Financial Stability in Unstable Times
Written by Ralph Levy
The economic news out of Europe and the United States is troubling. What can we do to find financial stability in these unstable times?
“Frightening” might be an inadequate term. Every day brings news of the world economic system apparently creaking at the seams.
Last Friday (June 1), the New York Stock Exchange saw a drop of 275 points on the Dow Jones Industrial Average. That’s a loss of 2.2 percent—the worst one day showing of the entire year! What’s more, that drop completes a wipeout of all the gains since the beginning of the year and leaves the Dow in deficit since January.
The biggest cause of investor jitters? Europe!
The news from Europe
Indeed, the news from Europe is chilling. Greece continues to teeter on the edge. Will it or won’t it exit the eurozone? And what would that mean for the other weak eurozone nations?
New elections are slated for June 17 in Greece, with the radical left Syriza party, led by Alexis Tsipras, apparently gaining strength. This “game of chicken” politician rejects more painful austerity but, at the same time, doesn’t want Greece to leave the euro.
Will the Greeks attempt to “have their cake and eat it too”? Not if German Chancellor Angela Merkel and Germany’s northern European friends have anything to do with it. What will happen when the irresistible force meets the immovable object? We should know later this month.
Spain and contagion fears
A much bigger economy, Spain, meanwhile struggles to shore up its troubled banking system, wounded by the implosion of the property bubble in that country.
Spain’s government recently nationalized one stricken bank, Bankia, and attempted to inject fresh capital into the banking industry generally. Yet Spain’s plans were not well-received in the rest of the eurozone; and the struggle to fix Spain’s banks continues, with the word contagion looming ominously over Italy, Portugal and the southern part of the eurozone in general.
The eurozone crisis has pitted the stronger, northern users of the common currency, such as Germany, Austria, the Netherlands and Finland, against the southern states, disparagingly nicknamed the “PIGS”—Portugal, Italy, Greece and Spain. (Or “PIIGS” if one includes struggling Ireland.) Now, according to press reports over the last few days, we may need to add in Cyprus, one of the smaller eurozone nations that is struggling and may need a bailout.
Three-month window?
How long will this continue before the crisis worsens and the eurozone fails? Three months, according to billionaire George Soros, in a widely-publicized opinion. According to Mr. Soros, “The crisis is likely to come to a climax in the [autumn]. By that time, the German economy will also be weakening, so that Chancellor Merkel will find it even more difficult than today to persuade the German public to accept any additional European responsibilities. That is what creates a three-month window” (BBC.co.uk, June 4, 2012).
Bad news for the United States
Last week also brought more bad news for the U.S. economy, with the number of new jobs created in May totaling only about 69,000. U.S. unemployment edged up again, from 8.1 percent in April to 8.2 percent (though it’s generally agreed this figure is artificially low, since it doesn’t include the number of individuals who have given up on finding work).
Most economists cite a figure of 125,000 new jobs per month needed to keep employment rolls steady, and 200,000 as the number needed to significantly cut unemployment.
Some U.S. economists are sanguine about the potential effects of a eurozone meltdown. They rightly point out that the United States is less exposed to trade distortions in Europe than other parts of the world. Yet this view probably overlooks the indirect effect the U.S. economy would suffer as a result of disruptions in China, the rest of Asia and parts of Latin America. The fallout of a eurozone crisis would be grim for all.
Political gridlock and an economic “precipice”
Finally, let’s not forget the upcoming U.S. presidential elections. Opinion polls predict a tight race between Democratic incumbent Barack Obama and his Republican challenger Mitt Romney. Yet an even more important factor than who will be the chief executive may be the congressional results, which could again produce a badly polarized legislature—and dangerous gridlock as the world’s wealthiest nation struggles to come to grips with a huge economic challenge.
Federal Reserve Bank Chairman Ben Bernanke has warned of a “precipice of economic destruction,” with out-of-control spending and inadequate revenues leading to a budget crisis late this year and in 2013. With one party averse to raising taxes and the other opposed to cutting social programs, Mr. Bernanke’s warnings may prove disturbingly prescient.
Your best investment
Scary it is. Disquieting. Troubling. Perhaps the worst part for the average citizen in North America, Europe and elsewhere is the feeling of being out of control on a personal level. “What can I do to ensure the economic future of my family?” is the natural reaction of many.
In fact, there is something we all can do. It’s something once referred to as “your best investment.” It’s a biblical law that has the effect of making the Creator God a partner in your personal and family finances.
We refer to the law of tithing—the practice of giving one 10th of one’s income from work and investment back to God, the One who made it possible for us to earn money in the first place.
This law involves identifying the true servants of God and where His work is being done. The tithe then is given to Him through His servants.
The patriarch Abraham practiced tithing and gave the tithe to God in the midst of enormously unstable times in his day (Genesis 14:18-20), as did his grandson Jacob (Genesis 28:22).
Much later, at the close of the Old Testament era, the prophet Malachi issued a challenge to “prove” or test by experience this law of tithing and to see that it brings a blessing (Malachi 3:8-10).
It’s a law that works. And one that will bring financial stability to those who try it—even in these unstable financial times!
For more on this, see “What Is Tithing?”
Ralph Levy is a minister of the Church of God, a Worldwide Association, and an instructor at Foundation Institute, who grew up in England and now lives in the United States. Dr. Levy enjoys reading, travel and foreign languages. He has a Ph.D. in biblical studies and has worked in foreign language and religious education for much of his life.