Well this week the credit crunch caused some of the biggest beasts in banking to crack, with the result that the Republican administration of George Bush, champion of the free-market, was forced to intervene to nationalise AIG and prop up the US banking system.
But although that caused stock markets across the world to bounce back to a certain extent, the problem hasn’t gone away… Many financial institutions are still at risk of collapse… Investments have a long way to go to regain their lost values. There will be political ramifications… both in the US Presidential campaign and perhaps even with regard to the leadership of Gordon Brown here… But ultimately the biggest losers are those at the bottom of the pile. Taxpayers who cannot afford the accountants who will help them avoid (if not evade) taxation, those whose mortgages have been foreclosed and employees who have been laid off without million dollar golden goodbyes.
This has all led to a flurry of articles looking at who is to blame… with fingers pointed in all directions… At Sub-Primer Lenders irresponsibly lending money to poorer people, with no real prospect of repayment… At Investment Banks who built an industry around repackaging these loans and playing pass the parcel with them… At Short-Sellers who capitalised on uncertainty and drove down the prices of bad and good companies alike for the sake of personal profit… At Financial Services regulators who have done next to nothing… And at Governments who have been variously accused of doing too little and too much… Of bailing out rich investors while ignoring the needs of the poor.
As usual the truth is very complex… and there are many people to blame… But a system that is essentially based upon predatory selfishness is, almost bound to result in periodic episodes of blood-letting… With the poor and the powerless paying the price.
It does raise the question as to whether the world of the stock market can in any way be endorsed by the church. My own denomination holds a very firm line on gambling, which prevents us taking money from the lottery and holding any games of chance on Methodist trust property, yet it says very little on the morality (or immorality) of our capitalist economic system which is essentially up-market gambling, with huge stakes. This week, the world lost its shirt on a series of long-odds bets!
But whilst the church says little, this week has proved again the wisdom of its founder, a humble carpenter from Nazareth. Despite the fact that he lived long before the development of the arcane system of modern stock markets, he told those who would listen:
Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where moth and rust do not destroy, and where thieves do not break in and steal. For where your treasure is, there your heart will be also.
But although that caused stock markets across the world to bounce back to a certain extent, the problem hasn’t gone away… Many financial institutions are still at risk of collapse… Investments have a long way to go to regain their lost values. There will be political ramifications… both in the US Presidential campaign and perhaps even with regard to the leadership of Gordon Brown here… But ultimately the biggest losers are those at the bottom of the pile. Taxpayers who cannot afford the accountants who will help them avoid (if not evade) taxation, those whose mortgages have been foreclosed and employees who have been laid off without million dollar golden goodbyes.
This has all led to a flurry of articles looking at who is to blame… with fingers pointed in all directions… At Sub-Primer Lenders irresponsibly lending money to poorer people, with no real prospect of repayment… At Investment Banks who built an industry around repackaging these loans and playing pass the parcel with them… At Short-Sellers who capitalised on uncertainty and drove down the prices of bad and good companies alike for the sake of personal profit… At Financial Services regulators who have done next to nothing… And at Governments who have been variously accused of doing too little and too much… Of bailing out rich investors while ignoring the needs of the poor.
As usual the truth is very complex… and there are many people to blame… But a system that is essentially based upon predatory selfishness is, almost bound to result in periodic episodes of blood-letting… With the poor and the powerless paying the price.
It does raise the question as to whether the world of the stock market can in any way be endorsed by the church. My own denomination holds a very firm line on gambling, which prevents us taking money from the lottery and holding any games of chance on Methodist trust property, yet it says very little on the morality (or immorality) of our capitalist economic system which is essentially up-market gambling, with huge stakes. This week, the world lost its shirt on a series of long-odds bets!
But whilst the church says little, this week has proved again the wisdom of its founder, a humble carpenter from Nazareth. Despite the fact that he lived long before the development of the arcane system of modern stock markets, he told those who would listen:
Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where moth and rust do not destroy, and where thieves do not break in and steal. For where your treasure is, there your heart will be also.
Had he lived on earth today he may have said something about sun-prime mortgages and short-sellers but the advice is essentially both timeless and timely.
And the key question is, where is your heart and soul invested?
This post was originally written as review of the week's news on Downtown Radio's Dawn Reflections.
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