Prime Minister Gordon Brown has now stated the obvious by finally agreeing with bankers that the world seems to be heading into a recession. It is worthwhile spending a few moments reviewing the reason we seem to be heading for the financial rocks. The answer is quite simple — as nations we owe too much. We are even seeing whole nations in danger of bankruptcy, as individual bankruptcy is becoming big business.
Centuries ago, the Bible understood that debt is something that should be avoided wherever possible. Proverbs 22:7 says: “The rich rules over the poor, and the borrower is the slave of the lender.” Thus the Christian approach to money management, many Christian leaders have argued, is to avoid debt like the plague.
The West as a whole has ignored that advice. The real problem seems to be that even our rich banks have not been able to avoid the temptation to borrow money in order to make more money. It is astonishing that no regulator seems to have seen the danger since even the banks have become slaves to some nebulous thing called “wholesale money markets.” Robert Peston reported the staggering statistic that in the UK “net wholesale funding of our banks went from zero in 2001 to £625bn by the end of 2007.” When a market is your master rather than an individual, if the market changes direction, you are doomed, unless another master bails you out. Now, of course, many banks are slaves of the state and one has to ask how many truly independent banks will be left by the end of this storm.
We might ask why debt is such a problem. The answer is really quite simple, and increasingly even secular commentators are beginning to grasp this. Debt is a form of theft from ourselves. As one commentator put it:
“The world stole prosperity from the future year after year, with the full collusion of governments, regulators, and central banks. Now the future has arrived.”