In the movie Wall Street the character of Gordon Gecko played by Michael Douglass uttered the infamous phrase “greed is good.” This sentiment of course runs completely contrary to the worldview that Christians are instructed to hold but this is the worldview in which the secular world has embraced. It is often times not expressed with such vigor and conviction but deep within the heart is this feeling. However, the radical nature of being a Christian is one of sacrifice in order to better the world and our neighbors. The current state of the world is not reflecting this and is in massive turmoil with the epicenter being the economy. In the recent history of the United States you cannot get very far without seeing something about how the economy is in peril originating with the financial crisis of 2008. Unemployment is a little less than double of what economist feel comfortable with. The housing market is still trading in dangerous water. Greece is perilously close to defaulting on its debts and Spain, Portugal, and Ireland are right behind them. The occupy wall-street movement is full of vitality and is a force to be reckoned with because people who are feeling so disenfranchised by the system that they have had enough. Social unrest is everywhere.
So, the question that we as Christian’s must ask ourselves is what do we make of this? How do we to interpret what is going on out there? The reason why I am concerned about this is because I have not seen much literature out there devoted to the Christian understanding of this subject. My burden in this paper is four-fold. The first thing I would like to accomplish is to talk about the anatomy of the fall and the crash (how did we get here) by looking at Genesis 3 and the narrative of the crash. The second is what is the spillover effect of the fall and the crash (economists would call this contagion). The third is what is at the heart of this matter with special attention to the concepts of idolatry and worship. Fourth is how do we proceed from here?
The Anatomy of the Fall and the Crash
So, where do we begin to start to understand all that went on in the crash of 2008? I think that the beginning is a great place to start. No not 2002 when the Target Federal Funds rate was lowered to a hundred basis points and left there for an unheard of eighteen months. However, we shall begin our quest at the very beginning namely Genesis 1. The most important thing that we as Christians must do is place the crash in the metanarrative (creation, fall, redemption, and restoration) if we are to even have a modicum of understanding. So for the investigation at hand we will start off at the beginning, trying to understand what happened that fateful day in the garden. First, we see that God created everything and said it was good (Genesis 1&2) and of all the commands of God that was given to Adam and Eve there was one command that was negative in nature (Gen 2:17). At this point of the story everything is serene and nothing seems like it can corrupt it and by everything I mean that from the economic standpoint that the traditional business cycles (peak, recession, trough, and recovery) did not exist because there was only room for growth and prosperity. So, everything was good and there was no corruption at all in the system.
Then as we go from Genesis chapter 2 to chapter 3 the unthinkable happens the serpent tempts Eve to eat of the tree of life and he tricks her into thinking that God is not good by hiding something from her and Adam. Eve eats of the tree and after she does she gives it to Adam and he eats of it. The question that we must ask at this point is why did this happen. What made Adam and Eve sin? Calvin is instructive on this issue when he says,
“Hence infidelity was at the root of the revolt. From infidelity, again, sprang ambition and pride, together with ingratitude; because Adam by longing for more then was allotted him, manifested contempt for the great liberality with which God had enriched him”[1]
The resultant events of this sin are numerous after God confronts them in the garden. The first is they realize that they are overexposed and naked so they try to cover themselves. The second, God confronts the two in the garden and they blame-shift and no-one assumes responsibility. The third is that God gives each a curse. The focus of our discussion will be the curse that is given to the man in Genesis 3:17-19 where he gave the curse of having to toil and work for everything. The utopian society had given way to a society in which the terms of toil and sweat were introduced whereby the whole system of work that was to be henceforth one that went from joyous to laborious. After the fall is when work became truly a four-letter word.
