Can the Markets Resist the Devil?
The present stock market slide is not the beginning of a cataclysmic collapse in the U.S. economy. Stocks may drop lower for a time, but the Dow will find a consistent floor above 7,000 and the Nasdaq is close to its bottom in this present slide as well. This will be closer to the actual value of American business, which in the long term is healthier for both the economy and the markets.
The equity markets were unrealistic in their exuberance in the late 90’s and now they are being driven by a fear that is just as unrealistic. A true concern is the fact that they can so easily be driven far from moorings that link them to actual business performance or solid prospects for the future, not just pipe dreams.
The markets are the major engine that drives the economy. Even if an engine stays within its operating parameters, if it starts oscillating between extremes it is in danger of not just stopping, but coming apart. The equity markets have been swinging far beyond normal limits both high and low. We need to pray against the greed that led to the unrealistic over-exuberance and also the fear that is now driving it. Both are enemies that can open the door to tragic consequences.
The economy itself is making swings up and down, but not like the markets. There is need for a stronger connection between the actual economy and the markets. This can never be total because there are so many factors that can affect the markets, but the stronger the connection the healthier they will be.
A Solid, Stable Future
The fundamental strength of American business is still very sound. Its resilience is remarkable. It is a healthy thing for the Dow to get back to what is closer to the real value for American business. We need to pray for wisdom and reason to return to the equity markets and for resistance to the greed and fear that is now gripping them.
America has not yet fulfilled her destiny and can rise to yet much greater heights economically, politically, militarily, and spiritually. The world needs for America to be strong at this time, and as a nation we have not reached our full maturity or strength. When we invest in U.S. stocks we are investing in America and her future. However, we must resist being controlled by either greed or fear.
It is no accident that the enemy attacked the World Trade Center and continues to issue threats against those things that will directly affect the economy. There remains a divine purpose for a strong America. We must expect attacks, but build our lives and our future in faith, not fear.
In Revelation 13 we see that the devil does have a plan for world trade. He controls people through fear the way that the Lord sets people free and leads them by faith. In Daniel 11:31-32 we see that even when the very abomination of desolation is being set up those who “know their God will display strength and take action.” Right in the face of the enemy’s most bold actions true Christians will not be hiding, but resisting with strength and action. Again, we must not be controlled by fear, but by faith.
When the recent panic began to grip Wall Street and the sell off began, I started buying. I determined to resist this fear in any way that I could, and have bought more stock in the previous four days than I have in the previous four years. We should only do what we have the personal faith and peace to do, but we must learn to not ever be controlled by the fear that is growing in the world, but rather to resist it.
A Steady Hand
In recent months CEOs, accountants, and analysts have lost about as much credibility as the markets have lost value. There is an obvious strong connection here, and there should be. However, is it right for the whole country to lose trillions of dollars and almost every company lose value because of a couple of crooks in a couple of companies? The overwhelming majority of CEOs, accountants, and analysts have been honest and straightforward, but are nevertheless being punished. That is not justice for anyone.
President Bush displayed remarkable wisdom and leadership in addressing the recent corporate scandals by effectively speaking loudly while carrying a small stick, which is the right thing to do at this time. This is not to imply that any criminals should get away with breaking the law, or that white collar criminals should get off easier than any other crook. It is not right that someone can steal a purse with fifty dollars in it and go to jail for years while someone can defraud millions of shareholders out of billions of dollars and not go to jail at all. Justice is crucial for true prosperity, and the stability of lasting prosperity requires justice. However, the present demand for stronger laws can result in an overreaction, which will stifle the future growth of American business, ultimately costing us all much more than these criminals have.
The scandals themselves have already started bringing necessary corrections. The stock markets will always deal most harshly with any deviance from straightforward honesty. It is a good time for some legislation that will bring more consistency to the accounting procedures, and put some teeth into the penalties for violating the law, but it will be a tragedy if these are taken too far.
Hero CEOs
Corporate leaders are the heroes that books are seldom written about, but they should be. They have helped to build America into what it is as much as any political or military leaders have. Anyone who has ever been in business leadership knows what a remarkable feat it is to be successful in it. In free enterprise all business endeavors require risk. The greater the potential reward the greater the risk. The wisdom, courage, endurance, and fortitude required of almost any business leader today could be compared to that of a general in a war.
In business, decisions must be made almost daily that can have huge consequences. To survive in today’s corporate world, leaders must move forward with vision and resolve under continual stress that very few people can endure. New laws are needed to punish fraud, which will only punish crime, not mistakes from being optimistic. Unrealistic optimism can result in losses, which is the nature of the game, but if we punish optimism we will not only shut down progress, we will destroy our future.
