To call for an existence which is qualitatively more satisfying is of itself legitimate, but one cannot fail to draw attention to the new responsibilities and dangers connected with this phase of history. The manner in which new needs arise and are defined is always marked by a more or less appropriate concept of man and of his true good. A given culture reveals its overall understanding of life through the choices it makes in production and consumption. It is here that the phenomenon of consumerism arises. In singling out new needs and new means to meet them, one must be guided by a comprehensive picture of man which respects all the dimensions of his being and which subordinates his material and instinctive dimensions to his interior and spiritual ones. If, on the contrary, a direct appeal is made to his instincts ”” while ignoring in various ways the reality of the person as intelligent and free ”” then consumer attitudes and life-styles can be created which are objectively improper and often damaging to his physical and spiritual health. Of itself, an economic system does not possess criteria for correctly distinguishing new and higher forms of satisfying human needs from artificial new needs which hinder the formation of a mature personality. Thus a great deal of educational and cultural work is urgently needed, including the education of consumers in the responsible use of their power of choice, the formation of a strong sense of responsibility among producers and among people in the mass media in particular, as well as the necessary intervention by public authorities….

It is not wrong to want to live better; what is wrong is a style of life which is presumed to be better when it is directed towards “having” rather than “being”, and which wants to have more, not in order to be more but in order to spend life in enjoyment as an end in itself.75 It is therefore necessary to create life-styles in which the quest for truth, beauty, goodness and communion with others for the sake of common growth are the factors which determine consumer choices, savings and investments. In this regard, it is not a matter of the duty of charity alone, that is, the duty to give from one’s “abundance”, and sometimes even out of one’s needs, in order to provide what is essential for the life of a poor person. I am referring to the fact that even the decision to invest in one place rather than another, in one productive sector rather than another, is always a moral and cultural choice. Given the utter necessity of certain economic conditions and of political stability, the decision to invest, that is, to offer people an opportunity to make good use of their own labour, is also determined by an attitude of human sympathy and trust in Providence, which reveal the human quality of the person making such decisions.

—Centesimus annus

In reading through Prof. Davenport’s text, I was struck by how similar are the contours of the economic debates in this period of American history are to our own debates. There are those who are comfortable with the idea of a free economy as a necessary institution for providing material well being for the human family. It simply is not possible to support six billion people on a system of central planning or on agrarian or distributivist principles. At the same time, there are the Sojourners who feel grave discomfort at what they perceive to be the materialism of our age and thereby seek system-wide change. Finally, there are the moralists who minimize debates about politics and rather seek to inspire personal moral piety.

What we need to see is the greater compatibility between the three positions than is usually supposed, provided there is freedom in which the three approaches can work. No society under any economic system will be free of greed, but the free economy produces the wealth that also makes charity and philanthropy possible. In addition, for those who seek simpler lives and private piety, the free economic system provides the room and possibility to make that choice. Davenport does not appear to be what I would call a pro-market thinker, which is what I suppose I might be called. Nonetheless, this book has identified the critical issues of the debate in those times and in our own. Christianity has adapted itself to many cultures and settings, but the advent of capitalism did provide its own special challenges.

How can a religion born in a world of poverty, and centered on the eventual glory associated with death on a cross, thrive in a world of fantastic levels of material prosperity? The experience of Americans shows how, and the views of the thinkers highlighted in this volume explain how a reconciliation can occur. It comes down to the critical fact that the most productive economic system ever known also happens to be the one that is most respectful of human rights and dignity, and provides the freedom to worship.

Read it all.

[In Allentown, Pennsylvania] the latest details of the government’s proposed $700 billion rescue plan was not the main story in the local paper, The Morning Call, on Sept. 23 (an article about the end of a teachers’ strike was). But it is on people’s minds. For many of Allentown’s residents, the rescue is an occasion for anger, even if that feeling is at times blunted by fatigue and resignation. They dislike what goes on in Washington, but those ill feelings are nothing compared with their view of Wall Street. “People see that the chief executives of these finance companies are making millions on the backs of taxpayers,” says Ed Pawlowski, the Democratic Mayor of Allentown. They are worried about how the next generation will fare in an America that many feel has mixed up its priorities.

