Posts tagged with: stock market

Here’s today’s offering from Jim Wallis’ Rediscovering Values for Lent on the Sojourners website:

Today, instead of statues, we have hedge funds, mortgage-backed securities, 401(k)s, and mutual funds. We place blind faith in the hope that the stock indexes will just keep rising and real estate prices keep climbing. Market mechanisms were supposed to distribute risk so well that those who were reckless would never see the consequences of their actions. Trust, security, and hope in the future were all as close to us as the nearest financial planner’s office. Life and the world around us could all be explained with just the right market lens. These idols were supposed to make us happy and secure and provide for all our needs. Those who manage them became the leaders to whom we looked, not just for financial leadership, but direction for our entire lives. That is idolatry. (page 29).

Last month, Fidelity Investments reported that the average 401(k) balance reached a 10-year high at the end of 2010 — two years after the financial crisis and recession. It also pointed out that “the majority (53%) of participants in 401(k) plans … earning between $20,000 and $40,000 do participate, and 71 percent of participants earning $40,000 and $60,000 participate.” That’s a lot of lower-income idolatry.

This is not a picture of the stock market

According to a report (issued in 2008) by the Investment Company Institute and the Securities Industry and Financial Markets Association, “ownership rates for equities and bonds across U.S. households grew dramatically between 1989 and 2001, but have since tapered off. In the first quarter of 2008, 47 percent of U.S. households (54.5 million) owned equities and/or bonds. The overall ownership rate in 2008 is still much higher than it was in 1989.” The report noted that “ownership of these investment assets has declined since 2001, as increasing market volatility has reduced Americans’ tolerance for risk.” But, most likely, those investment funds will be saved somewhere or moved into lower risk vehicles.

Of course, if you are afraid that investing in the stock market, a mutual fund, a money market account, etc., makes you an idol worshipper, the cure would be to stuff your cash into the mattress or bury it in a coffee can. But would that be good stewardship?

Blog author: jballor
Thursday, January 21, 2010
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Daren Fonda at Smart Money has a great primer on faith-based mutual funds, “Faith & Finance: A Boom in Religious Funds.” These kinds of funds can be understood as a slice of the broader sector of “socially responsible investing.”

As Gregory R. Beabout and Kevin E. Schmeising wrote in 2003 (PDF),

Over the last thirty years the phenomenon of socially responsible investing (SRI) has been changing the face of investment and corporate life, and carries with it the potential to modify a whole spectrum of relations within market economies. The relations of stockholders to corporations, managers to labor, labor to stockholders, and the corporation to the wider society all promise to undergo transformation if the practice of SRI continues to accelerate.

These kinds of funds reflect in some sense the gaining sentiment that John Wesley expressed in his maxim: “Earn all you can.” But this command was linked to others and limited by responsible duty.

Wesley put it this way: “Gain all you can by honest industry” and “by honest wisdom.”

Gain all you can by honest industry and you have taken the first of three steps in Christian prudence with respect to the use of money.

Memo to documentary filmmaker Michael Moore: Free markets didn’t cause the financial crisis. The biggest culprits were government planners meddling with the market. That’s the message of Acton’s newest video short.



So why on earth is Michael Moore (Capitalism: A Love Story, Sicko) so eager to route even more power and money through Washington? Centralized planning is economic poison. Doubling down isn’t the cure.

(Also, Acton’s resource page on the economic crisis is here.)

What is the root cause of the sub-prime crisis shaking the global economy? We need to know so we don’t allow it to screw up our economy even worse.

Many point to dishonesty and poor judgment on Wall Street. There was plenty of that leading up to the near-trillion dollar bailout, and even now the stock market is busily disciplining stupid, dishonest companies.

Others point to the many people who falsified loan applications to get mortgages beyond their means. That too played a role.

But dishonesty and poor judgment are as old as Adam and Eve. Something more was at work in the present crisis, a crisis of unprecedented scope. Why didn’t profit-minded loan companies run thorough credit checks? Why did they keep pumping out low interest loans to high risk borrowers, ignoring the risks?

It’s as if somebody spiked the financial system’s punch bowl with stupid juice, driving normally prudent financiers to dash, en masse, over the cliff.

It seems that way because it is that way. The brewers of the stupid juice were largely (if not exclusively) politicians in Washington who sought to redistribute wealth from the rich and middle class to poor people with bad credit. These politicians fostered various laws and institutions that directed, cajoled and legally bullied mortgage companies to extend big loans to people with little credit.

A case in point is a group called ACORN—Association of Community Organizations for Reform Now. Stanley Kurtz explains in an Oct. 7 essay at National Review Online:

“You’ve got only a couple thousand bucks in the bank. Your job pays you dog-food wages. Your credit history has been bent, stapled, and mutilated. You declared bankruptcy in 1989. Don’t despair: You can still buy a house.” So began an April 1995 article in the Chicago Sun-Times that went on to direct prospective home-buyers fitting this profile to a group of far-left “community organizers” called ACORN, for assistance. In retrospect, of course, encouraging customers like this to buy homes seems little short of madness.

… At the time, however, that 1995 Chicago newspaper article represented something of a triumph for Barack Obama. That same year, as a director at Chicago’s Woods Fund, Obama was successfully pushing for a major expansion of assistance to ACORN, and sending still more money ACORN’s way from his post as board chair of the Chicago Annenberg Challenge. Through both funding and personal-leadership training, Obama supported ACORN. And ACORN, far more than we’ve recognized up to now, had a major role in precipitating the subprime crisis.

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