On Sept. 11, 2001, Islamic terrorists attacked America, and overnight everything changed. The signs and warnings of such an attack were there the day before (9/10), but were ignored, misunderstood and glossed over by those charged with protecting the security of the nation. Had they been properly analyzed and acted upon, the tragedy could have been averted.
But it wasn't, and much has changed for America and the West since that fateful day. Now come signs of a looming financial crisis that could completely change the global economy and have a dramatic impact on America's role as the world's dominant economic power.
Subprime lending crisis
Last month the world's financial markets experienced a crisis caused by falling confidence in what is called the subprime lending market. Banks, brokerage houses and mortgage lenders in America and Europe were stung by the rising defaults on risky loans made to homebuyers of limited means on reckless terms.
Buyers took out loans on the gamble that housing prices would continue to rise. Lenders extended credit to them on a gamble that the buyers would not default on the loans. These adjustable loans, often with low initial interest rates that can rise sharply, were made to many who were unable to really afford owning a home at the inflated prices in many areas. These mortgages were then resold to other financial institutions that offered the potential for high returns to investors willing to take a high risk.
That risk was spread among many to the point that no one could really identify where the risk was. The result was fear in the markets, and the money that banks needed to do daily business began to dry up.
Many people who took these loans and are unable to pay will suffer the loss of housing, money and their credit rating. Many thousands who work in mortgage lending will lose their jobs as companies reorganize this part of their business. The Federal Reserve took steps to lower interest rates and to loosen the money supply. At the time of this writing, the dive has leveled off and markets seem to be returning to normal.
Even if you neither had a subprime mortgage nor work in the industry, could this crisis affect you?
The Western world's financial markets have created a major problem that threatens the bedrock of global finance. The system is so precarious that it threatens the financial security of all citizens, regardless of their exposure to financial markets. You may be completely free of debt and still be impacted by this latest trouble.
Foreign investors have taken on hundreds of billions of dollars of American debt. In essence, they are the ones who have borne the risks; they have financed the unrealistic housing boom and irresponsible consumer spending of recent years.
China is one of the major creditors that hold this debt. This can work as long as America is the major market for goods made in China (read, cheap prices at Wal-Mart). But one report says that soon the European Union will become China's largest export market.
Now we have seen significant default in a major segment of the American economy. The confidence other nations have in the American economy has been shaken. And confidence is a key ingredient of financial markets. When confidence is lost in a currency, all the "good money" flees to other currencies thought to be more secure. No one backs a loser in the high stakes game of global finance.
For this and other reasons, there is a real problem with the Western economies that could lead to some major corrections, thus impacting jobs, income and growth in America and Great Britain. America has fewer dollar reserves than other emerging nations such as India, and the United States has the largest trade deficit in the world. Britain has the world's third largest trade deficit.
There exists the potential for an unprecedented financial meltdown. Many experts see this problem and predict a major shift in investment toward other nations that seem to be healthier and a better investment.
An approaching fiscal hurricane
America faces a number of financial challenges beyond this most recent subprime issue. The coming retirement of the baby boomer generation will swamp the Medicare and Social Security system in the coming decades. The promised money is not there, and the cost of these entitlements will overwhelm the federal budget.
In 2008 the leading edge of the boomer generation will begin retirement. Those covered by Social Security are expected to grow to 69 million by 2020. By 2030 Social Security spending as a share of the budget will rise to 40 percent. These obligations will have to be borne by fewer workers.
America's health care is facing its own crisis. Medicare's prescription drug coverage, which took effect in 2006, is expected to cost more than $700 billion over 10 years. By 2050, expanding at current rates and adjusted for inflation, the whole Medicare program is expected to cost $2.6 trillion. That is the size of the entire federal budget today.
Add continuing budget deficits to this. The American government spends hundreds of billions of dollars more than it has. In recent years increased tax revenues have helped keep the national debt from growing as fast as it did in 2003 and 2004. Some economists argue that deficits don't matter, especially since they are a small percentage (less than 3 percent) of the entire national economy. Given the enormous size of the economy, this can be managed. Funds have been easily borrowed from foreign investors, such as China, to postpone a day of reckoning. But what happens when that day comes and other nations do not want to lend or invest on the same terms as the past?