At Wal-Mart (WMT) SuperCenter Store #2641, Brett Slack, one of the owners of Lehigh Valley Paintball, was picking up groceries with his two-year-old daughter while his wife was at her part-time job as a cashier at Giant Food. He, like most others here, believes that the government has no choice but to intervene, since the consequences of inaction appear to be far worse. So fine: He can live with his tax money helping to prop up America’s financial system. But he wants the chief executives of those companies (unnamed by anyone in Allentown) to pay, too. “The government should go after the CEOs,” he said. “I own a business, and if I went under, the bank would come after me. They made bad decisions and figured the government would bail them out. If the CEOs end up sleeping in cardboard boxes, that would be O.K. with me. They don’t deserve to be multimillionaires.”

Slack, who is 32, has had to lay off 20 of his 35 employees in the past year as rising gas prices slowed business. He and his two partners took pay cuts, too. “That’s what CEOs and owners should do,” he says. He put all his savings into the company when he started it four years ago. “If I have money to invest one day, I’ll just start another business. I won’t invest in the stock market,” he says.

Read it all.

A PUBLIC appeal for help is being made by the Anglican church at Cornholme as a result of mounting debts.

St Michael’s Church, in Burnley Road, is hoping for a cash boost as arrangements are being finalised for an arts and crafts exhibition at the end of this month.

In this month’s parish magazine, assistant priest, the Rev Irene Greenman, writes: “It is the parish church of Cornholme, but it is supported by the donations of only a faithful few ”“ some good friends who would not like to see the church close down.

“We have our usual share to pay to the diocese ”“ this year almost £11,000, of which we have paid £7,204 so far.

Read it all.

What would you pay, sight unseen, for a house that nobody wants, on a hard-luck street where no houses are selling?

That question is easy compared to the one confronting the Treasury Department as Washington works toward a vast bailout of financial institutions. Treasury Secretary Henry M. Paulson Jr. is proposing to spend up to $700 billion to buy troubled investments that even Wall Street is struggling to put a price on.

A big concern in Washington ”” and among many ordinary Americans ”” is that the difficulty in valuing these assets could result in the government’s buying them for more than they will ever be worth, a step that would benefit financial institutions at taxpayers’ expense.

Anyone who has tried to buy or sell a house when the market is falling, as it is now, knows how difficult it can be to agree on a price. But valuing the securities that the Treasury aims to buy will be far more difficult. Each one of these investments is tied to thousands of individual mortgages, and many of those loans are going bad as the housing market worsens.

Read it all.

Hedge funds that bet on a decline in British mortgage lender HBOS Plc are “bank robbers” and “asset strippers,” according to the Archbishop of York John Sentamu, the Church of England’s second-ranking cleric.

“To a bystander like me, those who made 190 million pounds ($353 million) deliberately underselling the shares of HBOS, in spite of its very strong capital base, and drove it into the bosom of Lloyds TSB Bank, are clearly bank robbers and asset strippers,” Sentamu told an audience of bankers at Drapers’ Hall in the City of London last night, according to his Web site.

Sentamu’s speech came as the Archbishop of Canterbury Rowan Williams, the Anglican church’s highest-ranking cleric, urged the British government to adopt more radical regulations, in addition to the temporary ban on short-sales of financial stocks in an article published yesterday on the Spectator magazine’s Web site.

“The question is not how to choose between total control and total deregulation, but how to identify the points and practices where social risk becomes unacceptably high,” Williams wrote. “The banning of short-selling is an example of just such a judgment. Governments should not lose their nerve as they look to identify a few more targets.”

Read it all.

The debate in Washington over the $700 billion bail-out plan for the US financial system is starting to resemble a plot from the television show 24.

