The Wall Street geeks, the quantitative analysts (“quants”) and masters of “algo trading” probably felt the same irresistible lure of “illimitable power” when they discovered “evolutionary algorithms” that allowed them to create vast empires of wealth by deriving the dependence structures of portfolio credit derivatives.

What does that mean? You’ll never know. Over and over again, financial experts and wonkish talking heads endeavor to explain these mysterious, “toxic” financial instruments to us lay folk. Over and over, they ignobly fail, because we all know that no one understands credit default obligations and derivatives, except perhaps Mr. Buffett and the computers who created them.

Somehow the genius quants ”” the best and brightest geeks Wall Street firms could buy ”” fed $1 trillion in subprime mortgage debt into their supercomputers, added some derivatives, massaged the arrangements with computer algorithms and ”” poof! ”” created $62 trillion in imaginary wealth. It’s not much of a stretch to imagine that all of that imaginary wealth is locked up somewhere inside the computers, and that we humans, led by the silverback males of the financial world, Ben Bernanke and Henry Paulson, are frantically beseeching the monolith for answers. Or maybe we are lost in space, with Dave the astronaut pleading, “Open the bank vault doors, Hal.”

As the current financial crisis spreads (like a computer virus) on the earth’s nervous system (the Internet), it’s worth asking if we have somehow managed to colossally outsmart ourselves using computers. After all, the Wall Street titans loved swaps and derivatives because they were totally unregulated by humans. That left nobody but the machines in charge.

Read it all.

Patricia and Wesley Galloway could not have children of their own. Yet for them, the essence of marriage is rooted in procreation.

“It takes a man and a woman to create children and thus create a family,” Mrs. Galloway, 60, told a legislative panel in Connecticut last year as it was considering a bill to legalize same-sex marriage.

The bill never went to a vote, but on Friday the Connecticut Supreme Court eliminated the need for a bill when it struck down the state’s civil union law and ruled that same-sex couples have a constitutional right to marry.

The decision was cheered by gay couples who argued that civil unions, despite giving them the same rights as married couples, were something less than marriage. But it has caused consternation among opponents of gay marriage, many of whom, like the Galloways, say their objections are not based on religion or morality, but in nature.

Read it all.

Receive our inheritance with gratitude and be radical in our interpretation of it. That suggestion sorted me out in regard to the creeds and I’ve since found it to be helpful in a variety of arenas. This weekend we’ve been applying it to the topic of gay marriage. We’ve been specifically focused on Proposition 8 ”“ an attempt to deny gay and lesbian couples their constitutional right to marry. Many of us oppose that proposition and we do so in the spirit of Dr. Carpenter. We have no intention of altering the traditional understanding of marriage ”“ two people, mutual love expressed in and through fidelity, life-long commitment lived out under the gracious purview of God and with the strong support of society ”“ but we insist on extending that blessing to the whole human family.

We are rigid conservatives when defining the core content of holy marriage and wild radicals in our belief that God intends this beautiful covenant for all. And because both sides of that statement are equally true, we join with the Episcopal bishops of California, unanimously aligned, in vigorously defending the right of gay couples to wed, the right the high court of our state granted earlier this year. We also pledge to work to encourage the Episcopal Church, as a national body, to recognize the wisdom and compassion of that decision and follow suit.

Read it all. This is what passes for wisdom in the Orwellian world of the leadership of The Episcopal Church these days. What is by any reasonable definition a complete overhaul of the nature of marriage–which is by definition a life long union of a man and a woman–is claimed to be instead a conservative clinging to the content of holy marriage.

Recall carefully and well the genuinely prophetic Statement by the California Catholic Conference Of Bishops’ Regarding The Supreme Court Decision:

Yes, exactly, these relationships can never be marriage by its very definition. That is the core content of marriage which some are attempting to change completely. But this is a church that does not tell the truth, and then does not tell itself the truth about not telling the truth, so this complete alteration is claimed to be the opposite of what is–KSH.

A sharply divided Connecticut Supreme Court struck down the state’s civil union law on Friday and ruled that same-sex couples have a constitutional right to marry. Connecticut thus joins Massachusetts and California as the only states to have legalized gay marriages.

