On Sept. 15, 2008, the investment bank Lehman Brothers filed for bankruptcy, signaling that the financial crisis that had been building since 2007 had reached a critical stage. The stock market plummeted, and the global economy stood on the edge of the abyss.
The financial crisis caused immense material suffering and the loss of human potential as many Americans lost their homes, gave up their chosen career paths, deferred having children and forwent medical treatments they could not afford. The decline of trust in secular institutions, including the government and the banking industry, could have been an opportunity for the Catholic Church to offer guidance, but it has not been quick or consistent in empowering people to address the harmful effects of the new global economy.
Almost exactly 10 years after the Lehman Brothers bankruptcy, the Census Bureau reports that the median household income has finally recovered to levels seen before the financial crisis, a positive achievement but one that highlights the millions in lost income in the intervening years. Between 2007 and 2010, the median net worth of U.S. households declined by 39.4 percent, and African-American and Hispanic households experienced further decline into 2013. Unemployment had risen to 10 percent by 2009, and millions more Americans were underemployed or had given up hope of finding a job.
People are unable recognize the complex social causes for their individual plight.
An increasingly individualistic culture left many Americans ill-equipped to deal with this material and personal loss. As the sociologist Jennifer M. Silva found in interviews for her 2013 book Coming Up Short: Working-Class Adulthood in an Age of Uncertainty, many working-class young adults interpret their economic problems as challenges they must face alone, rather than seeking solidarity with others. This is not primarily because such opportunities for solidarity are unavailable, but rather because these young adults do not trust the people and organizations that might work with them to improve their situation. As a result, people are unable recognize the complex social causes for their individual plight.
This same individualism hampered the public policy response to the financial crisis. Recovery measures like bailouts, stimulus packages and financial regulations generated a rapid political backlash as critics warned about the increasing scope of government involvement in the economy and the ballooning national debt. Congress slashed funding for public assistance programs like the Supplemental Nutrition Assistance Program (food stamps), the need for which had significantly increased in the aftermath of the crisis. Support for labor unions among Americans fell below 50 percent, as some blamed organized labor for the loss of manufacturing jobs, and Republicans like Wisconsin Governor Scott Walker curtailed the rights of public sector unions. Last year, the Trump administration signed a bipartisan bill that weakened some of the key banking regulations put in place by the Dodd-Frank Act of 2010. It was as if the American people forgot how the markets and financial institutions had betrayed them, and instead blamed their woes on the very forms of public solidarity needed for recovery, both personal and social.
The Vatican has provided some forceful responses to the global financial crisis. For example, in 2011 the Pontifical Council for Justice and Peace released a document calling for the reform of the international financial system, and earlier this year the Congregation for the Doctrine of the Faith and the Dicastery for Promoting Integral Human Development jointly issued a similar document. Likewise, in his 2009 encyclical “Caritas in Veritate,” Pope Benedict called for the reform of economic institutions with “real teeth” to promote international cooperation and solidarity.
Although these documents propose much-needed reforms to the global economy, the Catholic Church’s response otherwise has been lacking. It has yet to adequately address the powerlessness experienced by Catholics facing the immensity and complexity of the global economy and the United States culture of individualism.
The Catholic Church has yet to adequately address the powerlessness experienced by Catholics facing the immensity and complexity of the global economy.
How can the church address this powerlessness and build up what Pope John Paul II called “networks of solidarity” (“Centesimus annus” No. 49) now, 10 years after the financial crisis?
When the priests Yvan Daniel and Henri Godin published France: Mission Country? in 1943, it exposed the extent to which the working class in France had abandoned the Catholic Church, in large part resulting from the latter’s perceived alliance with the wealthy and powerful. The soul-searching that resulted from the book’s publication led to the emergence of several creative ministries engaged in outreach to the working people of France. Although some of these experiments failed, others (and similar efforts across Western Europe) helped raise up communities that embodied the spirit of Catholic social teaching and had a deep impact on European economic and political life in the decades after World War II.
Although our situation is quite different from that faced by Catholics in mid-20th-century France, we need to muster the same creative energy to develop networks of solidarity that empower people in the aftermath of the financial crisis.
