Wednesday, October 01, 2008

Where's Your Hope?

Is our hope in the government, what happens on Capitol Hill, or is it in the promises of God represented by the rainbow?

Symptoms or Systemic?

In thinking about this economic "bail-out," I am wondering .... are we treating symptoms again? ... or is it a systemic problem in our culture?

It seems that the highest moral good in our culture is economic prosperity. When we have a problem, it usually goes back to "it's the economy, stupid!"

People are making moral decisions based on how it will affect them financially. Older people are living together, so that they don't lose their deceased spouse's retirement. Younger people are living together outside of marriage to save money. Companies conduct unethical practices to make more money, as long as it is legal .... forget the ethics.

We now have a high rate of out-of-wedlock births in some segments of our culture because they would lose their government welfare benefits if they got married. That created a multi-generational practice of not getting married. Now many men and women don't even aspire to marriage because they have never experienced a family situation with a mother and father.

Some people base their giving to needs based on whether they can get a tax-deduction for it. I wonder what would happen if we went to a flat rate tax, with no deductions, would the churches and nonprofits survive?

At some point, our government and our culture is going to have to ask ourselves whether economic prosperity is going to be the guiding decision of our country? We are going to have to ask whether it is in the best interest of our country to have easy credit, even if it means an economic slow-down or that not everyone will attain the American dream of home ownership.

Michael Novak said:
Western democratic capitalism is like a three-legged stool, resting on political freedom, economic freedom, and moral restraint. Take away moral restraint, and the stool collapses.

Is the stool collapsing? Is the reason a lack of economic freedom or political freedom or is it a lack of moral restraint?

Let Wall Street have a nightmare and the whole country has to help them get back in bed again.

Will Rogers said that over 70 years ago. How little life has changed.

Is there a relationship between economics and morality?

Or has a sound economy become the highest good?

What has happened to our economy and how did we get here?
We have worked with people, who are in economic distress, in Christian financial counseling for 17 years, and with young, engaged and newly married couples for the last 13 years. We saw the train wreck coming for many years, as did many others. The red lights were flashing but the train wasn’t slowing down.

The lure of debt dangles before our eyes every direction we turn; the temptations are everywhere. The Bible says in Proverbs 22:7 “the borrower is servant to the lender.”

We have seen three foreboding snares in which people, especially young people, get trapped. Each snare is bound up in debt.

The bait for each trap is materialism, greed, consumerism, instant gratification …. Whatever you want to call it...

The first is school loans. We have seen people with more than $100,000 in school loans. They are easy to get, always available. We heard a story just today from a parent of a 39 year old who is having trouble paying her school loans. They go on forever.

The second trap is a new car with little or no down payment. Again, these loans are easy to get. Within a year, many people find that they can’t afford the payments on the car. They are “upside down” on the loan, they owe more than the car is worth. The chance of selling the car and getting out of the payments is nil. Car dealers make it easy though, they will let you buy another one and roll-over your debt into a new loan!

The third trap is buying a more expensive house than a person can really afford. Home buyers often gauge which house they will buy according to what the mortgage company will loan them. Mortgage companies will loan a person much more than the person can afford and often they do not require a down payment.

This third trap was the tipping point of the financial crisis we have today.

Mortgage companies often sell the mortgage to another company after the home is bought. After practicing this procedure regularly, many of them realized that they weren’t really taking a risk to be the initial financier of a home. They financed homes without being stringent on the qualifications of the buyer. The company who bought the loan had not qualified the buyer themselves. They had no idea if the person could make the payments…. and so on and so on.

The house of cards has now collapsed.

What are others saying?

By the time you read this blog, the decisions on Capitol Hill may be finalized. Right now, politicians are debating, main street Americans are angry, and Wall Street is on a wild, roller coaster ride.

Some politicians are calling the government bailout “socialism.”

Chuck Colson, on his website called Breakpoint, says that the cause of the market meltdown was moral failure. Free markets—capitalism itself—can thrive only when corporations and individuals exercise moral restraint. When those restraints fail, government regulation is sure to follow; which, in turn, makes free markets less efficient, and certainly less free.

Moral restraint, you see, requires a set of morals—beliefs that some things are right, and some things wrong. To put it more simply, moral restraint requires a biblical worldview.

