20. April 2009 by admin.

    Enter Larry Summers, the new U.S. presidential financial advisor and regulatory gatekeeper.  

    If only someone with nothing to lose would remind the president of that old story - perhaps apocryphal but containing a powerful truth - of the Great Wall of China. Four thousand miles long and 25 feet tall, intended to be too high to climb over, too thick to break through and too long to go around. Yet, in its first century of the wall’s existence, China was successfully breached three times by invaders, who didn’t have to break through, climb over or go around. They simply were waved through the gates by obliging watchmen. The Chinese knew their wall very well. It was the gatekeepers they didn’t know.

   The current United States economic and financial meltdown is driven by fraud and banks that got away with it, in part, because of government deregulation under prior Republican and Democratic administrations. Now its citizens know what happens when you destroy regulation, you get the biggest financial calamity for anybody under the age of 80.

   The U.S. government ignored warnings and existing legislation to stop it before the current crisis got worse. They didn’t even begin to investigate the major lenders until the market had actually collapsed, which is completely contrary to what investigators did successfully in the eighties’ Savings and Loan crisis. Even while the S & L institutions were reporting they were the most profitable savings and loans in America, the investigators knew they were frauds, and investigators were moving to close them down.
   
   There was advance warning of the current collapse. The FBI blew the whistle; in September 2004, there was an epidemic of mortgage fraud, that if it was allowed to continue it would produce a crisis at least as large as the Savings and Loan debacle.

   But after 9/11, the U.S. Justice Department transfered 500 white-collar specialists in the FBI to national terrorism. Understandable, perhaps. But then, the Bush administration refused to replace the missing 500 agents. So today, despite a crisis a hundred times worse than the Savings and Loan scandal, there are one-fifth as many FBI agents assigned to bank fraud.

   U.S. Treasury Secretary Timothy Geithner is publicly saying that it’s going to take $2 trillion - a trillion is a thousand billion - $2 trillion U.S. taxpayer dollars to deal with this problem. But the U.S. government is allowing all the banks to report that they’re not only solvent, but fully capitalized. Both statements can’t be true. It can’t be that they need $2 trillion, because they have massive losses, and that they’re fine …

   And so far, the only one in the clink is Bernie Madoff, and he was “a piker” compared to the U.S. bankers who peddled toxic assets like unverified “liars’ loan” mortgages as Triple-A quality goods.
   

   The Canadian financial market is a bit like the country: low key. Today, it is the envy of the rest of the world. Its biggest bank, the Royal Bank of Canada, is now the 11th biggest bank in the world by market capitalization. Its market capitalization is about three times that of Citigroup and 30 percent higher than that of UBS or Credit Suisse. There are now three Canadian banks among the 30 largest in market capitalization in the world. Obviously, this is due to the fact that their American, English and Swiss counterparts’ capitalization has melted away like snow in the sunshine. Of course, the Canadian banks’ profits have dropped considerably, but they remain positive. Why is the Canadian financial system considered the most solid in the world at the present time?

    The answer is simple: It’s the result of a Canadian government that did not allow itself to be influenced by the banks and of a regulator that remained conservative [with a small “C”]. The Canadian financial regulator has the reputation of being the most conservative among its American and European equivalents. For example, Canadian banks must hold Tier 1 capital of 7 percent of their assets (weighted by risk) and bank indebtedness may not exceed 20 times capital. The Canadian regulator is also attentive to the quality of bank capital, in particular with respect to the proportion of ordinary shares. In Switzerland, a financial regulator and an independent surveillance authority (Finma) have just been born and new rules introduced. However, the big banks’ level of indebtedness is significantly more than 30 times their capital.

