The earthquake and tsunami in Japan with about ten thousand people dead, hundreds of billions of dollars in damage and a possible nuclear meltdown was all over the news last weekend but I did not hear one peep about it in church. Nothing was said in Sunday school. Nothing was heard in any prayers said that I heard. Nothing came from the pulpit and nothing even was said in casual conversations. I guess us American Christians can be very inward looking and I also point a finger at myself because I never brought up Japan at church either. In contrast, when something much less deadly like 9\/11 or Katrina happened in our own country it was on the lips of everyone in every church in the nation. In fairness, perhaps most people still did not realize the extent of the disaster<\/p>\n
Even so, this disaster in Japan could have a grave impact on our own nation in the future. There will be an immediate economic impact in the world markets. Japan was already in grave economic danger before this happened because Japan has a debt load that is 200 percent of their GDP. That is by far the worst debt load of any nation in the world, and now this costly disaster will add to that.<\/p>\n
If Japan ever has to borrow from foreign investors with that kind of debt load they will not be able to pay the interest and they will default. The only thing that keeps Japan going is very high personal savings, but that is now going to rapidly end. Many will now need to cash in their savings to pay to rebuild. Japan also has a rapidly aging population. The elderly will have to start cashing in their bonds to live on very shortly. Japan already had an economic crises coming less than a decade down the road but now the debt crisis will be greatly accelerated.<\/p>\n
Japan holds almost one trillion dollars in U.S. Treasuries. If they have to sell them to rebuild, there will be a U.S. bond sell off. The consequences of that will end low interest rates in the United States and that will mean the end of any possible recovery in the United States. Even if they somehow do not sell their U.S. bonds, they certainly will have to stop buying our bonds, and that is going to make it much more likely that the Federal Reserve will create even more money out of thin air (quantitative easing) that will eventually destroy the value of the dollar.<\/p>\n
This disaster will probably also end any idea about building more nuclear power plants in the world, especially if there is an actual reactor core meltdown with radiation spewed on the population. A core meltdown now looks imminent as I write. Some nations have already announced that they have canceled plans to build more nuclear reactors and extend the life of existing ones.\u00a0 The end of new nuclear plants will mean more demand for other sources of energy down the line. That will create much higher energy prices unless we can get our government to get out of the way and let energy companies develop our abundant oil, gas, and coal deposits.<\/p>\n
Japan is not the only economic problem threatening the world economy. The civil war in Libya\u00a0 and the unrest in the Middle East have pushed oil prices to the point where they will damage the world recovery. Interest rates are also rapidly rising in the debt burdened parts of Europe. That is because the socialist labor unions are telling the people that they should not be willing to give up anything.<\/p>\n
What was\u00a0 lost in the news because of the civil war in Libya and the crisis in Japan is the fact that hundreds of thousands of people in Europe are marching in the streets protesting the austerity measures that the lending nations demanded. In other words, the big cuts will never happen and these nations will either default on their debt or they will continue to drag down the more responsible nations.<\/p>\n
If that is not enough to threaten the world economy. Food prices all over the world have soared to new all time highs and riots in poor nations are now becoming inevitable.<\/p>\n
Now, because of this huge economic loss in Japan the camel’s back that is carrying the world economy is fully loaded. If anything else of this magnitude happens within the next year it will become the straw that broke the camel’s back.<\/p>\n