The ruling, which cannot be appealed and is to take effect on Oct. 28, held that a state law limiting marriage to heterosexual couples, and a civil union law intended to provide all the rights and privileges of marriage to same-sex couples, violated the constitutional guarantees of equal protection under the law.

Striking at the heart of discriminatory traditions in America, the court ”” in language that often rose above the legal landscape into realms of social justice for a new century ”” recalled that laws in the not-so-distant past barred interracial marriages, excluded women from occupations and official duties, and relegated blacks to separate but supposedly equal public facilities.

“Like these once prevalent views, our conventional understanding of marriage must yield to a more contemporary appreciation of the rights entitled to constitutional protection,” Justice Richard N. Palmer wrote for the majority in a 4-to-3 decision that explored the nature of homosexual identity, the history of societal views toward homosexuality and the limits of gay political power compared with that of blacks and women.

Read it all and the full text of the ruling itself is there (85 page pdf).

Well worth the time for those interested.

THE Anglican Church in Melbourne faces a multimillion-dollar budget shortfall and may have to close ministries or sack staff.

The crisis has been brought on by the global financial meltdown because the church is so reliant on investment income. But church leaders admit that a large part was self-inflicted by inadequate financial management over decades.

As a tense synod at St Paul’s Cathedral on Saturday debated next year’s budget, heavy cuts that would have led to instant job losses were defeated. Instead, it accepted a six-month budget with a $1 million deficit while it awaits an external review of the church’s finances and structures.

Read it all.

A heartwarming story–watch it all.

Some key decision makers in Israel fear that unless they attack Iranian nuclear enrichment facilities in the next few months, while George W Bush is still president, there will not be another period when they can rely on the United States as being anywhere near as supportive in the aftermath of a unilateral attack.

In the past 40 years there have been few occasions when I have been more concerned about a specific conflict escalating to involve, economically, the whole world. We are watching a disinformation exercise involving a number of intelligence services. Reality is becoming ever harder to disentangle.

Please, no! Read it all.

Ed Knippers was Washington’s home-grown Michelangelo ”” a painter of larger-than-life biblical scenes known for their physicality and passion.

But his nude Davids, Bathshebas, Mary Magdalenes, Samsons and Delilahs have gotten limited acceptance in conservative circles. When he exhibited his work at Huntington College, an evangelical school in Indiana, there were so many complaints from students and the outside community that the college closed the exhibit after five days.

“Some Christians tend to be orthodox in their theology but emotionally they are gnostics,” he told me last week. “They do not like that physical stuff. But we have an incarnational religion and you have to get past that. In art, we can come to grips with our physicality and human possibilities in our body. That’s all we have here.”

Read it all.

The scale of the fundraising could lead to trading at the London stock market being suspended. This would give time for the market to digest the impact of the moves.

One consequence of the deal might be that Lloyds could renegotiate the terms of the HBOS takeover, although both sides are still keen for the merger to take place.

An economist who declined to be named said: “This is the biggest risk of the UK’s balance sheet ever undertaken. No-one knows the extent of the toxic assets these banks are exposed to.”

Separately, the future of Morgan Stanley, the American investment bank, is also in doubt today following a sharp sell-off of shares and warnings of a possible credit downgrade from Moody’s the ratings agency.

Read it all.

In short, regulation and state intervention are likely to become more fashionable than at any time since the end of the Cold War. In political science terms, it seems we’re about to veer left. Witness a Republican president’s $US700 billion example.

But few are yet asking what this might mean for social politics. Perhaps this is because it seems a separate matter to questions of economic policy. Yet it is foolish to assume that each can be quarantined from the other.

Economics is important precisely because it has the power to topple social dominoes. And it is in the realm of social politics that some of the most frightening possibilities of the financial crisis suggest themselves.

Consider the Great Depression, to which some are ominously likening this crisis. Latin America, which was hit particularly savagely because of its significant trade links with the US, retreated into a shrill form of nationalism. The result was the rise of fascism across the continent….