Catholics can transform already-existing institutions to better meet people’s needs in our age of austerity. Catholic theologians like Julie Hanlon Rubio and David Matzko McCarthy have proposed ways that families can become more engaged with their local communities. John Gehring has noted how Catholic leaders are increasingly working with labor unions in support of initiatives such as the recent push for a living wage in the fast-food industry. Nathan Schneider has called on Catholics to help establish cooperatives that empower workers and create bonds of solidarity not possible in traditional forms of business enterprise.
At the same time, Catholic parishes and dioceses ought to adapt existing forms of faith communities, or create new ones, to better meet the needs of workers. Parishes working together, or Catholics working with ecumenical partners, could form small faith communities for particular social groups such as retail workers and business managers. These groups could engage in a form of faith formation where participants share their experiences in the workplace and reflect on them in the light of Christian faith.
Similarly, churches should bring together members of distinct groups such as the working poor and the middle class, or immigrants and the native-born, to learn from one another and develop faith-inspired strategies for meeting community needs. While communities of this type would not necessarily engage in direct social action in the way unions or community organizing groups do, they could contribute to the conscientization that spurs people to join such action. And for groups such as undocumented immigrants and some types of laborers for whom political organizing is especially difficult, these groups could serve as a more discreet way of building solidarity.
The death of Lehman Brothers marked a turning point for economic life in the United States. The financial crisis signified the failure of the old economic order and devastated the lives of millions of Americans. Yet this calamity can still be a source of new life. Efforts to build economic solidarity have sprouted across the country in the years since the crisis. Catholics can learn from these efforts and make their own contributions and also provide a spiritual foundation for these networks of solidarity and draw on the long tradition of Catholic social action to enrich them.
Why the Wall st sign? I would have put up photos of Fannie Mae and Freddy Mac. Why this article now?
The article is also incoherent? He is writing on economics but doesn't understand it. There are twice as many job openings now as there are people out of work. People are quitting jobs in record numbers because they know better paying jobs are out there. Hope it lasts.
Free Market Capitalism is ridding the world of poverty while Catholic Social Teaching (which is what this author advocates) is a formula for creating more poverty
Until the next crash.
Do you know what causes a crash? Many things. One of which is what the author is recommending. Only his crash will last for generations.
Cross your fingers and hope we don't get another crash ever let alone soon! However, the Wall Street journal has an article on what could cause it. Too much debt. Google "Get Ready for the Next Financial Crisis."
Amazon stocks rise while not paying dividends. That could be a problem in a 40% financialized economy. Excuse me if I don't know much about debt because I haven't had any since 1992. I taxed my earnings to pay down my personal debt. But people go into debt because of medical emergencies and just meeting the basics. But doesn't debt fuel the economy by enabling people to buy stuff from China they otherwise couldn't and then raise the Chinese from poverty? If we crash due to debt, then those raised out of poverty will return, much like the great depression. We had a period of relative stability following the regulation and reforms instituted after the 1929 Crash. But, presently, regulation is considered an impediment in the march toward the capitalistic paradise. What I see is a steam engine without a pressure regulator. Disaster.
The biggest sources of personal debt are mortgages and student loans. Some have debt due to medical emergencies but not many. Also corporate debt. Personal items are a minuscule source of debt. The biggest driver of debt in the US is government deficits. China has little to do with debt except they hold a sizable portion of our government debt. Obama financed his deficits by also printing money but because of sub economic growth the rates did not rise. There is competition for money now and rates are going up. Called supply and demand.
This will help! https://www.bloomberg.com/news/features/2016-03-31/welcome-to-iceland-where-bad-bankers-go-to-prison
@JCosgrove "Why the Wall st sign? I would have put up photos of Fannie Mar and Freddy Mac. " Better a picture of Franklin Raines and Andrew Cuomo.
Before the editors of America write another article on the housing and mortgage crisis thy should read Wallison's book: "Hidden in Plain Sight".
They are never going to do that. They want it to be all about Wall Street greed. They are not interested in what really happened.
Not another author preaching Jesus was the first socialist and redemption is offered to all who do works of mercy through the organs of the State.
