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« 34 Rules of Writing | Main | The Bailout »

The Bailout Jump: Pray that the Chute Opens

The big question is not whether we have a monumental crisis on our hands. The outrageous and criminal abuses of executives at Fannie Mae and Freddie Mae, enabled by scandalous, socialistic politicians gave us the crisis. Bad mortgage deals that trashed all accepted lending practices have been leveraged many times over against debt. Banks will not lend money to each other, to most businesses or to most consumers. Without credit, business cannot buy raw material for their industries, pay their creditors or make payroll. Without payroll, workers—by the hundreds of thousands—will not be able to keep their households going. The economy slows down to a crawl, exacerbating an already toxic situation.

According to the terms of the bailout, the government will spend $700 billion that it does not have. It can either print or borrow the money. If it prints the money, dollar will be devalued. If it borrows the money from foreign nations, we will be a debtor nation beyond present levels which are already unprecedented. When it buys the mortgages, the government will own up to 50% of the housing market in this country. It plans to sell this real estate off to the highest bidders in a series of auctions. This compounds the problem.

Much of the real estate that the government will own is barely worth half of its original value. Many of the properties are worth scrap value only, and many of them were fraudulent transactions or never even existed. Even if every one of these properties were sold, there is not enough equity to avoid the greatest hit on our economy since the Great Depression, if not greater. The truth is that the loss of this money can never be recouped.

What will the impact of this enormous fiasco be on the average American? There will be a jump in inflation. Food, gasoline, heating oil and other basic commodities necessary to live will experience an historic climb. There will be a steep hike in unemployment. Industry and corporations will institute wage and hiring freezes. All of this economic turmoil will likely foment a rise in civil unrest. This creates a scenario of looting, crimes against property and protest marches that could easily turn violent.

My suggestions to you for the coming weeks and months are the following. Make sure you pay all of your notes—mortgage, car note, credit cards—on time. Bad credit could cut you out of the credit market. Pay close attention to the liquidity of your banks. If you have investments, talk to a knowledgeable person about their security. Be careful about taking on any additional financial risks.

Further, ask yourself these questions: If you can’t go to the store for a while, do you have necessary supplies to keep going? If things get very tight financially, how much of a cushion do you have? Can you do without certain purchases or expenditures? If you can cut the fat or non-essential items out of you budget, do it. It may not be time for a full-blown panic, but it is always time to be prudent.

The people who usually know about these things, the ones we look to for guidance are as puzzled as we are. When the experts don’t know what to do, it’s time to be concerned.

The most important thing you can do goes beyond the financial matters. Do you have a deep, inner peace? Do you have a source of strength that has nothing to do with money or material possessions? It is time to come to terms with your soul. It is time to pray. When everything spins out of control, your relationship with the eternal God will keep you sane and sensible.

Jesus told us not to take thought of tomorrow, of what we would eat or drink or what we should wear. This was not to encourage irresponsibility, but to give us a security resident in Christ that cannot be found anywhere else.

If Christ packs your chute, it will open.

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