Tuesday, March 24, 2009

The scope of the crisis

The scope of the crisis is global. It affects every nation, every financial institution, every business, and therefore every individual to a greater or lesser extent. The focal point is US and Wall Street, but the tentacles of this problem reach across the world financial system to Europe, Asia and beyond. Banks are at risk, with a number of banks in the US and Europe being nationalised or being taken over by other banks. There have been high profile failures on Wall Street, such as the collapse of Bear Stearns, and Lehmann Brothers. The Australian government has been forced to guarantee personal bank deposits up to a million dollars, reflecting similar moves by the UK government.

The size of the financial crisis

The scale of the Global Financial Crisis is difficult for the average person to comprehend. Where once a million dollars seemed a vast amount of money, now a billion dollars seems like chicken feed. Bail outs by the US and other Governments are now measured in trillions of dollars. Here in Australia, in 2008 the government gave over ten billion dollars as an economic stimulus package to pensioners and families. The sums of money involved are staggering and almost beyond comprehension. This was followed by a forty two billion dollar stimulus package in 2009.

Numbers of this magnitude mean very little to the average person, except that it is a lot of money. A trillion dollars is equivalent to one million people earning $50,000 per annum for a period of 20 years. We understand the concept of one hundred dollars, but we find it difficult to meaningfully relate to a trillion dollars.

A Christian response to the Global Financial Crisis

The Global Financial Crisis (GFC) has been termed a one in one hundred year event, whose scale and scope is difficult to grasp. It is global, it is financial, and is a crisis of enormous proportions, that affects individuals, families, businesses, banks, institutions, governments and nations. This problem is so big that Christians need to gain a healthy perspective on the challenges and opportunities in 2009 and beyond. It cannot be ignored, and the problem is not going to go away anytime soon.

This blog is an attempt to understand the Global Financial Crisis from a Christian perspective, and to provide some guidelines for practical action. In this blog I examine the magnitude of the crisis, the immediate and deeper causes, the effects of the crisis, and some possible responses by Christians and local churches.

Next post: The size of the problem