As I tweeted earlier today, the world appears to be coming to end (at least the world as we know it). The House backed out of the bailout; the Dow responded by plummeting ... 777 points—in this case a very unholy number; and Apple stock, which I should have sold at $198 a share tanked 18 percent and Google sank 12 percent.
And yet, today wasn’t even close to as bad as officials close to Treasury Secretary Henry Paulson feared it might be. Or is that day of reckoning still to come?
Let’s hope not. The most frustrating part about this whole mess for most of us is that we are innocent of the avarice that led to this calamitous situation. (I could go on to this point ad nauseam, but instead I’ll just avoid it altogether ...)
In light of what’s happening in our financial market and sending tsunamis into the U.S. economy, the Rev. Al Mohler, president of Southern Baptist Theological Seminary, reflects on a Christian’s moral responsibility during a time of irrational exuberance:
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.
Thus, 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.
The big debate in Washington is over the extent of government intervention. Prudence would indicate that the less government intervention, the better. Adam Smith was confident that a “hidden hand” within the economy would rectify excesses and punish bad actors. I think he is basically right, but the government is, like it or not, one of the actors in this economic system.
The problem with letting the markets solve this problem and letting the “hidden hand” punish the bad actors and unwise decisions is that, in this situation, the small investor is crushed along with the tycoon. Furthermore, the entire economy could face a crisis of confidence.
I left that last part in there because, on this, George Bush and I agree. I’m not a fan of socialism for the rich—thanks for that, Rhett—but I’ve never cut off my nose to spite my face. Read the rest of Mohler’s article here.