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2008 A look back: Business

Americans wracked by volatile economic year

By Robert Mims

These are the times that try men’s souls.” Patriot orator Thomas Paine penned that phrase in 1776 as the struggle for American independence began, but many are expressing those sentiments while watching their 401(k) plans shrink amid America’s current financial crisis.

In a convergence of factors amounting to 2008’s economic perfect storm, a worried nation saw its stock markets tumble; a complicated and entangled credit and banking system — and several of its most-trusted, big name firms — fall prey to crippling greed and mismanagement; a wildly inflated housing market crash; and terrified employers lay off workers now faced with the specter of foreclosure and even homelessness.

By October, the federal Bureau of Labor Statistics reported the unemployment rate stood at 6.1 percent, closing in on the 10 million mark. That was up 2.2 million Americans from a year earlier, before the economy first cooled and then plunged into a recession. Worse, the numbers of “long-term” unemployed — those without work for at least 27 weeks — swelled by 728,000 to 2 million during the same period.

Lost jobs can translate to delinquent mortgage payments, and foreclosure rates have skyrocketed. Through August, more than 2 million properties nationwide were subject to foreclosure filings — a 50 percent jump from the same month the year prior, according to the
RealtyTrac U.S. Foreclosure Market Report.

Many observers partly blamed the crisis on America’s addiction to easy credit and debt — both as individuals maxing out credit cards, and as a nation that has financed too much borrowing.

The price of oil and gasoline took a roller coaster ride during 2008, adding to the economic pressures facing Americans. At one point, crude oil sold well above $140 a barrel, and motorists paid an average of more than $4 per gallon to fill up their tanks. Rising fuel prices affected shipping costs and then the cost of living itself as the price of groceries and other goods jumped. The U.S. Consumer Price Index leaped 4.9 percent from September 2007 through October 2008.

By October, Wall Street was in full panic, and banks were afraid to lend to each other, let alone to businesses seeking to float payrolls or to families shopping for home loans. A desperate Congress drafted a $700 billion rescue plan to, in effect, underwrite questionable loans and even take stakes in struggling banks and financial institutions.

Would this unprecedented infusion of taxpayers’ dollars work? With Wall Street and stock-based retirement funds alike continuing to plunge, and global markets consequently tumbling on their own, the verdict was out. In nearly daily news conferences, President Bush urged patience — while presidential hopefuls Barack Obama and John McCain offered differing economic remedies of their own to voters.

For Christians, economic hard times will test both financial security and faith. Boiled down, principles seem simple enough: Spend less than you earn, avoid the use of debt, build some liquidity by saving, set long-term financial goals and, most important, recognize that God owns it all.

Gerald B. Hindy, president and CEO of AG Financial Solutions, recently wrote investors to assure them the Assemblies of God-affiliated lender to churches and ministries ($2.6 billion in assets) was especially aware of that latter principle.

Godly wisdom has “directed our strategies to focus on quality and safety in both investments and loans, now exemplified by the lowest loan delinquency rate in our history,” Hindy wrote. “During the coming months we will [continue] to be more sensitive to the leading of the Spirit … as we discern God’s direction.”

AG Financial Solutions Executive Vice President and Chief Operating Officer Jim Batten has some practical advice: Work with a financial adviser who promotes a biblical understanding of stewardship as you review your goals, risks, asset allocations and diversification of investment portfolios.

“A focused effort to minimize debt should be priority No. 1 for every family,” Batten says. “Start by paying down credit card debt, then auto debt and finally mortgages.”

The Christian’s responsibility as a steward cannot be ignored, Batten stresses, in good times and bad times.

“It is in times of crisis that we need God’s provision more than ever,” Batten says. “One of the basic ways to receive from the Lord is through obedience, which includes tithing and giving.”

Batten points to the promise in Philippians 4:19: “My God will meet all your needs according to his glorious riches in Christ Jesus” (NIV).

“God’s Word encourages us to give generously,” Batten adds, quoting 2 Corinthians 9:6: “Whoever sows sparingly will also reap sparingly, and whoever sows generously will also reap generously.”

ROBERT MIMS is a journalist and member of Life Church of Utah, an Assemblies of God congregation in Salt Lake City.

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