    The second difference is in the treatment of bank mergers. As in several developed countries, Canadian banks have wanted to merge and form a few global banks to better participate in the global growth of financial markets. The Canadian government has always rejected these mergers. As elsewhere, it had to weigh up the advantages connected with greater size and presence at an international level against the costs related to a reduction of competition in the domestic market. In 1998, the Canadian Competition Bureau clearly indicated that such mergers would decrease competition for several financial products (portfolio management, credit cards, loans etc.) in a significant number of submarkets. Consequently, it indicated what disinvestments by merger participants would be necessary to compensate for those reductions in competition. The Canadian banks quickly understood that the requirements were such that, by merging, they would risk losing an important advantage in the domestic market for an uncertain share of the international financial market.

    At that time, the merger that formed the present UBS was taking place and other global banks were forming, as in the Netherlands, for example. The result is that in 2007, UBS total assets represented 480 percent of Swiss GDP and Credit Suisse’s assets 286 percent, the number one and number three in this global classification according to the OECD (an Icelandic bank pacing between UBS and Credit Suisse), while the total assets of the largest Canadian bank represented only 40 percent of Canadian GDP. The size of the big Swiss banks and the economic concentration in that sector have become such that, in its 2009 report on Switzerland, the IMF worried about the authorities’ intervention and surveillance abilities in that domain.

    These differences are critical because the Canadian financial regulator and the country’s merger policy have led Canadian banks to adopt a more traditional and less risky model than that adopted by the big Swiss banks. That may be observed, for example, in the fact that the Swiss interbank market (loans and borrowings between banks) is nine times greater than in Canada. Not only are the consequences for the banks not the same when the market freezes up, as it did in 2008, but, above all, that shows that Canadian banks depend far more than do their Swiss counterparts on traditional and stable sources of funds, such as individuals’ deposits. Moreover, a Canadian bank hesitates more to form units specializing in financial tools that only a few experts master when it must remain relatively small and debt free. And even if it wanted to hire such specialists, how could it attract them, when global banks snatch them up for a fortune? So then, it’s not very surprising that Canadian banks should have stayed largely outside those markets.

   Today, the Canadian government is congratulating itself on its choices. For Switzerland, the consequences are altogether different, since, additionally, many financial institutions that intend to keep a reasonable size to better benefit from the advantages of the Swiss financial center must be beginning to ask themselves what shall become of them. For the race to attain a global size is a factor that today gives other countries levers of influence to modify the banking secrecy situation.

    Ownership is a significant difference between the U.S. Federal Reserve and the Bank of Canada (equivalent to FED). The shares of the US Federal Reserve are owned privately with a guaranteed 6% return. The Bank of Canada is owned by its citizens. All countries’ citizens have a direct interest in the performance of their national banking system. When a wealthy elite own their country’s Federal Bank, instead of the citizens, the possibility exists that their national banking system could function to favor its owners, whatever the ’safeguards’. 

    Taking a page from Horace Greeley…..Look North Mr President for there-in resides venerable wisdom(s) of which the USA has yet to learn!

  JA

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12. April 2009 by admin.

We are on the verge of a major collapse of Evangelical Christianity. This breakdown will follow the deterioration of the mainline Protestant world and it will fundamentally alter the religious and cultural environment in the West.

Within two generations, Evangelicalism will be a house deserted of half its occupants. (Between 25 and 35 percent of Americans today are Evangelicals.) In the “Protestant” 20th century, Evangelicals flourished. But they will soon be living in a very secular and religiously antagonistic 21st century.

This collapse will herald the arrival of an anti-Christian chapter of the post-Christian West. Intolerance of Christianity will rise to levels many Evangelicals had not believed possible in their lifetimes, and public policy will become hostile toward Evangelical Christianity, seeing it as the opponent of the common good.

Millions of Evangelicals will quit. Thousands of ministries will end. Christian media will be reduced, if not eliminated. Many Christian schools will go into rapid decline. The end of Evangelicalism as we know it is close.

Why is this going to happen?

1. Evangelicals have identified their movement with the culture war and with political conservatism. This will prove to be a very costly mistake. Evangelicals will increasingly be seen as a threat to cultural progress. Public leaders will consider Evangelicals bad for America, bad for education, bad for children, and bad for society.