China holds more than $1 trillion. What would happen if China chose to dump those dollars on the world market? This would cause a devaluation of the dollar and loss of confidence in the U.S. economy. Of course, it is in China's short-term interest not to see the dollar devalued. They would lose their investment, and the resultant slump in the American economy would harm the Chinese economy. But it would be a mistake to think this could not change.
What if OPEC decided it would no longer price its oil in dollars but instead switched to the euro? Such a move would lead to higher fuel prices in the United States. There are those oil-producing countries that want to see this change. If confidence in the American economy took a serious hit, the movement toward such action could accelerate.
No matter how one looks at America's national economy, the fact is there is an enormous amount of debt—more than this, or future generations, can ever hope to repay. For now the country prints more paper with colored ink, calls them dollars and puts them out to creditors with the hope they will continue to have confidence in the American government and its economic policies. The day that changes will see Americans and many other nations paying a lot more for the basics of life we have come to take for granted.
Living beyond its means
The United States has written checks that cannot be cashed. It is shielded temporarily from the consequences by political leadership that does not have the integrity and courage to face the moral and fiscal consequences of greed, indifference and self-indulgence.
And the fault does not lie just with leadership. Every citizen must see his or her role in creating a society that cannot pay its bills and chases after the gods of consumerism and mammon while others finance our extravagance. Both the nation and its citizens have been living beyond their means for too long. Other countries see this and are beginning to take steps to try to protect themselves from market volatility caused by this behavior.
Last December the European Central Bank raised its key interest rate in the wake of a declining dollar. This made the euro more attractive to international investors. The decline in the value of the dollar was seen as a threat to the European economy.
In the wake of the recent crisis in credit markets, interest rates could rise again to keep liquidity strong and confidence high. Jean-Claude Trichet, the president of the European Central Bank, keeps a close eye on potential risks and "concerns regarding possible uncontrolled developments triggered by global economic imbalances" ("How Dangerous Is the Dollar Drop?" Der Spiegel, Dec. 12, 2006).
Isaiah the prophet said of ancient Israel, in a message that resonates into our modern world, "Alas, sinful nation, a people laden with iniquity...They have forsaken the L ord, they have provoked to anger the Holy One of Israel...The whole head is sick, and the whole heart faints. From the sole of the foot even to the head, there is no soundness it" (Isaiah 1:4-6 Isaiah 1:4-6  Ah sinful nation, a people laden with iniquity, a seed of evildoers, children that are corrupters: they have forsaken the LORD, they have provoked the Holy One of Israel to anger, they are gone away backward.
 Why should you be stricken any more? you will revolt more and more: the whole head is sick, and the whole heart faint.
 From the sole of the foot even to the head there is no soundness in it; but wounds, and bruises, and putrefying sores: they have not been closed, neither bound up, neither mollified with ointment.
American King James Version×).
Unless the United States as a whole understands and accepts the root causes of its current dilemma and every individual comes to deep, heartfelt repentance, Americans will stumble blindly forward till a day of accounting is required for the great sin of forgetting where our blessings originated.
It is a trait of the descendants of Jacob to forget the source of their wealth and abundance. God foretold this when He brought the tribes of Israel into the land of promise. "So it shall be, when the L ord your God brings you into the land of which He swore to your fathers, to Abraham, Isaac, and Jacob, to give you large and beautiful cities which you did not build...then beware, lest you forget the L ord who brought you out of the land of Egypt, from the house of bondage" (Deuteronomy 6:10-12 Deuteronomy 6:10-12  And it shall be, when the LORD your God shall have brought you into the land which he swore to your fathers, to Abraham, to Isaac, and to Jacob, to give you great and goodly cities, which you built not,
 And houses full of all good things, which you filled not, and wells dig, which you digged not, vineyards and olive trees, which you planted not; when you shall have eaten and be full;
 Then beware lest you forget the LORD, which brought you forth out of the land of Egypt, from the house of bondage.
American King James Version×).
That is why I ask whether we are living in a 9/10 economy. The signs of economic change have been in front of us for many years, but we go blindly on as if nothing will change. This publication has consistently warned of the coming change. Search our online site at www.wnponline.org for past World News and Prophecy articles on the subject.
This current crisis will likely stabilize. But because the fundamental problems remain, unless there is significant change, a worse crisis will follow. Obviously, greed is an underlying factor in all facets of the subprime crisis. God is ever merciful, but there will be a day of judgment if America does not repent.
Don't let complacency lull you to sleep when it comes to world events. World News and Prophecy will continue to keep you informed. WNP