The various Governments in the USA are of this world, the Lord of this world is Satan so, the Lord of the Governments in the USA is ...
The second reading, from James this Sunday, first have faith and others will know you have faith by the works that you do. (and then they will ask you to tell them what is the source of your obviously envious life, what you have that they do not have an opening to share the Good News!)
Pardon me, mate, but it is very hard to read this article several times and not discover yet another core absurdity.
Citizens in the USA do not have anything resembling "an age of austerity" - have you never been to Mexico City, Dhacca, Mumbai, Harare or Caracas?
4 ensembles every year seasonally, epidemic obesity with heart disease, stoke, diabetes, breast cancer following.
All citizens seemingly obliged to conform to pride, covetousness, lust, wrath, gluttony, envy and sloth to match the Jones and keep friends; and to wink their eyes to sodomy, fornication, serial and parallel polygamy, adultery, incest, pornography and riot.
The author uses a wide brush to paint broad strokes. So I will narrow the conversation. Greed has not gone out of style. The financial crisis post 2008 was a housing bubble where everyone involved was trying to cash in whether selling homes or buying homes. Many involved were dishonest whether inflating assessments, approving mortgages for those who could not afford them, lying about income on mortgage applications, packaging then bundling and slicing mortgage backed bonds as falsely rated as AAA and so on. The crash was inevitable. Many homeowners increased consumption expenditures by taking out home equity loans or refinancing their mortgages and spending the cash. Until the music stopped. Now there are several current topics to highlight among many. Tariffs. The history of the US shows that tariffs were a major and continuing national and regional issue for much of our collective US history. Today China and other countries do not pay their workers a decent salary. The present so called "tariff war" may hopefully convince other countries to renegotiate with the US so we can sell more of our export products overseas and overseas countries can manage to pay their workers more so those foreign workers can afford American exports. On another topic, transaction taxes should be levied on all Wall Street financial transactions including stocks, bonds, currencies, options, derivatives, collateralized debt obligations and the like. Does anyone really think that high speed trading is investing rather than just short term gambling? Regarding fast food restaurants, I spoke to a mother of five who worked at McDonald's who said she was against a $!5 per hour wage. She said the business can't make money at that wage. She told her children that you don't spend your life working at McDonald's, it is a step up the ladder and there were plenty of scholarships and offers of financial assistance to continue one's education. Right now the television has more advertisements to lease new automobiles than I can ever recall. Someone must have some money. So yes, there is great income inequality, wealth has stove piped to the top. one percent. But it is an international problem and local community organizing seems like a single shot pistol when the metaphorical battle needs to be fought with armored divisions. And it seems the Church is rather occupied right now with other matters. Congress? We know how productive they are.
RRB Gorakhpur Group D Result
I think Iceland has part of the answer! This Is Where Bad Bankers Go to Prison
Iceland is the only nation that put top finance executives behind bars after the 2008 crisis. Still, fears of crony capitalism remain. https://www.bloomberg.com/news/features/2016-03-31/welcome-to-iceland-where-bad-bankers-go-to-prison
You don't understand. If they put bankers in jail, they would have to put half the Democratic Party in jail too. They caused the financial crisis. That would never happen and most of the bankers are Democrats. Not all but most. No jail time for the culprits when they are Democrats.
The USA is a toxic cesspool of greed, gluttony, sloth and wrath. Better to let Americans decimate each other in person mano a mano and get it over with instead of doing it online.
Rid us of America and make the world a more loving place full of hope. Amen
“Go Home America, You're Drunk”, by Virginia Hume
Virginia Hume is a contributor to The Weekly Standard.
Have you ever arrived sober to a party that’s been going on too long? Half the people are lurching around, glassy-eyed and happy. The other half are furious, slurring their way through nonsensical arguments.
That’s how I’ve felt watching cable news since the election. Some of the assertions people are making are absolutely bananas. I keep wanting to shout, “Good God, shut up. You are DRUNK!”
They aren’t drunk, of course.
But they are under the influence.“
https://www.weeklystandard.com/virginia-hume/go-home-america-youre-drunk
How many Repubs struggled to keep Glass-Steagal in place? This Democrat vs. Republican thing is a sock puppet fight to keep the peasants hornswoggled. Until new parties can get a toehold with instant runoff voting, everyone but the 1% is in trouble.