—Gerard Baker in the (London) Times

I know you are having to shoot the financial rapids. Markets are in turmoil. Bear Stearns and Northern Rock are etched indelibly in your memory. And now we have the stories of Lehmann brothers and Merrill Lynch, AIG and HBOS.

To a bystander like me, those who made £190million deliberately underselling the shares of HBOS, in spite of its very strong capital base, and drove it into the bosom of Lloyds TSB Bank, are clearly bank robbers and asset strippers!

We find ourselves in a market system which seems to have taken its rules of trade from Alice in Wonderland, where the share value of a bank is no longer dependent on the strength of its performance but rather on the willingness of the Government to bail it out, or rather on whether the Government has announced its intentions so to do.

Our country has built its financial strength historically on the manufacturing of goods, where money was the medium of exchange. In the last week we have has seen its systems come close to ruin because now money is no longer being the medium of exchange for goods, but rather is the very item which is being traded.

Meanwhile talk of bonuses being paid out to the few whilst the many suffer, cocks a snook at any talk of “fairness” or “equity”.

Read it all and there is a press release here also.

Trading the debts of others without accountability has been the motor of astronomical financial gain for many in recent years. Primitively, a loan transaction is something which enables someone to do what they might not otherwise be able to do ”” start a business, buy a house. Lenders identify what would count as reasonable security in the present and the future (present assets, future income) and decide accordingly.

But inevitably in complex and large-scale transactions, one person’s debt becomes part of the security which the lender can offer to another potential customer. And a particularly significant line is crossed when the borrowing and lending are no longer to do with any kind of equipping someone to do something specific, but exclusively about enabling profit ”” sometimes, as with the now banned practice of short-selling, by effectively betting on the failure of a partner in the transaction.

This crisis exposes the element of basic unreality in the situation ”” the truth that almost unimaginable wealth has been generated by equally unimaginable levels of fiction, paper transactions with no concrete outcome beyond profit for traders. But while we are getting used to this sudden vision of the Emperor’s New Clothes, there are one or two questions that, in government as in society at large, we at last have a chance to ask. Some of these are elementary and practical. Given that the risk to social stability overall in these processes has been shown to be so enormous, it is no use pretending that the financial world can maintain indefinitely the degree of exemption from scrutiny and regulation that it has got used to. To grant that without a basis of some common prosperity and stability, no speculative market can long survive is not to argue for rigid Soviet-style centralised direction. Insecure or failed states may provide a brief and golden opportunity for profiteering, but cannot sustain reliable institutions.

Without a background of social stability everyone will eventually suffer, including even the most resourceful, bold and ingenious of speculators. The question is not how to choose between total control and total deregulation, but how to identify the points and practices where social risk becomes unacceptably high. The banning of short-selling is an example of just such a judgment. Governments should not lose their nerve as they look to identify a few more targets.

Read it all.

Congress looked close to reaching a deal to approve a $700 billion plan to bail out the U.S. financial system and President George W. Bush called an emergency meeting for Thursday to hammer out details.

The move toward a deal will likely calm U.S. markets, which remained on tenterhooks on Wednesday as negotiations dragged on. Investors sought cash and safe-haven assets, briefly sending short-term interest rates below zero. Experts said banks were hoarding cash, fearful that if they loaned money to other banks they might not get repaid.

Most Asian stock markets were weaker and the U.S. dollar dipped against major currencies on Thursday on lingering worries about the timing and scale of rescue plan and fears of the financial contagion deepening.

On Wednesday, Senate Banking Committee Chairman Christopher Dodd expressed optimism a deal was nearing.

Read it all.

For background on this, please see this post from yesterday.

Watch Elmo and friends do their magic–heartwarming.

Have we come so far from our Catholic tradition that we have forgotten the power of martyrdom, on which the Western church is built? Does no-one in TEC understand any more the meaning of sacrifice?

