“The heart of a man to the heart of a maid – Light of my tents, be fleet – Morning awaits at the end of the world, And the world is all at our feet.” – Rudyard Kipling
It’s a common canard amongst journalists to take a standard, run-of-the-mill bit of despair and try to pump it up (for ratings purposes) by pointing to how it disproportionately impacts a “victim” class.The usual line is “[insert bad thing, such as end of the world], women and minorities hardest hit.” The absurdity of course is that the end of the world hits everybody the same – but journalists have a script and a narrative and a style; so they play to it.
I caught several articles recently that speak to the impact of the economic downturn on various sectors of society, namely churches and minorities. We’ll hit these in order.
Banks Foreclosing on Churches …
The first is an article by Reuters about how banks are foreclosing on churches in record numbers. The long-and-the-short of it is this: churches don’t get 30-year notes like normal people, they usually finance business loans on a 5-year time horizon, at the end of which the entire note is due. No worries, people usually just roll over the financing at the end of that time into another note. However, if the economic downturn has hammered the church’s ability to pay, or worse yet the value of the building is now well below the loan amount, banks may be unwilling to refinance. (Trace back five years from now and you’ll find the end of the bubble.)
There’s some hand-wringing in the article about how banks are unwilling to negotiate with churches. It goes up to the edge, but not over, in the prospect of labeling this “oppression” – it’s not. Banks are rational businesses. They do what is in their best interest, while also aligning to the massive number of regulations they must meet.
Interestingly, the banks are in a pretty ugly situation here too. In the housing market, a bank can foreclose on a house and turn it around for sale. There are costs in doing so and the house usually gets trashed in the process, but the housing market is still fluid. Try doing that with a 2000-person church building. It’s not like there are just dozens of 2000 member congregations out there looking around for new buildings.
As for the churches I’d just note that churches are people too. Yes, it is bad that churches find themselves unable to pay the mortgage – unable to pay back money they borrowed. This is bad for us. “The wicked borrow and do not repay, but the righteous give generously” – Psalm 37:21. We don’t like being on the wrong end of this exchange. While it is perfectly legitimate in the business world to exercise the “asset for default” exchange in the loan contract, churches and many Christians find it unsettling.
Yes, there are churches who have made bad decisions about how much they could borrow. It is the way of many people to believe in the good times that things will go on like this forever. “It’s not a bubble – it’s a permanently high plateau.” That’s why we run multiple economic scenarios in our planning, allowing for bad things to come and still maintain some margin. Even in these scenarios though we rarely catch every single variable or every single potential pitfall.
As long as we live in an economy dominated by crony capitalism and centralized banking, the asset bubble blowing and popping flail will continue and we’ll see more and more groups caught in the aftermath. The rich elites and the politically connected will get their bailouts – at the expense of the faithful … and the poor and minorities.
The Destruction of Black Wealth …
The next article comes from The American Prospect titled “The Destruction of Black Wealth.” The article follows the story of Charles Walker, a former grocery store owner in Detroit, whose business went under recently due to the downturn in the economy. I feel for Walker. Stories like his are all too common.
The article goes on to note some statistics about the disparity of wealth between white and black America, and the dramatic difference in unemployment rate (which we’ve noted in the past). The author notes how the Great Recession has had a disproportionate impact on blacks – and I think he’s right. Unfortunately, he doesn’t even come close to understanding the causes, or just how deep the “conspiracy” is. Oh, he makes some tried-and-true charge of “racism” (this time in the banking industry) … missed it by a mile.
Yes, the deck is stacked against you, but it’s not a bunch of racist bankers sitting around plotting how to squeeze a bit more interest out of you. It is way worse than that. Where to begin?
Asset Bubbles and First Access to Money. It is the way of all central banking systems to blow asset bubbles and claim that it is economic growth because of their wise planning. In the process of the asset bubble blowing, those with “first access” to money get paid handsomely, while those without last access get hammered when the rug is yanked out. Consider the recent housing bubble. Who got paid and who got hammered? The last people to buy in were the ones who got hit the hardest in the crash. And who buys last? The people least able to accrue capital at the beginning of the process and are only able to stitch it together at the end due to lax credit standards. That’s the poor, in case you missed it.
Or how about the current monetary policy at the Fed? Have you looked at the price of gas and groceries lately? Does that help or hurt the poor (and minorities, who disproportionately comprise “the poor”). If these Fed policies of easy money have caused a rise in prices, who has benefited? Well, the stock market is up. That helps the poor too right? No, the rich own the stocks and are getting a huge payday on the backs of your higher gas & grocery prices. That ain’t racism – greed sees no color.
Rampant Crony Capitalism and Political Favoritism. It’s interesting to me that the story is centered around the nearly collapsed city of Detroit. As we noted in “For Three Sins of Progressives, Even For Four …” Porter Stansberry recently rote a good article about the collapse of Detroit (among other things). He noted the tight correlation between progressive vote-buying tactics and urban decay. (I would say there is also a correlation between Republican vote-buying tactics and other problems, but that’s not the issue in Detroit.)
I have little doubt that Charles Walker and his former customers have consistently voted for the very same political system that has led to an unlivable economic situation. There’s a saying in here somewhere about making beds and lying in them, I can’t quite put my finger on it just now though.
The article even makes mention of the fact that a vast majority of minority-owned businesses are one-man-shops. It is quite difficult to meet the massive regulatory burdens of government in a solo outfit. Again, beds and sleeping.
LBJ Is Laughing All The Way To … Somewhere. Then there’s the whole Great Society issue, which isn’t really discussed. Let’s just say that you could hardly script a better means of destroying a community that LBJ was able to put together in his short stint as president. The end of the family, a fatherless generation, piling up despair and the destruction of the human spirit – it’s an impressive array of destruction.
Bob Herbert, the author, then goes on with this:
It is futile to view the desperate struggle of African American businesses outside the context of two overwhelming imperatives: the obligation of the United States to figure out how to put its population to work in jobs that will support families and sustain a world-class economy; and the parallel obligation, perpetually avoided, to bring black Americans and all of their talent and energy fully into the fold of the wider society.
I would argue first and foremost that governments hold obligations on neither front. Instead they are obligated to defend human rights (life, liberty, property). Putting a population to work and bringing all Americans into the society are a function of freedom: free choice, free markets, free interaction, freedom to live your life.
But if you want to look at a government failing to do the things you note – look no further than the ballot box. You have chosen these policies. Americans, left and right, have continued to choose crony capitalism and central banking ahead of freedom. Americans, left and right, have continued to choose vote-buying instead of freedom and self-reliance. Americans, left and right, have refused to dismantle the legacy of LBJ. Finger pointing is useless here, the complacency is too widespread.