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The Christadelphian | November 2008

In the magazine this month:

  • Editorial Fellowship in the Gospel: 3 – The call of Abraham
  • Letters to the Editor
  • Sunday morning “When I am weak, then I am strong” | Trevor J. Hughes
  • In the image of God 10 – Teaching | Michael Edgecombe, Rebecca Lines, Russell Taylor
  • Zion ploughed as a field 2 – Lessons for today | Gavin Ramsden
  • “The hope of Israel” | Mark Sheppard
  • Book review “To encourage you to read more …” | (Building a Library) | John M. Hellawell
  • Pause and ponder 23 – Married in the Lord, part 6: Choosing a wife | Stephen Whitehouse
  • Acts of the Apostles 21 – Acts 19:28–20:16 | Paul Cresswell
  • What’s remarkable about that? | Barry Lambsdown
  • At the foot of the cross Part 3 – “Truly this was the Son of God” | Dudley Fifield
  • The credit crunch of AD 33 | Robert Jamison
  • “Flee to the mountains” | Peter Forbes
  • One baptism and John’s baptism | Andrew E. Walker
  • Signs of the times Global collapse in financial markets | Andrew Bramhill
  • Israel and their land Russian naval threat | Stephen Whitehouse
  • The brotherhood near and far

A sample article from this edition:

Signs of the Times

Global collapse in financial markets

THE collapse of the world’s financial markets has been remarkable both because of its range and the speed with which it has occurred. Although governments and policy makers have been grappling with the credit crisis for over fifteen months, the dramatic collapse from mid-September has left politicians and central bankers seemingly overwhelmed and powerless to restore confidence and order to markets worldwide. Actions taken, often involving hundreds of billions of pounds, dollars and euros, at times have not had the beneficial market reaction hoped for. As Henry Paulson, the US Treasury Secretary announced his $700bn bailout plan markets settled, willing to wait for its implementation, but then became desperate for it to arrive. News that Congress rejected the bill sent shudders throughout the world’s credit and stock markets which fell heavily, but such is the fragility and unpredictability of today’s financial world that when Congress finally approved the deal markets fell again, worrying that the plan would not work.

Collapse in confidence

Many people have examined the operations of the global financial system to understand what is going on. The jargon is baffling and the complexity of the system renders it largely impenetrable, but all will be able to appreciate that the current financial issues boil down to a simple lack of confidence. Many readers will recall the very unsettling times in September 2007 when queues of anxious depositors gathered outside Northern Rock branches in the UK to withdraw their savings. Such a high profile run on a UK bank (something not seen in the UK for over one hundred years) was unacceptable to the government who intervened to protect depositors. Since then, other banks have failed in a similar fashion, names such as Bradford & Bingley and Bear Stearns being notable cases. Government intervention was again necessary to stabilise markets and depositor confidence.

During September 2008 two further bank collapses have brought the banking system to its knees. Lehman Brothers, a very significant investment bank was allowed to fail by the US government, even though it was much larger than Bear Stearns that had been rescued earlier. The government argued that as Lehman Brothers had no retail depositors to protect, its institutional customers and counterparts would just have to suffer the loss. Two weeks later the US government took action to rescue a major savings bank, Washington Mutual (the equivalent of the Halifax in the UK), but did so in such a way that only retail depositors were helped, with institutional lenders losing everything.

These two actions have contributed significantly to a worldwide collapse in confidence in banks and the banking system by wholesale lenders and investors. This has led to a ‘silent’ run on the banks, none of which has been visible to the public as there are no customer queues spilling out onto pavements and around the corner. However, billions of pounds (and dollars and euros) have been withdrawn from the banking system as institutional depositors and lenders looked for safer homes for their money, and many banks have simply run out of money. Central banks had to step in, fulfilling their role as ‘lender of last resort’ to prevent the collapse of many large, and seemingly healthy financial institutions.

As Bible readers we are not surprised at any of this. There are numerous exhortations about the transience of money. “Wilt thou set thine eyes upon that which is not? For riches certainly make themselves wings; they fly away as an eagle toward heaven” (Proverbs 23:5). It is also rather ironic that economists, when calculating the UK’s GDP, classify the country’s considerable earnings from financial services in a category entitled ‘invisibles’.

There are three things worth considering as we view these dramatic events with our Bibles. Firstly the financial collapse could easily be one way in which Christ’s prophecy about “men’s hearts failing them for fear” comes to pass. So far banking failures have been relatively orderly and all who wished to withdraw their funds have been able to do so. But the great majority of those withdrawals will have been by cheque (which needs paying in at another bank) or by electronic transfer (again to another bank) – no cash passes from banks to customers. If the systemic failure deepens as many commentators are predicting, cheques and electronic payments will be no good without banks. And as there is only enough cash in the system to satisfy perhaps three per cent of depositors, many individuals will be faced with no access to their money resulting in total loss.

Secondly, as the financial markets are truly global, all countries are affected. As nations become desperate unusual measures are being taken to ensure preservation. Iceland, faced with economic bankruptcy following the rescue of its banks, turned to its allies for financial help. America declined, traditional support from its Nordic neighbours and Europe was not forthcoming, so Iceland turned to Russia. A loan of €4bn is currently being arranged. This may not be significant in terms of Bible prophecy but we recognise that under stress nations will form alliances and allegiances away from their normal allies and we could quickly see a new geo-political structure developing in line with latter day prophecies. Undoubtedly the European Union has been brought closer together as their response to the crisis required unity and co-ordination.

Finally it is also apparent that problems in global markets require a global solution. Individual nations cannot act in isolation. Unpaid mortgages in the US have affected banks across Europe. Government guarantees for depositors in Ireland prompted hurried responses from Governments across the EU. Without a co-ordinated, global response no solution will be found. Man may not yet recognise the future work of the Lord Jesus Christ, but only when the Lord reigns from David’s throne in Jerusalem, overseeing a worldwide government, will the lasting solutions be found.

Andrew Bramhill


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