Because a martyr is what Bob Duncan now is. The Episcopal Church should not need a heretically catholic Anglican such as me to tell it that the next step up from martyrdom is sainthood. Bishop Duncan’s office has been inundated with emails, phonecalls and letters of supportm since the ill-advised deposition. Since Friday, he has had personal messages from six primates, including ++Anis and ++Chew, indicating their intention not to recognise the deposition and to support the Pittsburgh “remnant”. There have been all kinds of other ones as well from various bishops, clergy and laity all over the world. They are being catalogued on a new site, set up specially to venerate the deposed bishop.

And now in England, six bishops are pledging their support and saying they will continue to recognise him. Surely that is momentous enough to warrant an archiepiscopal comment? Or perhaps all pretence of episcopal collegiality has been abandoned.

Read it all.

“I’ve had people say: ‘what’s with the Episcopal Church? They’re open to everybody’,” she said, noting that many such group are offered only to congregation members. Trinity Church in Princeton offers a similarly unrestricted job-seekers group, she added.

Johnson also predicted that the newly “reduced profile[s]” of many of the area’s employers will mean reduced incomes for people who do keep their jobs. That reduction could mean changes in local economies, she added.

Sandra McPhee, a lawyer who belongs to St. Matthew’s Episcopal Church in Evanston, Illinois, and the chair of the Consortium of Endowed Episcopal Parish’s endowment committee, told ENS that she expects that Episcopal parishes with endowments of all sizes are consulting their investment experts and “taking a wait-and-see attitude.” While the consortium does not give investment advice and does not track how member parishes invest, McPhee said the best investment strategy in times like this is one of prudence based on the advice of a trusted adviser.

McPhee, who is also a member of the Episcopal Church’s Executive Council, participated in the Eucharist at St. Matthew’s this past Sunday (during which her two-month-old granddaughter was baptized) and recalled that rector Jane Henderson acknowledged in her sermon that “everyone’s antsy, everyone’s nervous.”

Read it all.

President Bush appealed to the nation Wednesday night to support a $700 billion plan to avert a financial meltdown on Wall Street, and he invited both major presidential candidates to join him and Congressional leaders at the White House on Thursday to forge a bipartisan compromise.

Warning that “a long and painful recession” could occur if Congress does not act quickly, Mr. Bush said the consequences could play out in “a distressing scenario,” including potential bank failures, job losses and inability for ordinary Americans to borrow money to buy cars or send their children to college.

“Fellow citizens, we must not let this happen,” he said.

The address, and the extraordinary offer to bring together Senator Barack Obama, the Democratic presidential nominee, and Senator John McCain, the Republican, just weeks before the election underscored a growing sense of urgency on the part of the administration that Congress must act to avert a far-reaching economic collapse.

It was the first time in Mr. Bush’s presidency that he delivered a prime-time address devoted exclusively to the economy, and it came at a time when deep public unease about shaky financial markets has been coupled with skepticism and anger directed at a government bailout that would be the most expensive in American history.

Read it all.

Unfortunately, there were also some serious negative consequences, particularly in the housing market. Easy credit — combined with the faulty assumption that home values would continue to rise — led to excesses and bad decisions. Many mortgage lenders approved loans for borrowers without carefully examining their ability to pay. Many borrowers took out loans larger than they could afford, assuming that they could sell or refinance their homes at a higher price later on.

Optimism about housing values also led to a boom in home construction. Eventually the number of new houses exceeded the number of people willing to buy them. And with supply exceeding demand, housing prices fell. And this created a problem: Borrowers with adjustable rate mortgages who had been planning to sell or refinance their homes at a higher price were stuck with homes worth less than expected — along with mortgage payments they could not afford. As a result, many mortgage holders began to default.

These widespread defaults had effects far beyond the housing market. See, in today’s mortgage industry, home loans are often packaged together, and converted into financial products called “mortgage-backed securities.” These securities were sold to investors around the world. Many investors assumed these securities were trustworthy, and asked few questions about their actual value. Two of the leading purchasers of mortgage-backed securities were Fannie Mae and Freddie Mac. Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk.