Read it all.

Graham Kendrick – the author of such painful hymns as Shine, Jesus, Shine has been included amongst a list of 50 people responsible for ruining Britain.

Being placed alongside individuals as nauseating as Paul Burrell, Jeffrey Archer and Janet Street-Porter might seem a little harsh for someone whose only crime is to have penned more happy-clappy songs than anyone else.

Four hundred at the last count.

But it’s hard to fault the argument.

Read the whole thing.

Let us make no bones about it. This financial crisis is a major spiritual crisis. It is the crisis of a society that worships at the temples of consumption, and that has isolated and often abandoned millions of consumers now trapped on a treadmill of debt. It is the crisis of a society that values the capital gains of the rentier more highly than the rights of people to a home, or an education or health. It is the crisis of a society that idolises money above love, community, wellbeing and the sustainability of our planet. And it is a crisis, in my view, for faith organisations that have effectively colluded in this idolatry, by tolerating the sin of usury.

I define usury as the exalting of money values over human and environmental values; of creating money at no cost and lending at rates of interest intended to accumulate reserves of unearned income. Of reaping that which one did not sow.

Christians began to dilute the sin of usury as far back as the 1500s. John Eck, supported by the Fugger banking family, in his book Tractates contractu quinque de centum (1515), defended 5% as an acceptable rate of interest as long as the borrower and lender mutually agreed to the loan. Martin Luther took exception to this laxity, and raged that “heathen were able, by the light of reason, to conclude that a usurer is a double-dyed thief and murderer. We Christians, however, hold them in such honour that we fairly worship them for the sake of their money … Meanwhile, we hang the small thieves … Little thieves are put in the stocks, great thieves go flaunting in gold and silk.”

Read the whole piece.

Brazilian Finance Minister Guido Mantega said that the president told the finance ministers that he was doing all he could to involve other countries in efforts to resolve the crisis. According to White House spokesman Tony Fratto, Bush acknowledged the problems began in the U.S., with a meltdown of the market for subprime mortgages in the summer of 2007. The president felt it was important to take the rare step of coming to such a meeting because the problems were spreading globally.

“It doesn’t matter if you’re a rich country or a poor country, a developed country or a developing country””we’re all in this together,” Bush said, according to Fratto. “We take this seriously, and we want to work with you.”

In response, the G-20 countries issued a joint statement in which the finance officials pledged to work together “to overcome the financial turmoil and to deepen cooperation to improve the regulation, supervision and the overall functioning of the world’s financial markets.”

Read it all,

Remember the Rule of Holes: When you find yourself in one, the first thing to do is to stop digging.

Right now we’re in one of the deepest economic holes anyone has ever seen. And what we need to do is to stop making things worse by continuing to over-rely on financial markets and financial institutions that have proven to be incapable of performing their core missions: getting capital to where it needs to go and pricing that capital in a way that reflects the risks and underlying economic values. We have to stop digging. Another week like this one, and there won’t be much left to rescue.

Read it all.

A year ago, Robert Paynter was comfortably retired and looking forward to years of refurbishing old cars and boating from his dock on Lake Norman in North Carolina. Over a 17-year career at Wachovia, he amassed a pile of stock and options from the bank that he had assumed would be worth more than $600,000.

But now the options are worthless, and he watched the value of his Wachovia shares shrink to about $15,000 before he sold all of them this week after the bank succumbed to the financial crisis and its stock fell to fire-sale prices. The rest of his investments are in free fall.

“It’s like having an out-of-body experience,” said Mr. Paynter, 61. “It’s like being in a hospital bed and watching yourself dying. Whatever the bottom is going to be, I wish it would just get there. It’s the every day, watching the blood drain out of it, that’s hard to take.”

Read it all.

But first, let me offer a note of optimism before I serve up the not so good news. This is not the end of the world. There are a lot of very positive things happening in the US and the world. Companies are creating new inventions. Much of the economy, including health care, is moving along fine. I have lived through two serious recessions (1973-74 and 1980-82), and the point is that a free-market economy will find a way to eventually get back to solid growth. Recessions are simply part of the business cycle. Congress cannot repeal the business cycle. This will not be the last recession of my life. I hope to live long enough to go through 4 or 5 more.

