Making Sense of the Economic Crisis
Monday, September 29th, 2008
Are you as confused as I am over the US economic crisis? Admittedly I am the world’s worst when it comes to understanding finances, but wrapping your mind around the complex issues that surround the current situation is a challenge for anyone. I’ve done a little research and in a nutshell here’s how I understand it.
For over a year now the US economy has been slowed by a reduction in the availability of credit. Two big issues are contributing to the problem. First is the decision by lenders to make risky subprime mortgages available to homebuyers under relaxed standards resulting in a record number of defaults. Second is the practice of bundling and trading bad loans along with good loans making it virtually impossible to know which loans are good and which are bad. Over time this has created widespread uncertainty which has frozen credit markets. Consequently it is becoming difficult for the economy to function since business needs credit. Now we are told that Big Brother must step in and save us.
Things get even more complicated when you factor in the effects of energy dependence. Then to make matters worse law makers are compelled to inject partisan spin into the process in hopes of scoring political points with their constituents. Everyone seems to be pointing fingers but no one is willing to claim any of the responsibility. And while throwing money at the problem may put a band aide on the bleeding, one wonders if anything meaningful will be done to address the heart of the problem.
Dr. Albert Mohler has written a great piece on A Christian View of the Economic Crisis. In it he explains:
…the current crisis sheds light on what happens when things get out of control, when various pressures distort the proper operation of the markets, and when irrational valuations entice investors to make poor investments. Dishonesty enters the picture at many levels, and the individual investor is too often left in the dark.
When these things happen the economy is threatened by a lack of trust, and trust is the most essential commodity of all when it comes to economic transactions. Without trust, the entire system collapses.
I’m reminded again of the first two chapters of 1 Corinthians where Paul compares the foolishness of this world to the wisdom of God. “We speak wisdom among those who are mature,” writes Paul, “yet not the wisdom of this age, nor of the rulers of this age, who are coming to nothing (1 Corinthians 2:6).” It seems to me that we are seeing these words being played out right before our eyes. Greed, dishonesty, questionable business practices are all part of the wisdom of this age and are utilized by the rulers of this age. Michael Spencer gives a sobering reminder of this all “coming to nothing.”
So how should Christians view this economic crisis? According to Dr. Mohler:
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. Over the long-haul, the entire economy must prosper if the vast majority are to do well and realize a responsible gain.



