We are turning outward rather than upward (horizontal rather than vertical). When we fail to look upward, we end up losing our liberty.
1. Changes in laws
- Sarbanes Oxley, repeal of Glass Steagall Act
- Leverage limits
- forced assets to be marketed to market
2. Changes in behaviour
- "no-doc" loans
- improper pricing of risk
3. Changes in trends
- house prices began to fall from their peak
- U.S. dollar and crude oil prices
4. Changes in government activism
- Troubled Assest Relief Program (TARP)
- fiscal activism
Rates fell so borrowing costs spiked
- no-doc loans
- repacking of loans to re-sell
- structured investment vehicles (SIVs). Borrow in the short-term credit markets and invests in the long-duration credit markets
Historical Context
1. Pressure to originate loans to the poor.
- mid 90s
- risk was taken on by Fannie Mae/Freddie Mac
2. Decline in assets pushed ratings down. Collateral and asset base fell.
The Christian Response:
Amos 3:6
Daniel 4
The Lord allows "bad things" to occur throughout our lifetime.
Luke 13
The most involved and most affected by the crisis are no more "guilty" than the rest of us if we are covetous.
Hebrews 13:15 - God is faithful.
Eph. 5:3, Col. 3:5
There may be an inverse correlation between debt and contentment.
Ladies:
1 Peter 3:6 - Be a modern-day "daughter of Sarah".
Men:
1 Timothy 6 - Be a modern-day "son of Abraham".
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