So what happened in 2008? What were some of the causes that lead up to the greatest financial crises that we have seen since the Great depression? Well the first thing we must understand is that naturally before there is a crises like this there, logically, must be a time in which things are going well and we are in a time of utopia. This time period would be from the year 2002 to the end of 2007 when the US was coming of the recession that was caused by the dot-com bubble bursting in the early 2000s. After that there was a five-year stretch in which the markets were going through the roof and people were making money hand-over-fist. Two examples of this were Apple Inc. (aapl) was trading at $7.25/shr at the middle of 2002 and by the end of 2007 it was trading at $198.08/shr. That is nearly a 3000% Return on Investment (ROI). The next examples are the three major indices from September 2002 to Dec 2007. The Dow Jones went from 7,528.40 to 13,365.87 (177% ROI). The NASDAQ went from 1,210.47 to 2,504.65 (206% ROI) and finally The S&P went from 800.58 to 1,411.63 (176% ROI). So the average ROI for the indices over that time frame was 186.33% or for every dollar you put into the system you would expect to get back $2.86.[2] Even cash at this juncture was following the cultural mandate of being fruitful and multiplying. I think that this qualifies as “utopian”.
So what happened caused the crash of 2008. There are four things that simultaneously went haywire; the rise of the shadow banking sector, the loosening of the regulatory environment, the change in the mortgage industry, and the prominence of such terms as secutization, derivatives, and structured finance[3]. Each of these contributed to the grand problem that saw the demise of the financial system. Those things are not evils in and of themselves. The question remains what was the “apple” that was eaten that saw 2007 (Gen 1-2) to go into 2008 (Gen 3). The forbidden fruit in this case was the increase in the appetite for debt caused by cheap money in the system causing as economists would call it perverse incentives[4]. Now I am not saying that debt is necessarily a bad thing but at this point in the story the appetite for debt and risk became insatiable because much like the Calvin quote earlier we longed for more than was allotted to us. To put this in numerical perspective, John Cassidy illustrates it as such; the total debt outstanding from 2002 to 2006 went from $31.84 Trillion to $45.32 Trillion which was an increase of 42.3% and by 2006 total indebtedness of the country counted for 350% of GDP. Or as he puts it the AVERAGE household had debt of $128,000.[5] What happened at the turn of the calendar almost had a flavor of the turn of the chapter from Gen 2 to Gen 3
The first thing that we note is that people came to the realization that they were in fact overexposed and naked (their shorts were not covered). In the realization of the nakedness many people realized that they needed to cover themselves. In the finance world this is what is called the flight to safety.[6] However, what is different in this account is that there was not enough “fig leaves” or cash to go around and that even though Adam and Eve were covered many people were left naked or worse were left with toxic assets that are like a bomb that is about to go off and cause financial death.[7] After the race to liquidity happens there are people that are left to ask the question of what happened? Because of the nature of the problem and the fact that it is systemic (widespread) this means that no one is going to take the responsibility of what happened. During this time the investment banks blamed the mortgage companies who blamed the American people who blamed the Federal Reserve who blamed Wall Street who blamed China who blamed the American government who blamed George Bush. No one really wanted to take responsibility because each had a hand in it somehow (we will talk about this later). The third thing is the aftermath of this is that the world is not the same and many things have gone terribly wrong in the markets in the economy and work has once again regained its status as a four-letter word
The Contagion of the Fall and the Crash
The question that this arises is what did the fall affect? The question much like we will see later with regards to the economy, everything was affected because of sin. There was a radical corruption of sin whereby everything was infected. It was as if there was a contagion of sin within the self, making everything depraved stemming from original sin. Calvin described this sin as,
Original sin, then may be defined a hereditary corruption and depravity of our nature, extending to all the parts of the soul which first makes us obnoxious to the wrath of God, and then produces in us works which in Scripture are termed works of the flesh[8]
Jonathan Edwards likewise states,
I now assert, that mankind are all naturally in such a stat, as is attended without fail, with this consequence or issue; that THEY UNIVERSALLY RUN THEMSELVES INTO THAT WHICH IS, IN EFFECT, THEIR OWN UTTER ETERNAL PERDITION, as being finally accursed of God, and the subjects of his remediless wrath through sin. – From which I infer, that the natural state of the mind of man, is attended, with a propensity of nature, which is prevalent and effectual, to such an issue; and that therefore their nature is corrupt and depraved with a moral depravity, that amounts to and implies their utter undoing.[9]
Not to belabor the point any further but Martyn Lloyd-Jones further states “There is in us, in man, this terrible mighty power called ‘sin’ which alienates us from God and leads us to hate Him, and at the same time debases us and leads us to conduct which can only be described as disgusting.”[10] So what we learn is that sin is not just who we are but in fact what we do and that this sin corrupts everything that we come in contact with. Even more Paul says in Ephesians that by nature we are children of wrath (Ephesians 2:3) and David says in the Psalms that we are brought forth in inequity and that it was in sin that his mother conceived him (Psalm 51). What we see in this, is that humanity is so corrupt because of not only what we are but what we do. We are like our first parents who through the one trespass of Adam led to the condemnation of all people (Romans 5) it was this trespass that lead to us to death but even more than that it was this trespass that made us slaves to sin whereby the fruit that was being produced lead to death (Romans 6:19-20).
