By Morton J. Marcus, an economist with formerly with the Kelley School of Business at Indiana University
The Reverend Terminus Tufflov was preaching although he and I were the only persons in the sanctuary. "These are hard times, my friend. The forces of darkness have gathered and are threatening my flock. These economic woes are tests sent from on high to challenge our faith. We must prevail and we will prevail."
"That's very comforting Termi," I said, addressing him informally since we have known each other for several decades, although I am not one of his congregants. "It's always good to know that we will prevail over our problems."
"Agents of evil led some into error and financial sin," the Rev. proceeded. "But their temporary indiscretions were not born of greed as much as by the desire to help their fellow men."
"Really?" I asked.
"Certainly," he replied. "Builders, brokers, and bankers cannot stand to see families denied the American Dream: the single-family, detached, owner-occupied home. Likewise, real estate agents, land title insurers, and a host of other good people are always willing to step forward to assist those deprived and in need of home ownership.
"It's one of America's blessings and nowhere else will you find people happier to help the home-owner than right here in Indiana. Our state and local politicians lead the parade of enablers, folks whose efforts put home-ownership within the grasp of virtually every citizen."
"I never recognized the virtue of such self-interest before," I said.
"Virtue," Termi thundered. "Verily, it was virtue that had investors from all parts of the world buy imaginative packaging of home loans. What can be better than putting more people into their own homes? What can be safer than the American home? To do good while being prudent is truly a virtue."
"But it turned out," I said, "that those were not prudent investments. And, when oil prices began their dramatic rise, more and more borrowers could not repay their loans. This made lenders very nervous about lending since they did not know to whom they cou ld lend safely. Only then did some 'get religion' and try to back pedal. Thus began the current recession. A downturn in housing activity married to a credit crunch."
"Yes," said Termi, adjusting his ecclesiastical robes. "Marriage begun in a state of stress and turmoil is a challenge. I always recommend counseling, which turns out to be successful because most couples do not return for a second session."
"This recession," I said, "will not be resolved by faith. We had faith in our biggest commercial and investment banks. We had faith in the wisdom of the Federal Reserve and the competence of the U.S. Treasury. We found no hope from the promises and assertions of the leading business executives."
"But my boy, " the Rev. protested, "these are the princes of our commercial realm, the pillars up on which our communities rest."
"No," I insisted. "These 'princes and pillars' are the self-serving beneficiaries of our economic system. Only a few of them know the consequences of their actions. And if you do not understand how your activities integrate with the efforts of your neighbors, you are dangerous, ignorant and lacking in virtue."
"That is a harsh judgment," Termi said. "Tell me, what will bring this recession to an end?"
"That is already taking shape," I answered. "It is a renewed vision of our nation as a place where innovation and creativity are rewarded when they serve mankind and not just the interests of a few."
The Rev. descended from his pulpit and said quietly, "I don't expect that vision can be well-received in this hall of worship. The faithful here prefer tomorrow to be very much like yesterday."