We must also be careful how we try to restrict executive pay and bonuses. Democrats are now attacking the President because he received modest, low interest loans from a company that he once headed. There is nothing wrong with the practice of a company loaning money to executives at a discount as part of their benefit package as long as it is disclosed.
There are many executives whose leadership rewards thousands of people with good jobs, and many more with significant returns on their investments, sometimes in the hundreds of billions of dollars. Shouldn’t those whose job can so positively affect so many people, not to mention strengthen the nation, be paid as much as the average ball player?
The televangelist scandals of the late eighties brought some needed examination and corrections to ministries. God begins His judgement with His own household (I Peter 4:17) because He cannot judge the world for the same things that His own people are doing. Just as I warned in the late eighties during the televangelist scandals, we can expect the same kind of judgement that His household goes through to ultimately come upon everyone else.
Like the televangelist scandals in the late eighties, there are some needed corrections in business practices, especially in accounting procedures. However, just as the televangelist scandals unfairly hurt everyone in ministry, including the majority of faithful pastors and Christian leaders who have lived by the highest standards of integrity. This overreaction resulted in damage to Christians everywhere, as well as accelerating the meltdown of morality in America. The present corporate scandals can end up doing great and unnecessary damage to business in general if we do not handle this situation with proper restraint.
The Need for Real Representatives
The strength of the American economy can be traced directly to the combination of brilliant business and government leadership in providing the freedom to compete on a just and level playing field. Most of our legislators are lawyers. We can thank them for having the greatest, most fair legal system in the world. It is not perfect and will not be until the New Jerusalem comes to earth. Even so, there are very few lawyers who really understand business. We need to have more business leaders as legislators.
There are continual scandals in government that are hurting the country far more than business and televangelist failures. There is a much more desperate need for election reform than business reform. The Eddie Murphy movie, “The Distinguished Gentleman” may paint with too broad a brush to make its point, but it does highlight the way the system now works for many of the people we elected to represent us. We need to make a real issue out of disclosing which representatives are receiving donations from which PACs, and how their voting record is affected by it.
When our nation was founded congress was only to be in session a few weeks out of the year, and it was expected that legislators would be part-time. They all had farms and businesses which were their main occupations. This kept legislators much more in touch on a grass roots level with their neighbors who they represented in congress. The modern, professional politicians do not live in as real a world, and there needs to be more of a reconnection here, just like the one that is needed between the stock markets and the actual economy.
Though we owe lawyers and our legal system a great deal for providing what is still the best business environment on the planet, a lawyer who really understands business is rare. This is why it is typically our government’s response to a problem to add more laws and regulations when what we really need now are fewer encumbrances. There should be a law passed that for every new regulation added, we need to remove two. There are a multitude of useless regulations that make business far more difficult than it needs to be, and thereby less efficient. We, the consumers, pay this bill.
Accountants are like lawyers in a lot of ways. The modern world could not run without them, but they often cannot see the forest for the trees. I can fully understand how even the most honest auditors could have been at both Enron and WorldCom and not seen what was coming. This is not to imply that those who were there were innocent, and that there are not conflicts of interest when auditors are given lucrative consulting contracts from the companies they are supposed to be examining. However, auditors are faced with an almost impossible task: There are so many useless regulations to deal with it drives one to start majoring on minors.
One study of the IRS revealed that IRS agents could only give accurate tax advice 40% of the time. With the constant changing of laws and regulations, I think that any IRS agent that can get it right 40% of the time must be a genius.
We may be presently dealing with a slide in credibility because of a few CEOs and auditors who were crooks, but one of the greatest hindrances to the future growth of American business is the continual changing of the rules in the middle of the game that business has had to deal with. How could you play a game if one minute a rule that makes you safe and in position to score suddenly changes without anyone telling you about it, and instead of winning you are dead!
There is a real danger that our legislators will overreact to the current scandals in ways that could do serious damage the future of American business. This is in no one’s best interest but that of our enemies. We should be as disturbed by those who are trying to make political capital out of this crisis, as we are by those who have made the mistakes. They will hurt us all.
The Democrats think they can make an issue out of the Republicans being too cozy with corporate America, and the Republicans can certainly make an issue out of the fact that they are having to clean up the mess that started during the mid to late 1990’s under the Clinton Administration. Both parties have made mistakes. No one can operate in this present world without making them. However, both parties have also done much to lay the foundation for the prosperity that we have enjoyed. An eagle needs both its left and right wing to fly.