It is a curious thing that Paul in the Romans passage uses the phrase that we were slaves to sin. The term is interesting because the concept of slavery is one that connotes the fact that our lives were subjected to its whim. The logic flows that whatever someone is subjected to it means that it controls the person’s life in all manners for the exchange of protection. I think that Paul could have also said something to the effect of that we were in debt to sin and it was the overflow of indebtedness that was the controlling factor of what we did. It was this debt that controlled all facets of life.
This could relate to what is going on in the post-crisis world that our enslavement to debt radically corrupted everything that was around us. However, sin is subtle in ways that when we think that things are going well it turns out that it is not. Moreover, the extent in which sin corrupts is not often known. What we think might be the problem is actually a symptom and the corruption runs much deeper then we think. Take for example, what chair of the Federal Reserve said when he thought that it was just the sub-prime crisis that was causing all the mess,
What I did not recognize was the extent to which the system had flaws and weaknesses in it that were going to amplify the initial shock from subprime and make into a much bigger crisis”[11]
Bernanke’s quote is telling on a number of levels. The first is that when you think you have sin cornered much like The Fed thought that they had the cause cornered by just dealing with the sub-prime mess as it turned out that was not really the cause of all that was going on. The thing that Bernanke realized is that sin is much more devious than what it first appears. In other words sin is craftier and when we think that we have nailed the issue we actually discover that it is much deeper than we think and the whole system has been corrupted further then we can imagine. Often times that when we start to unwind sin much like the unwinding of certain Collateralized Debt Obligations(CDO) is that we find that there was much more corruption then could have ever understood. The other important thing that we must also understand is that as it has been discussed before that sin never takes responsibly for itself and is always wanting to blame shift.
After we have just dealt with the reality that the financial crisis was much deeper than we thought it was we must also realize that it was much wider of a scope then we could have understood. This systemic crisis did not just affect the United States but the contagion extended not to other industries as has been highlighted but to other nations as well. This is due to the fact that most nations are in each-others pockets and that when a country engages itself in protectionist policies there is a chain-reaction of closing off of pockets as well. This was made evident in the East-Asian currency crisis 1998 with the advent of carry-trade[12] (which is the use of one currency to borrow another currency due to the fact that the exchange rate costs are lesser then the cost of borrowing) This was further exacerbated in the crisis of 2008 because of the interconnectedness of the worlds-financial system even more so ten years later because the arbitrageurs had a greater neighborhood to trick-or-treat and get candy from. The sheer levels of capital flows from one country to another was astounding.
How this relates to sin is pretty easy to see. Often times when we think that we have sin contained the effects are far greater then we realize. A practical example is the fact that when a single man engages in pornography often times he thinks that the worst thing that he is doing is sinning against God (Which should be an incentive enough) and that God is God that is forgiving and will forgive him no matter what. This fails to account the massive spillovers that occur when he looks at pornography. Some of the consequences that he fails to see is that the when he clicks on that website he is contributing to the MASSIVE objectification of the female population and the perversion of many females in their self-image. The second thing that he does not realize is the fact that he is ruining his conception of what beauty and that if he hopes to get married somewhere along the way that is going to affect his marriage in numerous ways. The more that he becomes indebted to the sin of pornography the further the spillovers will be. The analogy is not perfect but is a good proxy for understanding systemic nature of contagion and its “unintended” consequences.