Depressions are caused by governments making major policy mistakes. And we have made some in the areas of not regulating mortgage lending, allowing the five large investment banks to increase their leverage to 30 or 40 to one in 2004 (what was the SEC thinking?), and failing to oversee the rating agencies. That is behind us. It will make a normal recession deeper and the recovery longer, as I have been forecasting for some time.

But as I argue below, immediate actions must be taken by the government to avoid a much deeper problem. To not take actions to stem the credit crisis would be that major policy mistake which would compound all the other mistakes. I think everyone knows the seriousness of the problem and will act. Let’s pray they do.

But whatever happens, there will be plenty of opportunity for investors and entrepreneurs to exploit. The world is on the cusp of a remarkable explosion of new technology of all sorts that will transform our lives. This march of progress went on unchecked last century, through two world wars, major depressions, numerous smaller wars, recessions, financial crises all over the world, famines and natural disasters, not to mention a lot of man-made ones.

The current crisis will pass. None of us will want to go back to the “good old days” in 20 years, for we will be living in the best of times.

—John Mauldin in this week’s newsletter

They outplayed Oklahoma today in the second half and deserved to win–but that was the worst officiating in a major game in as long as I can remember. Read it all.

The landscape of American finance has been radically changed. The independent investment bank””a quintessential Wall Street animal that relied on high leverage and wholesale funding””is now all but extinct. Lehman Brothers has gone bust; Bear Stearns and Merrill Lynch have been swallowed by commercial banks; and Goldman Sachs and Morgan Stanley have become commercial banks themselves. The “shadow banking system”””the money-market funds, securities dealers, hedge funds and the other non-bank financial institutions that defined deregulated American finance””is metamorphosing at lightning speed. And in little more than three weeks America’s government, all told, expanded its gross liabilities by more than $1 trillion””almost twice as much as the cost so far of the Iraq war.

Beyond that, few things are certain. In late September the turmoil spread and intensified. Money markets seized up across the globe as banks refused to lend to each other. Five European banks failed and European governments fell over themselves to prop up their banking systems with rescues and guarantees. As this special report went to press, it was too soon to declare the crisis contained.

That crisis has its roots in the biggest housing and credit bubble in history. America’s house prices, on average, are down by almost a fifth. Many analysts expect another 10% drop across the country, which would bring the cumulative decline in nominal house prices close to that during the Depression. Other countries may fare even worse.

Read it all.

We in the Bedouin community do not normally discuss sensitive issues like polygamy with the general Israeli public. We have already seen that any interest that may exist among Jewish Israelis in this subject extends only to the “demographic” implications of multiple marriages among the Bedouin.

But the topic is important on a purely human level, and needs to be placed on the public agenda, because it is something that hurts us, the female members of the country’s Arab population. In fact, it is something that should interest the entire public, which rarely knows much about what’s going on next door, among the Arab citizens of the state.

Unfortunately, nearly every Bedouin woman in the Negev is at risk of becoming a “first wife” if we don’t take action against the phenomenon.

The conventional assumption about polygamy is that it is permitted in Islam. It is essential, however, to be precise about the source of the sanction in Islamic law. Hence, while there is multiple marriage that is permitted by the faith, in most cases today, the practice is being followed for social reasons alone, with no connection to the religion.

Read it all. (Hat tip: DP)

As much as members of Congress want to find scapegoats, the root of this problem is political greed in Congress. Members of Congress from both parties wanted short-term political credit for promoting home ownership even though they were putting our entire economy at risk by encouraging people to buy homes they couldn’t afford. Then, instead of conducting thorough oversight and correcting obvious problems with unstable entities like Fannie Mae and Freddie Mac, members of Congress chose to ignore the problem and distract themselves with unprecedented amounts of pork-barrel spending.

—U.S. Senator Tom Coburn of Oklahoma

Episcopal Presiding Bishop Katharine Jefferts Schori has recognized as the true Episcopal Diocese of Pittsburgh those who refused to secede Saturday with the majority of local Episcopalians into the Anglican Province of the Southern Cone in South America.

