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April 8, 2020

The Economic Bailout, October 2008

Michael Cozakas • Money Management
I was in Norway during the most recent economic events that have caused such a stir throughout the world. I heard people tell me that the U.S. financial markets were collapsing and unprecedented losses would occur. When I realized the nature of the problem I reflected on what was causing this catastrophic event to occur.
 I was in Norway during the most recent economic events that have caused such a stir throughout the world.  I heard people tell me that the U.S. financial markets were collapsing and unprecedented losses would occur.  When I realized the nature of the problem I reflected on what was causing this catastrophic event to occur. 
What Happened?

First and foremost, I believe this is a Godly correction and it is a good thing for our economy.  The mortgage meltdown, which has caused most of this, was brought on by some greedy people that departed from sound economic practices.  The bankers that caused this put many people into mortgages that they could not afford or qualify for.  They convinced people that if they purchased homes beyond their earning capability they would realize an increase in their quality of living. 

The bankers developed mortgage packages with artificially low interest rates that made the loan payments for the first few years affordable and easy to make.  No one ever looked past the initial rate as the people were told that they could always refinance, and they really should move up and enjoy their new life style.  To make the problem worse, the bankers then released loan packages called "stated income loans" that had no income verification. These loans were given to borrowers based on what they said they earned.  It is, and has been, common banking practice to verify everything a borrower states so that people are held accountable to their word. 

 Many people were convinced by the bankers, the mortgage companies, and the mortgage processors, that they should get the home of their dreams and take full advantage of the American dream.  As we all know, these practices moved the banking community away from good stewardship principles, and they were motivated by their greed. 

As the loans came due, and the market conditions changed, their dream homes become a curse. Because they were living well beyond their means, they suffered through foreclosures, bankruptcies, and personal financial devastation.  This caused the mortgage melt down to occur, which affected our old and stable financial institutions; thereby, creating the current economic conditions.  Suffice it to say, there was nothing Godly in anything our financial institutions did. Praise the Lord, He brought about a correction.

Most of us understand good stewardship, and most of us understand when something is not right.  We all are given a moral compass. As these events occur, which will shape our life for generations; we need to see that God is in this so we all have real hope that this is moving by the hand of God for our good. 

The Bail Out

Interestingly enough, while I believe God caused this, I can also see God's grace at work here.  When I first heard that our elected official were faced with approving a 700 billion dollar economic bail out to help our financial institutions survive, I was relieved that our government was actually going to do something to help-then I quickly realized that the taxpayer base would pay it back.  The number is so large; it will affect us and our children.  This cannot be good, and why should we help financial institutions that strayed away from sound banking practices? They caused the problem; they should suffer through the chaos as this is righteous.



Shortly after that, I read an article that said this is not the first time that the U.S. government has bailed out the economy.  In fact, this is the fourth time, and every time the government has bailed out the economy the people eventually prospered.

 The first time this occurred, the economic bail out was suggested by and administered by Alexander Hamilton.  The government purchased properties, held on to them, and then sold them for a profit; thereby replenishing the treasury.  We know Alexander Hamilton to be a man of God and this was his idea.  In a time of crisis, we work together for the good of the country where we live.

 The last time this occurred was during the 80's when the S&L meltdown occurred.  A similar set of circumstances happened and our government stepped in and bailed out the problem.   The government formed a company that held the properties and then they were sold at a profit. The money was repaid at a profit for the people. 

When I started to see the truth of this, I realized that while God drove a correction that was needed, He also opened a door that, based on history, could actually profit the people in time.  While I don't believe our financial institutions deserve anything, I do believe that we should seize the hope that God has given us.  I also believe that this is a great time of fear for the country.  The media has learned that people pay more attention to it when the news is bad, so the media has learned to play on our fears.

Faith, Hope, and Trust

This is a time for the body of Christ to hold onto our faith and trust the Lord and His ways.  I know that through faith and trust, we will overcome this and our character in Christ will grow more day by day.  I also believe that those people who have no relationship with the Lord will be driven to seek Him and find their faith.  The old adage that says there are no atheists in a foxhole tells us that in a time of crisis the people seek their God.  I believe more people will be driven to the church and more people will find their God. 

 As believers, it is our responsibility to let people see the Spirit of the Lord that abides in us.  We must show our faith as we go through these difficult times. As people around us walk in fear, we can walk in faith and keep our peace, joy, and righteousness.  When people see the character of Christ in us by the way we conduct ourselves in this time of crisis, they will ask the question that will truly lead them to their God. 

I think this is an incredible time of faith and restoration for all people.  This is a time when God is gathering the faithful to lead the unfaithful to a place of peace.  We are not in a time of catastrophic doom-so don't let the media rob you of your faith!

We are in a time of great change, but we all know that great change is required and we all know that God is committed to our growth.  Don't let the enemy rob you of your hope. Let your faith and trust in the Lord our God grow day by day as we work together to build His Kingdom.

Visitor Comments (1)

Response to Michael Cozakas' Article

I was bolstered and encouraged by Mr. Cozakas' article. As I was reading through the article a recent bible reading came to mind, Genesis 47. In this chapter we see Joseph administering on Pharoahs behalf. Joseph's bailout has been a success but the difficult times continue. Eventually the people traded all they to the point of their property rights and even their positions as free agents vowing themselves as subjects to Pharoah.
The really interesting aspects unfurl in the first chapters of Exodus. Here we find a Pharoah has arisen who doesn't know of Joseph or his people or of their ingenuity and prosperity that they had brought to Eygpt. In fact he fears them and takes measures to constrain and dominate this people.
A critical question arises due to the fact that it was Joseph who suggested that they yield their lands to Pharoah and their subjection to Pharoah. In his gifting did Joseph assist in setting up the context for his people's future slavery. Pharoah had already benefitted extraordinarily under Joseph's stewardship: Was this a bridge too far? We know Pharoah was something of a surrogate father to Joseph whilst, the father and son were estranged from one another. Was there a deep need for emotional validation that played into Joseph's decision making process. These are speculations of course but they may contain clues for us as contemporary believers. I sense that leaders are going to emerge on many levels within the political and social firmament from among the church's numbers worldwide and it's is our resonsiblity to be men and women of wisdom guiding our brothers ands sisters to have their significance embedded in the Lord as they rise to prominence. I think many will be showered with accolades and have unprecdented access to power structures. The challenge is to remain humble and have the long view that all human kingdoms are fickle and afflicted with consistently short-term memories. One final question persists in my thinking: what if in this final famine situation that Joseph dealing he had advocated mercy? What if he used his influence to advise the Pharoah into an act of charity?
Solidifying state power structures is not the same as promoting kingdom power and rule. It may be that there are timeless precepts buried in this aspect of the biblical narrative.

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