The Evangelical investment in moral, social, and political issues has depleted their resources and exposed their weaknesses. Being against gay marriage and being rhetorically pro-life will not make up for the fact that massive majorities of Evangelicals can’t articulate the Gospel with any coherence. They fell for the trap of believing in a cause more than a faith.

2. Evangelicals have failed to pass on to young people an orthodox form of faith that can take root and survive the secular onslaught. Ironically, the billions of dollars spent on youth ministers, Christian music, publishing, and media has produced a culture of young Christians who know next to nothing about their own faith except how they feel about it. Young people have deep beliefs about the culture war, but do not know why they should obey scripture, the essentials of theology, or the experience of spiritual discipline and community. Coming generations of Christians are going to be monumentally ignorant and unprepared for culture-wide pressures.

3. There are three kinds of Evangelical churches today: consumer-driven megachurches, dying churches, and new churches whose future is fragile. Denominations will shrink, even vanish, while fewer and fewer evangelical churches will survive and thrive.

4. Despite some very successful developments in the past 25 years, Christian education has not produced a product that can withstand the rising tide of secularism. Evangelicalism has used its educational system primarily to staff its own needs and talk to itself.

5. The confrontation between cultural secularism and the faith at the core of evangelical efforts to “do good” is rapidly approaching. We will soon see that the good Evangelicals want to do will be viewed as bad by so many, and much of that work will not be done. Look for ministries to take on a less and less distinctively Christian face in order to survive.

6. Even in areas where evangelicals imagine themselves strong (like the Bible Belt), they will find a great inability to pass on to their children a vital Evangelical confidence in the Bible and the importance of the faith.

7. The money will dry up.

What will be left?

•Expect Evangelicalism to look more like the pragmatic, therapeutic, church-growth oriented megachurches that have defined success. Emphasis will shift from doctrine to relevance, motivation, and personal success – resulting in churches further compromised and weakened in their ability to pass on the faith.

•Two of the beneficiaries will be the Roman Catholic and Orthodox communions. Evangelicals have been entering these churches in recent decades and that trend will continue, with more efforts aimed at the “conversion” of Evangelicals to the Catholic and Orthodox traditions.

•A small band will work hard to rescue the movement from its demise through theological renewal. This is an attractive, innovative, and tireless community with outstanding media, publishing, and leadership development. Nonetheless, the coming evangelical collapse will not result in a second reformation, though it may result in benefits for many churches and the beginnings of new churches.

•The emerging church will largely vanish from the evangelical landscape, becoming part of the small segment of progressive mainline Protestants that remain true to the liberal vision.

•Aggressively Evangelistic fundamentalist churches will begin to disappear.

•Charismatic-Pentecostal Christianity will become the majority report in Evangelicalism. Can this community withstand heresy, relativism, and confusion? To do so, it must make a priority of biblical authority, responsible leadership, and a reemergence of orthodoxy.

•Evangelicalism will need a “rescue mission” from the world Christian community. Perhaps missionaries might come to America from Asia and Africa. Will they come? Will they be able to bring a more vital form of Christianity?

•Expect a fragmented response to the culture war. Some Evangelicals will work to create their own countercultures, rather than try to change the culture at large. Some will continue to see conservatism and Christianity through one lens and will engage the culture war much as before – a status quo the media will be all too happy to perpetuate. A significant number, however, may give up political engagement for a discipleship of deeper impact.

Evangelicalism doesn’t need a bailout. Much of it needs a funeral. But what about what remains?

What happens when the denominations become largely irrelevant? The networks that replace them will have to be able to marshal resources, training, and vision to the mission field and into the planting and equipping of churches.

Will many marginal believers depart? Possibly, if churches don’t begin and continue the work of renewing serious church membership. They must change the conversation from the maintenance of traditional churches to developing new and culturally appropriate ones.