The decline in the housing market set off a domino effect across our economy. When home values declined, borrowers defaulted on their mortgages, and investors holding mortgage-backed securities began to incur serious losses. Before long, these securities became so unreliable that they were not being bought or sold. Investment banks such as Bear Stearns and Lehman Brothers found themselves saddled with large amounts of assets they could not sell. They ran out of the money needed to meet their immediate obligations. And they faced imminent collapse. Other banks found themselves in severe financial trouble. These banks began holding on to their money, and lending dried up, and the gears of the American financial system began grinding to a halt.

With the situation becoming more precarious by the day, I faced a choice: To step in with dramatic government action, or to stand back and allow the irresponsible actions of some to undermine the financial security of all.

Read it all.

Mr Paulson’s proposal to purchase distressed mortgage-related securities poses a classic problem of asymmetric information. The securities are hard to value but the sellers know more about them than the buyer: in any auction process the Treasury would end up with the dregs. The proposal is also rife with latent conflict of interest issues. Unless the Treasury overpays for the securities, the scheme would not bring relief. But if the scheme is used to bail out insolvent banks, what will the taxpayers get in return?

Barack Obama has outlined four conditions that ought to be imposed: an upside for the taxpayers as well as a downside; a bipartisan board to oversee the process; help for the homeowners as well as the holders of the mortgages; and some limits on the compensation of those who benefit from taxpayers’ money. These are the right principles. They could be applied more effectively by capitalising the institutions that are burdened by distressed securities directly rather than by relieving them of the distressed securities.

The injection of government funds would be much less problematic if it were applied to the equity rather than the balance sheet. $700bn in preferred stock with warrants may be sufficient to make up the hole created by the bursting of the housing bubble. By contrast, the addition of $700bn on the demand side of an $11,000bn market may not be sufficient to arrest the decline of housing prices.

Something also needs to be done on the supply side. To prevent housing prices from overshooting on the downside, the number of foreclosures has to be kept to a minimum. The terms of mortgages need to be adjusted to the homeowners’ ability to pay.

Read it all.

I will take comments on this submitted by email only to at KSHarmon[at]mindspring[dot]com.

President Bush readied a prime time speech to the nation and Treasury Secretary Henry Paulson accepted a major change in legislation for a $700 billion bailout of the financial industry on Wednesday as the administration scrambled to prevent further deterioration in the economy.

Republican officials said that Paulson had bowed to demands from critics in both parties to limit the pay packages of executives whose companies benefit from the proposed bailout. They spoke on condition of anonymity because Paulson’s decision had not been formally announced.

White House officials said Bush’s speech would dwell on the financial crisis.

Press secretary Dana Perino said the president wants to tell the American people how the crisis affects them and help them understand the depth of the problem.

Read it all.

AN OPEN LETTER OF SUPPORT TO BISHOP BOB DUNCAN
24th September 2008

The Rt. Rev. Robert Duncan
Pittsburgh, PA USA

Dear Bishop Duncan,

I greet you in the name of our Lord Jesus Christ, the name above all names, and the One who is the same yesterday, today, and forever. I have very intentionally addressed this letter to you as Bishop Duncan, for, indeed, you are a Bishop.

I was upcountry tending to pastoral business when the TEC House of Bishops took their vote to supposedly depose you, so I am very sorry that I could not add my name at the time to the very good statement issued by my esteemed colleagues, Archbishops Venables, Gomez, and Nzimbi. I hope you know of the unqualified support you have from me and our entire House of Bishops.

In 2004, when the Church of Uganda broke communion with TEC, we stated that, although we were breaking communion with TEC, we remained in communion with you, the Diocese of Pittsburgh, and all who uphold the historic and Biblical faith of Anglicanism and did not support the unbiblical decision of confirming the election of Gene Robinson to the episcopate.