She confirmed the Rev. James Simons and two others as the “rightful Standing Committee of the Episcopal Diocese of Pittsburgh.” The Standing Committee governs in the absence of a bishop. The Rev. Simons, rector of St. Michael of the Valley, Ligonier, was the only member of the previous Standing Committee to oppose secession.

Both dioceses now call themselves “the Episcopal Diocese of Pittsburgh.”

“The presiding bishop’s word today was certainly welcome news,” said Rich Creehan, spokesman for the U.S.-based Episcopal Diocese of Pittsburgh.

Read the whole thing.

“There’s nothing that’s come anywhere near this.”

Alan Valdes, a trader for brokerage and financial services firm Hilliard Lyons, said past market crises ”” the 1987 crash, the dot-com bust, the savings and loan collapse ”” were “child’s play” compared with the last two weeks on Wall Street.

—An Associated Press article on recent market action

[Jim] Simons and [Andrew] Roman contacted Jefferts Schori by email to tell her what had happened and to ask her to consult with the Standing Committee about providing episcopal assistance for the diocese. The Presiding Bishop replied with her recognition of Simons, Murph and Roehrich as the diocesan Standing Committee and told them that she had asked Clayton Matthews, bishop for pastoral development, to assist help them obtain that assistance.

“I give thanks for the work that the Standing Committee has undertaken and look forward to learning of your progress as you move forward in this mission,” Jefferts Schori said in her letter. “You and the people of the Episcopal Diocese of Pittsburgh continue in my prayers and those of Episcopalians across this church.”

Jefferts Schori has also written to each of the former members of the Standing Committee, notifying them that they are no longer part of the ecclesiastical authority of the Diocese of Pittsburgh. The Pittsburgh Standing Committee became the ecclesiastical authority on September 19 when Duncan’s deposition prevented him from exercising his authority in the diocese.

Read it all.

On Wednesday afternoon, I received a phone call from David Wilson, President of the Standing Committee, informing me that in 15 minutes there would be a conference call with the other seven members and that they intended to remove me from the Standing Committee. Two reasons were given. First, I had not accepted my letter of transfer to the Southern Cone. Actually, I had missed the announcement at convention and the letter was never offered to me. When I returned home that evening I found it in the mail having been sent the previous day. The second reason given was that my parish, St. Michael’s, appeared on this web site as having decided to stay in the Episcopal Church. I was not asked to join the conference call and was offered no due process. I do not recognize the authority that purported to take these actions. Providentially at that moment, I was meeting with key leaders of the Diocese of Pittsburgh of the Episcopal Church. After I reported the phone call to those assembled, and with the advice of the Diocesan Chancellor, I immediately appointed two new members to the Standing Committee, which the canons give me the authority to do. This was done at 2:44 P.M. I am pleased to announce that Ms. Mary Roehrich and The Rev. Jeff Murph, who were in attendance at the meeting, immediately accepted those appointments.

Later in the day, I received a letter by e-mail from David Wilson informing me that the remaining seven members of his Standing Committee consider themselves to be aligned with the Province of The Southern Cone.

This information was conveyed to the Presiding Bishop’s office and today we received recognition as the Standing Committee of the Episcopal Diocese of Pittsburgh in the Episcopal Church and because of the absence of a Bishop, the ecclesiastical authority.

Read it all.

Dear Jim,

Now that the Diocese has voted to amend its Constitution and align with the Province of the Southern Cone, it is our duty on the Standing Committee to faithfully serve as the Diocese’s ecclesiastical authority within that organizational structure.

Your recent letter “to the people of the Episcopal Diocese of Pittsburgh” makes clear that you do not believe that you have this duty, but rather that you feel called to a different duty ”“ to challenge the validity of the Diocese’s realignment. Your October 6 letter to the members of the Standing Committee also reflects this perspective.

