptcy. When a nation lives the same way it can put off the day of reckoning for a longer time but there will be a price to pay. There will be a day of judgment.
There is no question that America is the strongest economy in the world and is the main engine of the global economy. But there is more than just economic statistics and figures in understanding our global dominance. Our “exceptionalism” is due to more than physical factors. We sit upon the high places of the world by the grace and blessing of the God of Abraham. That God made key promises of national greatness that have been fulfilled in the national greatness of the United States and Great Britain. You can read the story in our booklet The United States and Britain in Bible Prophecy .
There are several economic issues facing America right now. In this post I’d like to focus on the trade deficit we have with other nations.
We have reported on this blog the views of financial guru Warren Buffet. Mr Buffet is the Chairman and CEO of Berkshire Hathaway, an investment fund company. Mr. Buffet sees a big problem with America’s trade deficit. America has a trade deficit of 6 percent of gross domestic product and has gone on for 29 consecutive years. Buffet said in his annual report to shareholders that we are in danger of becoming a “share cropper nation”. Here are additional comments from a recent interview :
“Everyone says that what is going on can’t go on forever. We had, you know, $618 billion trade deficit last year, and it’s already grown a little bit this year. The standard line is, it can’t go on forever, but no one seems to give an answer of what is going to be done about it. We exported $1.1 trillion last year, and we imported over $1.7 trillion. We are running up obligations to the rest of the word, and they are buying our assets at the rate of almost $2 billion a day. And that will have consequences. We have a lot of assets to trade, and people will take our IOUs. Right now our net position versus the rest of the world is they own $3 trillion more of us than we own of them, and that number grows every day, and at some point economists talk about a soft landing. Maybe there will be a soft landing, but you know, who knows”?
Buffet is both alarmist about the current problem yet optimistic that it can be solved. But people do not want to deal with it, and most discussions result in a benign neglect, people are just not interested. There is more talk about the likely 100 billion annual deficit of Social Security in the next twenty years, yet today we have annual budget deficit of $400 billion dollars. It is hard to get discussion on this massive deficit.
Returning to the trade deficit Buffet shows what would happen if it continues on the present course
“Well, if we keep doing what we’re doing — and we have shown no signs of slowing down—the world will own a substantially greater percentage of this country or have our IOUs in the form of government bonds 10 years from now than now,and the cost of servicing the debt or the cost of paying dividends on the ownership will mean that we will send abroad a few percent of our GDP every year just to service debts that arose from the over-consumption that has taken place currently. So, our sons will pay for the sins of their fathers, to a degree. Now, we’ll always have a rich country. This is the best country in the world”.
Did you note that, “our sons will pay for the sins of their fathers…” That is Biblical language for not living righteously today, putting off the day of judgment on the next generation. That reluctance is another type of fiscal and moral problem. Whether or not we’ll “always be a rich country” is uncertain. If these trends continue it is hard to imagine how we could maintain the high standard of living we have.
Buffet’s solution to the trade deficit is an import certificate that is broad based and does not target specific countries or goods. It may not sound exactly like a trade tariff but who is to say how other nations would react if their goods were to be taxed or singled out for extra import duty. Tariffs of any kind can lead to a trade war which can upset the present world order.
Today the United States imposed limits on clothing imports from China. The Wall Street Journal reported:
The Bush administration said Wednesday it will impose new limits on imports of clothing from China. The action follows complaints that a surge of Chinese apparel to the U.S. was hurting American firms.
The administration will restrict a number of items that China can ship to the U.S.: men’s and boys cotton and man-made fiber shirts, man-made fiber trousers, man-made fiber knit shirts and blouses and combed cotton yarn”. (Wall Street Journal, May 19, 2005)
This follows quotas imposed last week on other clothing items. The American textile industry has been deviated by cheaper imported clothing from China and other nations. This move, belatedly, attempts to address this problem.
Leviticus 26:17 says “you shall sow your seed in vain, for your enemies shall eat it”. We could yet see a time when our economic prosperity would be eclipsed by those who wish us ill.
When a family spends more than it takes in and has to service a large debt with high interest payments it inevitably declares bankruptcy. When a nation lives the same way it can put off the day of reckoning for a longer time but there will be a price to pay. There will be a day of judgment.
There is no question that America is the strongest economy in the world and is the main engine of the global economy. But there is more than just economic statistics and figures in understanding our global dominance. Our “exceptionalism” is due to more than physical factors. We sit upon the high places of the world by the grace and blessing of the God of Abraham. That God made key promises of national greatness that have been fulfilled in the national greatness of the United States and Great Britain. You can read the story in our booklet The United States and Britain in Bible Prophecy .
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