It Has Been Quite The Year

I started this ministry one year ago. I would never have believed that I could find so many subjects but just when I thought I had run out of ideas, something else popped up.

May you live in interesting times is an old Chinese curse. This past year has been an interesting time for financial subjects. About ½ of the wealth of the entire world just vanished. Derivatives, collateralized debt obligations, non-traditional insurance products (translation: fraudulent), structured investment vehicles (translation: unregulated banks), carry trades, jingle letters, and bailouts are just a few of the topics that have caused the world’s wealth to vanish in the storm. In the past year we have lived through the worst stock market crash in eighty years, the highest unemployment since World War II, and an unprecedented real estate crash.

In the past year we have learned that there are lies, damned lies, and statistics. The unemployment rate fell last month even though there are fewer jobs and more Americans. This is because there are approximately 2.5 million American workers who have just given up or no longer meet the Bureau of Labor Statistics’ definition of unemployed and actively seeking work. The Bureau uses a “Birth Death Model” to statistically predict the current unemployment rate based on scant information. This model is always optimistic and has to be corrected months after the fact when more concrete information is available. Recently job loss between April 2008 and March 2009 was increased by about 850,000. I am asking people I know in the ministry and even people I don’t know to pray for Americans who have lost their jobs.

The efforts of the world’s government and central banks have been likened to plugging a hole in a dam with more water. In a recent article published in Bloomberg Press Caroline Baum writes, “In Chapter 10, Section VI of “The General Theory of Employment, Interest, and Money,” John Maynard Keynes advocates building pyramids as a cure for unemployment. In fact, “Two pyramids, two masses for the dead, are twice as good as one,” he wrote in his 1936 treatise.”

Our government can not spend money fast enough, even with projected deficits of $1.3 trillion this year and $1.6 trillion next year. But once all the pot holes are filled, all the bridges are repaired, unneeded high speed rail lines, and pyramids are constructed, then what? We still have no permanent tax paying wealth creating jobs to pay for all the debt we are creating in an attempt to extricate our nation from this collapse.

The Federal Reserve Bank is buying up pools of bad mortgages at face value in order to stabilize the banks that issued this toxic waste. On a couple of occasions some of these wretched things were sold on the open market at 10 to 25 cents on the dollar. As far as I know these were some of the better articles of the class. In spite of all these efforts the stock market is once again, headed down.

Until recently, I would have asked the question, “When will the Chinese grow tired of paying for our folly?” But they have problems of their own. Now the question might be better stated, “When will the Chinese no longer be able to pay for our folly?” Their economy is based on at least 10% growth per year fueled by exports. Their exports are dropping and their attempts at “juicing” their local economy are producing empty shopping centers and unoccupied office buildings. This is not sustainable.

Europe will not save the world’s economy. Portugal, Ireland, Italy, Greece,and Spain (now called the PIGS) are facing default on their bonds. Germany is not in the mood to save their neighbors, although they might be required to do so by the agreements that created the Euro. The former Soviet Bloc countries are in worse condition than their Western neighbors.

It has been a year for old fashioned values, modest lifestyle, paying down debt, saving money, and hard work (if you are lucky enough to still have a job).

A Prayer for our country from the Book of Common Prayer

ALMIGHTY God, who hast given us this good land for
our heritage; We humbly beseech thee that we may
always prove ourselves a people mindful of thy favour and
glad to do thy will. Bless our land with honourable industry,
sound learning, and pure manners. Save us from violence,
discord, and confusion; from pride and arrogancy, and from
every evil way. Defend our liberties, and fashion into one
united people the multitudes brought hither out of many
kindreds and tongues. Endue with the spirit of wisdom those
to whom in thy Name we entrust the authority of government,
that there may be justice and peace at home, and that, through
obedience to thy law, we may show forth thy praise among
the nations of the earth. In the time of prosperity, fill our
hearts with thankfulness, and in the day of trouble,
suffer not our trust in thee to fail; all which we ask through
Jesus Christ our Lord. Amen.