I fully understand that your position on these issues is a matter of personal conviction. Nonetheless, I must sorrowfully conclude that your letters (and other actions) are a violation of your obligations as a member of the Diocese’s Standing Committee. Further, your actions, and the Resolution of your parish which you have already forwarded to the Diocese, make clear that you are no longer qualified to be a member of the Standing Committee under Article IX, section 2 of the Diocesan Constitution. Accordingly, I am calling a special meeting of the Standing Committee to fill the vacancy left by your departure.

Read it all.

October 6, 2008

The Rev. David Wilson
St. David’s Episcopal Church
905 East McMurray Road
Venetia,PA 15367

Dear David:

I am sending this letter to each member of the Standing Committee.

I am sure you are aware that I did not support Saturday’s actions of the Convention of the Diocese of Pittsburgh of the Episcopal Church in amending the diocesan Constitution to remove the “accession” clause and in accepting the invitation of the Archbishop of the Southern Cone to “join” that Province. On the other hand, it is my understanding that you did support those measures. If I am wrong in that understanding and you are in a position to demonstrate to me that you opposed and publicly repudiated those actions, I would appreciate you letting me know promptly. I shall assume that I am correct if you do not communicate to me a contradiction of my
understanding by 5 p.m. on Wednesday, October 8th.

Despite the tensions of the recent past I have greatly appreciated the opportunity to serve the mission of Christ with you in our capacities as members of the Standing Committee, and I pray that your ministry will be faithful and rewarding in the time ahead.

Faithfully Yours

–(The Rev.) Jim Simons, rector, St Michael of the Valley, Lignoier, Pennsylvania

It’s time to enjoy the upside of the credit crisis. As Washington scandals go, this one is strictly G-rated. Unlike the excesses of the 1990s, the current debacle doesn’t make you turn off the radio whenever national news is broadcast in the presence of youngsters. And rather than trying to prevent certain phrases from seeping into dinnertime conversation, you’d actually be thrilled if your kids could use “credit default swap” in a sentence.

There’s a teachable moment here: “Should we spend money that we don’t have?” I put this question to the peanut gallery gathered at my breakfast table. Laughter all around from the under-10 set. OK, I was leading the witnesses.

But further study with a statistically insignificant sample of one 7-year-old suggests that piling on too much leverage is not instinctive behavior. My son Neal was skeptical of the idea that he could buy the things he wants by borrowing. “Why would I do that? I want my own money.” He also wondered who would want to lend to him.

Read it all.

….the repercussions of crisis that began in the United States are global. In Britain, where Prime Minister Margaret Thatcher joined with President Ronald Reagan in the 1980s to herald capitalism’s promise, the government this week moved to partly nationalize the ailing banking system. Across the English Channel, European leaders who are no strangers to regulation are piling on Washington for gradually pulling the government watchdogs off the world’s largest financial sector. Led by French President Nicolas Sarkozy, they are calling for broad new international codes to impose scrutiny on global finance.

To some degree, those calls are even being echoed by the International Monetary Fund, an institution charged with the promotion of free markets overseas and that preached that less government was good government during the economic crises in Asia and Latin America in the 1990s. Now, it is talking about the need for regulation and oversight.

“Obviously the crisis comes from an important regulatory and supervisory failure in advanced countries . . . and a failure in market discipline mechanisms,” Dominique Strauss-Kahn, the IMF’s managing director, said yesterday before the fund’s annual meeting in Washington.

In a slideshow presentation, Strauss-Kahn illustrated the global impact of the financial crisis. Countries in Africa, including many of those with some of the lowest levels of market and financial integration and openness, are now set to weather the crisis with the least amount of turbulence.

Shortly afterward, World Bank President Robert Zoellick was questioned by reporters about the “confusion” in the developing world over whether to continue embracing the free-market model. He replied, “I think people have been confused not only in developing countries, but in developed countries, by these shocking events.”

Read it all.

In 2003 a research group discovered 64% of Americans expect to go to heaven when they die, but less than 1% think they might go to hell. Not only are there plenty of people today who don’t believe in the Bible’s teaching on… [hell], even those who do find it an unreal and a remote concept. Nevertheless, it is a very important part of the Christian faith, for several reasons.

Read it all.