The Heart of the Matter
The question that needs to be addressed is at this time is what is at the heart of this matter. Or according to the Christian worldview how do we to interpret what is at the core of crisis and crashes of the like? What I purpose is that at the heart of this is worship. Worship at its core is ascribing worth to something and when a person engages in the act of worship they are going to sacrifice to that thing in which they are ascribing worth to. If this worship is directed toward something other than the God the Father, who created the world and sent His Son Jesus to die for sins and the Christian is united to him via the gift of the Holy Spirit then it is considered Idolatry. However, for someone with proper understanding of the metanarrative of scripture the diagnosis of Idolatry with regards to the crisis of 2008 should not surprise. The history of humanity starting with our first parents (as has already been discussed) is littered with Idolatry. From Adam, to the tower of Babel, to the man that is discussed in Isaiah 44:12-17,
The ironsmith takes a cutting tool and works it over the coals. He fashions it with hammers and works it with his strong arm. He becomes hungry, and his strength fails; he drinks no water and is faint. The carpenter stretches a line; he marks it out with a pencil. He shapes it with planes and marks it with a compass. He shapes it into the figure of a man, with the beauty of a man, to dwell in a house. He cuts down cedars, or he chooses a cypress tree or an oak and lets it grow strong among the trees of the forest. He plants a cedar and the rain nourishes it. Then it becomes fuel for a man. He takes a part of it and warms himself; he kindles a fire and bakes bread. Also he makes a god and worships it; he makes it an idol and falls down before it. Half of it he burns in the fire. Over the half he eats meat; he roasts it and is satisfied. Also he warms himself and says, “Aha, I am warm, I have seen the fire!” And the rest of it he makes into a god, his idol, and falls down to it and worships it. He prays to it and says, “Deliver me, for you are my god!”
I know that for us in the modern world to read such an account like this sounds rather ridiculous because we after all are enlightened scientific people and we know for a fact that wood idols are not going to save us at all. However, that is such a shallow hermeneutic and it completely misses the point that Isaiah is trying to get across. For the argument at hand the ironsmith could be an investment banker and his wooden idol that he makes could come in the form of a complex derivative product in which he invests in by putting his heart into and sacrificing to it. Now I feel like this is a good point to interject by saying that I am not saying that all investing is bad nor am I saying that the capital markets are bad in any way shape or form. The reason that I say this is straight from the parable itself. There was one half of the log that was used for its intended purpose and that was to cook over, and warm himself. This was the gift of the log that God had given to the ironsmith. The point that it became trouble for him was when he thought that the other half of the log was going to be his savior.
Allow me to take this into the modern-day and how we can learn from this. I think that as a part of being the image of God it means that we are able to use our creative faculties in the ways of business in the act of wealth creation. There is an aspect of the fact that we are as humans instructed to capitalize on this as a part of having dominion over the land. We are instructed by the lord to use the land as such. There have been many epochs in human history in which we have gone from a primarily agrarian economy to the present day knowledge/information economy (I am speaking of the first world of course). At each juncture in the epochs there are have been cases in which the primary wealth making entity could be used in such a way that would abuse it thus making it Idolatrous for the ironsmith it was the wood. For the Dutch it was tulips. For the investment banker it could be a CDO. The thought process of the underlying construction of a CDO and all the sophistication behind it is something that if we are to think about it is sheer creative genius. I mean to be able to navigate and understand all the moving parts and the co-ordination that is needed to construct even just one let alone a whole market of these things is mind-blowing. However, the point in which these things become dangerous is when they go from, as the Isaiah passage indicates, a steward of the resource, to something that will serve as our functional savior. The question that needs to be asked on a continuous basis for the Christian who is in the financial services industry or simply investing in general is what are the ends? If the ends are to serve self in the act of worshiping self via the wealth creation than the worship of God who gave us our minds as the Supreme wealth Creator we are missing the point of our brains and that is to serve him in all that we do.[13] The other importance for the constant evaluation of are we staying true to keeping the Glory of God at the center of our hearts is that as Calvin says the heart is an idol factory so we are prone to idolatry. The reason for this is as Jeremiah is quick to remind us of the condition of the heart when he says, “The heart is deceitful above all things, and desperately sick; who can understand it?” (Jeremiah 17:9).