Last July, in a private gathering, someone captured President Bush on a mobile phone. When asked about the cause of the global credit crisis, the president responded, “There is no question about it. Wall Street got drunk.” The president paused, and said, “That’s one reason I asked you to turn off your TV cameras.”

Michael Novak writes about the relationship between the free market system and morality: Western democratic capitalism is like a three-legged stool, resting on political freedom, economic freedom, and moral restraint. Take away moral restraint, and the stool collapses.

The Facts of Personal Debt

A study released in January of this year, The Barna Group provided a data-driven snapshot of the U.S. population, providing a dose of objectivity to some much-debated, often-misunderstood issues. The Barna research explores matters beyond "who-will-Christians-vote-for" questions - for now - in favor of examining the perceived importance of 10 diverse issues. In the top tier of the ranking, three issues were considered “major” problems by Americans (all faiths, party affiliate, etc.): Those included poverty (78%), the personal debt of individual Americans (78%), and HIV/AIDS (76%). The issue of personal debt rose to the top when the survey group is delineated into Christians who have a deeper faith and among Republicans.

From MSN Money:
Of the households that did carry a credit card balance, the median amount owed was $1,900. That means half of the households with a balance owed more, and half owed less. (Medians are less subject to the skewing phenomenon that plagues averages; that’s why economists tend to favor them.)

Bill Whitt at the VIP Forum, a Washington D.C. research firm, by analyzing the credit card debts of all the households the Fed surveyed, Whitt discovered:
· Only 29% of households owe $1,000 or more on their cards.
· 21% owe $2,000 or more.
· 6% owe $8,000 or more.
· 4% owe $10,500 or more.
· 1% owe $21,400 or more.

Does this mean all the hand-wringing over consumer debt is so much noise? Hardly. Although most Americans seem to be avoiding the credit card trap, there are still plenty of people on the financial edge: More than a third -- 36% -- of those who owe more than $10,000 on their cards have household incomes under $50,000, according to the VIP Forum analysis. The percentage of disposable income used to pay debts is still near record highs.

Bankruptcy Rates
The U.S. bankruptcy filing rate climbed again in August of this year, reaching a new post-2005 high of 4,476 filings per day. The year 2005 is significant because it was the year that the bankruptcy law changed making it more expensive and more time-consuming to file bankruptcy as well as making bankruptcy less effective once debtors got to bankruptcy court. Despite these changes, the bankruptcy rate has become staggeringly high, and we appear to have returned to an era where we will have well more than 1 million annual bankruptcy filings.
[Read statistics]

What do I do with all this information?

A few basic principles that guide us in the Christian life will also serve us well in this area.

First - pray for those who are in authority. Pray for their wisdom but also their sense of morality and ethics.

Second - take responsibility for any part you have in accumulating debt or being unwise in your spending.

Third - and most important, seek God’s heart and guidance on finances.

Fourth - Be involved in the culture. Share your perspective with your government representatives. Find out who might need help in your sphere of influence. Share what you have learned about finances in a way that honors God but gives grace to the listener.

Fifth - Don’t panic. Your reaction to the economic climate today is a barometer of your trust in God. Is your security in money or in the government or the political system or in Wall Street or is in God, our Father, our Creator, and our Sustainer?

Managing money is not rocket science.

Three practices will take care of most decisions in regards to money:
1. God owns it all. Seek Him about what to do with His money. Use His plan.
2, Spend less than you earn. Do not go into debt. If you are in debt, make it a priority to get out.
3, Save first, before spending for your wants of the day. A dollar spent today precludes how it can be spent in the future.

The Bible and Money

"Let your character be free from the love of money, being content with what you have; for He Himself has said, 'I will never desert you, nor will I ever forsake you,' so that we confidently say, “The Lord is my helper, I will not be afraid" Hebrews 13:5-6

“The earth is the LORD's, and everything in it, the world, and all who live in it; for he founded it upon the seas and established it upon the waters.” Psalm 24:1-2

"But if anyone does not provide for his own, and especially for those of his household, he has denied the faith, and is worse than an unbeliever" 1 Timothy 5:8

"The wise man saves for the future, but the foolish man spends whatever he gets" Proverbs 21:20, LB