Economic “Contagion”—and Bible Prophecy

Will the Greek financial troubles spread? Will contagious eurozone economies spark a crisis that will lead to core countries giving up more sovereignty? What does this mean in light of end-time Bible prophecy?

I don’t recall ever hearing the word contagion from the mouth of my economics teacher. Nor do I remember reading it in the assigned textbook.

Now, years later, I see that word on the front page of my Financial Times newspaper most days. It refers not to some physical sickness, but to the concern about spreading economic weakness, especially in the area of trade, among the eurozone nations.

Greek contagion?

For the last few weeks, the word has been applied repeatedly to poor Greece, apparently the sickest of the afflicted eurozone economies. Unable to balance its budget and hold a position of strength in the modern European economy, Greece has had to be bailed out more than once, to the tune of some 110 billion euros in the first round alone, with more to follow.

The fear is that the weakness of the weakest will spread to the less weak. As I write, the front page of the Financial Times carries the following headline: “Italy’s Debt Costs Soar in Greek Contagion” (July 13, 2011).

This is pretty sobering news; Italy is the fourth-largest European economy and the third largest in the eurozone (the United Kingdom, a member of the European Union, has not adopted the euro). Italy’s economy, with a GDP of 1,500 billion euros, ranks just below that of the United Kingdom and significantly above that of Spain, the eurozone’s fourth largest. Some commentators have suggested that, because of sheer size, the economies of Italy and Spain are just too big to bail out, as has been done for Greece and (to a lesser extent) Portugal.

How the euro limits weak economies

What has contributed to this financial weakness among peripheral eurozone economies? It used to be that an independent nation state whose economy ran into rough times had to do three things: increase taxes, cut spending and devalue its currency.

With the advent of the euro, national currencies no longer exist for individual nations in the eurozone. This means the 17 nations that have adopted the single currency are unable to adjust the value of their currency to accommodate economic weakness within their own borders. The eurozone “experiment” seems to be proving that use of the first two—tax increases and austerity budgets—is not sufficient to address imbalances that build in the system.

A Greek default? Leaving the eurozone?

So now there is talk of a Greek default. Or of one or more states in the eurozone departing the single currency, going back to their former national currencies, devaluing and then perhaps somehow joining back up again.

Whatever the future holds, the present is stark enough. For the weaker eurozone economies, borrowing has become prohibitive, approaching impossibility. Greece’s 10-year bond yield is currently around 17 percent, a rate that makes it virtually impossible for the nation to borrow. Italy’s is around 6 percent, while Spain’s 10-year bond returns are currently just under 6 percent.

Contrast this with the benchmark German bond, currently returning 2.75 percent, and one gets a flavor of the degree of imbalance and loss of investor confidence in the weaker eurozone economies.

So the term contagion, now so frequently used by economists as they observe the eurozone crisis, refers to the expanding perception of economic weakness, from the weakest (Greece, Portugal) to the not-quite-so weak (Italy, Ireland, Spain), and the consequent loss of confidence in these countries.

The formation of an end-time European power

How does this play in with Bible prophecy? The Scriptures are plain when they state that the return of Jesus Christ will be preceded by a religious-political-economic-military system composed of 10 nations (or groups of nations) based in Europe and inspired by the ancient Roman system (Revelation 12:3; 13:1; 17:3, 7, 12). This will be the last human empire before the establishment of the Kingdom of God.

Is it possible this current economic crisis in Europe will become so critical that it will serve as the stimulus for the formation of this end-time European power? It would appear to emerge not democratically, but out of severe crisis, as an emergency measure.

Notice: “These [the 10 horns or 10 leaders] are united in yielding their power and authority to the beast; they will make war on the Lamb [Jesus Christ], and the Lamb will conquer them, for He is Lord of lords and King of kings” (Revelation 17:13-14, New Revised Standard Version, emphasis added).

Will the 10 yield their political power to the beast as a result of a crisis? That would seem very likely.

Whatever the case, current developments in Europe are significant in the inexorable march of Bible prophecy. Let’s watch the effects of “contagion” and keep our eyes on Europe!

For an earlier article on the global financial crisis, see "Europe's Economic Crisis: Where Will It Lead."

Ralph Levy is a minister of the Church of God, a Worldwide Association, who grew up in England and now lives in the United States. Dr. Levy enjoys serving the Church, reading, travel and foreign languages. He has a Ph.D. in biblical studies and has worked in foreign language and religious education for much of his professional life.