No what is keeping the peasants hornswoggled is the Fake News put out by liberals. The biggest one is the effect of the 1% or .1% which is actually positive for the poor. If you are interested in learning some basic economics I can give you some good sources. The best are the writings of Thomas Sowell. The ultra rich don't control resources. Their wealth is based on equity which can not be cashed in. It is an illusionary number.
With any luck the Left/Right will blow up the Right/Left, and those of us who wish both camps would go away can scatter salt on the soil to prevent them from ever returning from hell.
Historically in the U.S., Catholic economical assistance has been fairly successful at the microeconomic level. Community-centered enterprises such as credit unions and life insurance enterprises come to mind. Some organizations of this type can now number their duration in excess of 100 years. They arose largely because the instruments of credit and financial security accessible in the larger society were inaccessible to certain immigrant ethnic groups. I believe there are some parallels in institutions that arose to assist various Jewish communities, and probably also other ethnically uniform immigrant communities.
One key to the success and durability of these types of enterprises was trust. The managements of the enterprises trusted the populations they existed to serve, and the patrons trusted the managements. The commodities traded were basically debt and risk mitigation instruments. Most of these instruments involve an assessment of the future. There are no risk free debt or insurance instruments, primarily because nobody can predict the future with certainty.
There are all kinds of tools to evaluate probabilistically the likelihood of occurrence of events that would affect the safety of a credit or insurance instrument, and consequently the satisfaction of both creditor and borrower. But these tools involve not just elaborate calculations, but importantly, assumptions. Typically, the assumptions in forecasting models constitute the elements of the model that have the most influence on the quantitative outcomes. And some assumptions in the transaction process that these models facilitate concern information about the composition of the instrument itself, such as the actual value of any assets that might form the basis of the instrument. Here, in the absence of detailed knowledge of the product transacted, is where trust came in.
The question most pertinent to our present situation is whether that trust is possible any more.
The consistent drumbeat about “free market capitalism” being the salvation of human economic comfort belies the fact that those who propose it most loudly sit comfortably as its benefactors. The rest of society awaits the benefits to trickle down, whether jobs that pay “family-supportive” wages, decent affordable housing, and quality economic health care. And the trickle down always seems to be short of the promises, especially for the elderly, the disabled of all sorts, and the disenfranchised. For example, after promising never to touch retirees’ Social Security and Medicare, the president’s own budget makes cuts to the programs, and prominent Republican legislators now talk frequently about the national deficit requiring cuts to “entitlement” programs.
The USCCB produces nice rhetoric about economic security for citizens but you’d never know it from the pulpits of the nation’s churches. The fact is that most of the nation’s bishops are indeed allies of the 1% for their contributions to church charities. The local silence of USA bishops follows the simple rule, be careful of the feet you step on today, they are connected to the backsides you need to kiss tomorrow!
Apparently you are unaware of the world around you. The so called poor in the United States live better than the rich of a 100 years ago in many ways. They may be spiritually and culturally deprived but not materially. Poverty is rapidly disappearing from the world. All due to free markets that trickle down all over the world.
You should read more. Basic economics would be a good start. Freedom is an amazing driver of human achievement. Read about it.
Two good starters are
The Suicide of the West by Jonah Goldberg. Start with the end of the book, the conclusion and then appendix.
Factfullness by Hans Rosling. Shows the ignorance of the educated.
Both available on your eBook reader in a couple minutes.
Stanley, Harvey, Charles & Vincent get it - as does our brave and prescient Holy Father. I'd say the rest of you can go back to enjoying brandy and cigars with Steve Bannon and Cardinal Burke. Matthew Shadle got his point across without boring us with expository writing on the dismal science and I won't either, though it's likely we both could if it was appropriate to the audience. What I read here is a mash-up of Gestalt-right talking points and facts and data wouldn't be welcome anyway.
Interesting comment. Argument by denigration. Ad hominems are an admission of a weak argument. . Thanks for making our points.
Ironic when facts and data are being recommended by the ones the commenter denigrates.