The International Financial Crisis
The Wall Street crash of 2008, the Main Street Housing mortgage crisis, the Australian Stock Market crash, the Government rescue packages in every country, and the belt tightening by every citizen everywhere is the fruit of decades of financial greed, lack of regulation, and speculative use of the share and property markets. It means that Gordon Gekko and his philosophy “Greed is good” have finally brought the world to a halt.
Many Christians have been caught up in the ways of the world and are now financially and emotionally suffering. Others remember what their father told them, and will suffer no more than most other citizens. You remember what he said: pay cash, owe no man anything, don’t buy what you cannot afford, steer clear of debt, never put up your house as a guarantee for anything or anyone, and so on. Never expect a bank to help you when you need help.
Do you remember your dad’s other pieces of advice such as, “Look after the pennies, and the pounds will look after themselves.” “Do not put all your eggs into one basket.” “Your best investment will always be in your own house.” “Neither a borrower nor a lender be.”
And as John Wesley advised his early converts, “Do all the good you can, by all the means you can, in all the ways you can, in all the places you can, at all the times you can, to all the people you can, as long as ever you can. As for money, gain all you can without hurting anybody. With wisdom, save all you can. Then give all you can.”
Unfortunately we have been through an era when everyone was encouraging you to spend – buy a second or third house, get new furniture, a pool, a new car, mortgage all you have, borrow every cent. No interest until 2012! Get a free extra Credit card. We will give you excessive valuations without anyone checking. If the country continues like this we will eventually have a day of reckoning. This month it came. More than anything else, the USA was exporting its debts to China. China now looks good for a decade of huge returns while USA is facing a mountain of debt – at least a thousand billion dollars! Plus another similar amount of debt to the Arabs!
As I write this, the Australian Stock Exchange today has lost $55 billion in share value, superannuation funds have taken an enormous hit, investments are looking shaky in many companies, and the average stock exchange losses around the world stand at over 10%.
While our Prime Minister is saying our systems are fundamentally sound, in the USA and Australia the financial system is clearly in need of reform and realism. We still possess record high unemployment, a huge surplus in the bank, vast natural resources that China and India want, and smart intellectual capital.
Is this all about greed? In the 1987 Oliver Stone movie “Wall Street,” the character Gordon Gekko famously declares, “greed is good.” But is the economy really driven by greed? No one has explained basic economics as well as Adam Smith did in his 1776 classic, The Wealth of Nations. It is many years since University days when I last read it, but as I remember the great Scottish thinker explained, an economy is based upon the transfer of goods and services from one individual to another.
Al Mohler, who TIME magazines calls the “reigning intellectual of the evangelical movement”, explains it this way, “Each partner in the transaction must believe that this transfer is in his or her own best interest or the transfer is not voluntary. Both parties seek to gain something from the transfer. Since no one person can meet all of his or her own needs alone, a vast economic system quickly takes shape. Individuals trade goods and services through the exchange of currency or another agreed-upon form of value.
At every stage, the transfer is made because those involved desire and intend to achieve a gain. The legal entity of a corporation allows individuals to band together in a common economic cause with certain legal protections. A stock market allows individual investors to buy an interest in a company, thus allowing the corporation to use their capital in hopes of future gain. The market works because all concerned hope to gain through the process.”
“Is this greed? In and of itself, this is not greed at all. The desire for a profit, for income, and for material gain is not in itself greed. The Bible clearly teaches that the worker is worthy of his hire and that rewards should follow labor, thrift, and investment. Greed raises its ugly head when individuals and groups (such as corporations or retirement funds) seek an unrealistic gain at the expense of others and then use illegitimate means to gain what they want.
Given the nature of this fallen world and the reality of human sinfulness, we should expect that greed will be a constant temptation. Greed will entice the rich to oppress the poor, partners in transactions to lie to one another, and investors to take irrational risks. All of these are evident in this current crisis.
Adam Smith recognized, the economy is a moral reality. Christians should take the advice found in the Bible and in the teachings of Jesus. Christians should look at the economy as a test of our values. The Bible values honest labor and dedicated workers, and so should we. The Bible warns against dishonest business practices, and we must be watchful. False valuations are, in effect, lies. Dishonest accounting practices are just sophisticated forms of lying. Insider information is a form of theft.
The Bible honors investment and thrift, and Christians must be wary of the impulse for short-term gains and pressure for instant profit. When Governments buy bad debts from Investment houses, we are rewarding the immoral, the greedy and the selfish managers and corporate giants. They should not be rewarded for leading their corporations into this situation. It would be more just to let those companies go bankrupt rather than use tax-payers money to prop them up, but this would also injure many innocent investors. It is better to rescue the companies with bans on manager rewards and limits on their future activities.
Capitalism has brought more wealth to more people than any other system. It rewards investment, labour, and thrift and rises on innovation. Better ideas and better products push out inferior ideas and inferior products. Given the reality of human sin, we should not centralize economic control in the hands of the few, but distribute economic power to the many. A free market economy distributes power to multitudes of workers, inventors, investors, and consumers”. http://www.albertmohler.com
Christians are to be stewards of God’s resources. Everything we are, everything we do, and everything we own truly belongs to God and is to be at the disposal of Kingdom purposes. This world is not our home and our treasure is not found here. We are to do all, invest all, own all, purchase all and give all to the glory of God. I will be writing a major paper on this to be presented in these pages later this month.
Christians should glorify God in our economic lives. We should investigate our own hearts with even greater urgency and get rid of greed and selfishness and seek the greater good of those we should serve.
REV THE HON DR GORDON MOYES AC MLC