The ascendency of Charismatic-Pentecostal-influenced worship around the world can be a major positive for the evangelical movement if reformation can reach those churches and if it is joined with the calling, training, and mentoring of leaders. American churches may come under more of the influence of the movement of the Holy Spirit in Africa and Asia.

Will the Evangelicalizing of Catholic and Orthodox communions be a major development? One can see greater unity and appreciation, but the history of these developments seems to be much more about a renewed vigor to “evangelize” Protestantism in the name of unity.

Will the coming collapse get Evangelicals past the pragmatism and shallowness that has brought about the loss of substance and power? Probably not. The purveyors of the Evangelical circus will be in fine form, selling their wares as the promised solution to every church’s problems. Expect the landscape of megachurch vacuity to be around for a very long time.

Will it shake loose the prosperity Gospel from its parasitical place on the Evangelical body of Christ? Evidence from similar periods is not encouraging. AMERICAN CHRISTIANS SELDOM SEEM TO BE ABLE TO SEPARATE THEIR THEOLOGY FROM AN OVERALL IDEA OF PERSONAL AFFLUENCE AND SUCCESS.

The loss of their political clout may impel many Evangelicals to reconsider the wisdom of trying to create a “godly society.” That doesn’t mean they’ll focus solely on saving souls, but the increasing concern will be how to keep secularism out of church, not stop it altogether. The integrity of the church as a countercultural movement with a message of “empire subversion” will increasingly replace a message of cultural and political entitlement.

Already publicly noted, “Christianity loves a crumbling empire.”

Christianity will rejoice in the ruins, with new forms of Christian vitality and ministry being born. Expect to see a vital and growing house church movement. This will be a radical turnaround for an Evangelicalism that has made buildings, and paid staff its drugs for half a century.

The new Evangelicalism might even learn from the past and listen more carefully to what their ‘God’ says about being ‘His’ people in the midst of a powerful, idolatrous culture.

 JA

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3. April 2009 by admin.

We are seeing the demise of a political philosophy, not because of ideological dispute, but because the data cannot be denied, and it shows that, when the markets are left to their own devices, within the large group of the market, there is always a subset whose greed overpowers all ethical and moral considerations. And their intentions, being so focused and intense, overpower the less coherent and more passive majority. What separates sports from mere brawls is the rules. The same is true in the financial realm, because human nature is consistent in broad ways, even over long time periods, across many aspects of our culture.

We see that we have five per cent of the world’s population, and 25 per cent of the world’s prison population. And reduced to a sentence: The USA runs the world’s largest gulag, and the economies of many small towns and cities are so perverted that they live on the warehousing of human beings. It is, or should be, a statement shaming every American.

We are seeing the illness profit industry wriggle like a speared viper, objecting to a government health program against which they will have to compete. The same people who were saying the government couldn’t possible run a decent health care system — which sounds very funny to those of us on Medicare, and for those in the Congress — are now saying they can’t compete. And then they grudgingly say well just maybe we could charge sick people the same as healthy people. For those who appreciate irony it is going to be a season of very nasty black humor as the illness profit folk are pressed harder and harder. Look particularly for Republicans, who have been sucking the illness profit teat for decades to claim, as Senator Grassley just has, that the government would be an unfair competitor. One doesn’t know whether to laugh, cry, or regurgitate at his hypocrisy. The point of the drill is universal health care, not the protection of the illness profit special interests that have been feeding him. Think about this statement, “The main selling point for a government-run program would be its low cost. It would have a much lower overhead than private plans, with no need to make a profit or spend money on marketing or brokers’ commissions. And, if allowed to flex its muscle, the government would buy medical care at much lower prices.” And then ask yourself, o.k. so what’s wrong with that? The rest of the industrialized world seems to find that works pretty well. 

We do not have health care in the United States, we have an illness profit industry. And millions of people suffer, even when healthy, because of the stress of not having recourse to medical treatments they might need and which, elsewhere, are considered a basic human right. Once again we have made profit the highest value of the state; it blights our national character.

I continue to believe we are better than this.

JA
 
 

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