Conclusion or Asking the Question: Now What?
The question remains is one of how then shall we live in light of this knowledge so that we are better able to understand what is going on in the future. I think the great imperative of all Christians is that we are not to be surprised because of what is going on out there. We of all people should realize that market fluctuations are going to happen. This is a part of the living in the already-but not yet paradox of the place in the metanarrative. However, the key thing is how do we respond to this so that the light of Gospel may be further manifest? The way that I see things is that much like the real world there is always going to be a regulation tension out there. There are going to be those that are calling for more regulation and there are going to be those who are calling for less.[14] However, these models of regulation are still having people put their hope in government either way.
In the regulatory environment there are those who have an over-realized view of the kingdom and think that we can bring the kingdom here with more and more regulation. This would be the pharisaical-legalistic view of things because the undergirding philosophy is that we need more laws so that there might be an equitable distribution of wealth and ergo no more crashes because of the rampant equality. However, on the other side of the coin are those who want to put their faith in the auto-correcting mechanism of the market and want little regulation at all. Those would be the functional Antinomianists of the world who are against law in general. Both I think are in error in some fashion because they are putting their faith in something other than the cross. One states the government will save the other states that the markets will save them. I will make this loud and clear that whatever you place that is NOT Jesus as your savior it will only lead to your condemnation. So, we render that which is Caesar’s to Caesar and we use situations like the crash in ways to glorify him in all that we do whether there is a boom or a bust to the economic system. Let me more clear and say this does not mean that we as Christians are not to be in places like Goldman Sachs, Target, Best Buy, Wells Fargo, US Bank, 3M, Humana, Yum, Papa Johns and the like but we are there as ambassadors to let Christ shine through our work because we have a Sabbath rest in Christ or to put it into Piperesque terms “Don’t waste your financial crisis”
[1] John Calvin, Institutes of the Christian Religion, trans. Henery Beveridge (Peabody, Mass: Hendrickson Publishers, Inc., 2008), 149
[2] All data that was used was from Yahoo Finance site. This is a public site.
[3]United States Government. The Financial Crisis Inquiry Report. (Washington D.C.: U.S. Government Printing Office, 2011.) 26-27
[4] Frank K. Martin. A Decade of Delusions: From Speculative Contagion to the Great Recession. (Hoboken: John Wiley & Sons Inc., 2011) 375
[5] John Cassidy. How Markets Fail. (New York: Farrar, Straus and Giroux, 2009) 223
[6] Charles P Kindleberger. Manias, Panics and Crashes: A History of Financial Crises. 4th .( Hoboken: John Wiley & Sons Inc., 2000.), 17
[7] Scott McClesky When Free Markets Fail: Saving the Market When It Can't Save Itself. (Hoboken: John Wiley & Sons Inc. , 2010.) 3
[8] John Calvin, Institutes 152
[9] Jonathan Edwards. The Works of Jonathan Edwards. Vol. I, in The Great Christiian Doctrine of Original Sin Defended, by Jonathan Edwards, (143-233. Edinburgh: The Banner Of Truth Trust, 2009) 148
[10] Martyn Lloyd-Jones,. The Plight of Man and the Power of God. (London: Christian Heritage, 2010.) 71-72
[11] Financial Crisis Inquiry Report 229
[12] Padma Desai. Financial Crisis, Contagion, and Containment. (Princeton: Princeton University Press, 2003.) 203
[13] This is a Romans 1:21-25 way of reading the text. I took some liberties but stayed true to what is being said.
[14] The pendulum model I owe much to the teachings of Bethel University Finance professor Chuck Hannema who instilled in me the understanding that in the financial world there is going to be this regulatory Tension. This is shown in the establishment of the Glass-Stegal Act in 1932 as a part of the regulation of banks making them separate from the rest of the Investment environment. The movement toward deregulation started in 1999 when Gramm-Leach Bliley was enacted thus repealing the Glass-Stegal act allowing banks to co-mingle and start offering a wider selection of products.
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