Despite the shameful action taken last week by the majority of TEC Bishops, nothing about our position has changed. We continue to recognize you as a Bishop of the One, Holy, Catholic, and Apostolic Church. We continue to recognize you as a Bishop in good standing in the Anglican Communion, and we whole-heartedly support the action of Archbishop Greg Venables and the House of Bishops of the Province of the Southern Cone to receive you into their House of Bishops. We continue in full communion with you and we do not recognize the action of the TEC House of Bishops to depose you.

Furthermore, we are praying that on 4th October the majority of the Diocese of Pittsburgh will vote to be reunited with you as their Bishop. When the King of Buganda tried to destroy the Christian movement in 1886 by killing the converts in his court, he instead fueled the spread of the Gospel among our people. I believe that can also happen in North America. So, do not be discouraged. Our God is a God of redemption, and He will take what was intended for evil and bring good out of it.

Finally, if the world couldn’t see it before, this vote reveals how spiritually lost TEC is and why North America needs a new Province that authentically represents historic and Biblical Anglicanism. The Instruments of the Anglican Communion could have averted this crisis. Instead, institutional inertia is preferred, and meanwhile, the tear in the fabric of our communion is now deeper and wider, the mission of the church suffers, and many people miss out on hearing the good news that a Saviour has come.

I look forward to the day when you are not only the Moderator of the Common Cause Partnership, but when we can also welcome you to the table of Primates as the Archbishop of a new, Biblically faithful Province in North America. May the Lord grant you wisdom and apostolic favour as you lead that movement, and may He add daily the number who are being saved.

Yours, in Christ,

The Most Rev. Henry Luke Orombi

ARCHBISHOP OF CHURCH OF UGANDA.

The biggest problem Paulson faces, though, is that the American people don’t seem to have understood that the crisis on Wall Street could spread to Main Street with very painful consequences. “We just haven’t communicated as well as we need to,” Paulson acknowelged this morning. “The average American looks at this as being about Wall Street, and they’re angry, and I’m angry too. There have been huge excesses and flaws in the system, but the average American doesn’t understand the implications this has for them: money needs to flow through the system so that every American business virtually every day can operate the way it needs to.”

Paulson faces other problems on Capitol Hill too. Both parties in Congress are by now deeply skeptical of any new Administration demands for increased executive authority and are vehemently pushing for more oversight of how Treasury will manage the bailout. The Paulson plan is bigger in that regard than just about anything Bush asked for in the war on terror. Section eight of the proposal he sent to Congress says, for example, “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”

Senators and Representatives feel most keenly uncomfortable about the nasty politics of the deal. In an election year dominated by a bad economy, it’s not good to throw huge money at a bunch of Wall Street firms, especially when each party is worried the other is going to bluff and ultimately try to use the deal as a populist rallying cry. This is compounded by the fact that Paulson just happened to lead one of the biggest market players, Goldman Sachs, before coming to Treasury. In that role, he acknowledges, he placed a lot of the bad debt that the now defunct Fannie Mae and Freddie Mac were peddling. “Yeah, I and everyone else placed Fannie and Freddie debt,” he says, but “We didn’t create this system and this was a mess that had to be cleaned up.” He also acknowledges that he put the former Fannie Mae head, Jim Johnson, on the board of Goldman, and that Johnson chaired Paulson’s compensation committee.

All of this, however, will not be enough to blow out the deal, because the consequences of a collapse in the so-called shadow banking system would be much worse.

Read it all.

The Archbishop of Canterbury, Dr Rowan Williams, was today branded a ”˜papal puppet’ after he became the first leader of the Church of England to accept visions of the Virgin Mary at Lourdes as historical fact.

He asserted that 18 visions of Our Lady allegedly experienced by Bernadette Soubirous in 1858 were true.

His words shocked millions of Protestants worldwide because they not only signified a break with Protestant teaching on the Virgin Mary but also Dr Williams’s personal acceptance of the Catholic doctrine of the Immaculate Conception, which is explicitly linked to the apparitions.

The archbishop made his remarks during a three-day visit to the shrine in the French Pyrenees – the first ever by a leader of the Church of England.

Read it all.