For those of us who don’t gamble, it is more than a little odd to find out that we lost anyway. For a long time, a small number of people were getting rich by trading something called “derivatives,” which involves (I think) gambling on the future value of past debt. The benefits (for the most part) were channeled to a lucky few, but the risks were spread broadly. When the bubble burst, the whole economy was sucked into the vacuum. And now it will take a trillion dollars to get us out of this hole.
We talk about the housing bubble. But we have had housing bubbles before and the world did not come to an end. The derivative trading leveraged the potential gains (for a few investors) while also multiplying the risks to our economic system as a whole.
On Wall Street where we spent hundreds of billions of dollars on a bail-out, they gave out bonuses totally 18 million dollars, the sixth largest total ever. Congratulations on a great year, you didn’t just wreck Wall Street, you brought the country to its knees!
From a faith perspective it brings two things to mind. First, we have worshipped the market for too long. The prophets of Israel could have told us that when you worship false gods, eventually there are consequences. It’s not that God is angry. It’s just how the world works. We reap what we sow.
But second, it is so hard to get over the anger. We don’t want them to get away with it. Someone, we think, has to pay for this. (Actually, we, the American people are going to pay for it, whether we like it or not.) The search for villains, though emotionally satisfying in the short term, is ultimately a path to spiritual bankruptcy. When anger and frustration define who we are, then we cannot live faithfully. And our anger prevents us, as a nation, from moving toward a solution.
So the hedge fund managers gambled away our money, and we need to repent. Ironic, but true.