Counting the Cost

The financial ‘crisis’ has come as a shock to the world, including me. It probably shouldn’t have been such a shock if we had been better at counting the cost. One of Jesus’ parables is about a man who starts to build a house and runs out of money, winding up a laughingstock for not figuring out ahead of time what he could afford. This market situation is not exactly like that parable but it does raise the question of whether the folks buying financial instruments were paying attention. Worse, it raises questions of whether even those paying attention could figure out what was going on, whether those creating the financial instruments were hiding the cost or believed that counting the cost was no longer necessary because they had 'spread' the risk.
When I look at my own 401k and the mutual funds that I was and still am investing in, I have to say that I was not really well informed on what kind of risks were being taken in the bond and mortgage markets. I did not think the funds I was buying would expose me to a lot of that mortgage risk. I also think that the way the risky loans were packaged made it difficult for most investors to have any real idea of what level of risk they were buying into. To me the biggest concern about all of this is that the financial instruments had been made into instruments such that hardly anyone seems to have had a good understanding of what the risks really were. It is one thing to accept more risk for the potential of a higher payoff; it is quite another not to be able to tell how much risk you are taking. To me this is the biggest issue that is not being addressed: how to make sure that in the future there is clarity of what risks there are in various financial instruments such as ‘bundled’ mortgages.
Meanwhile, ‘buyer beware’ has certainly become the by-word in the market, so much so that no one seems to know whom to trust. That is a big part of the problem with the credit markets. There is still uncertainty about what kind of financial transaction carries what level of risk. I would have been backing away from the stock market had I realized how risky the financial markets had become. However, that risk was very well hidden until the financial markets collapsed. We have all learned that we need much more visibility to risks that are in the market, though it is not yet clear how we are going to be able to get that information in the future.
This market collapse has impacted other things that would not immediately come to mind, like our church’s capital campaign. At the start of the year, long before the financial markets imploded, our elders recommended moving forward on a huge building project. After a lot of information sharing and discussion a vote was taken to approve moving ahead on a capital campaign to raise funds for the project, though as with any large project like this there was a lot of concern about if this was the right time and if the project was too big (at $53 million it was a big project plan). Then the markets imploded right at the time for making pledge commitments. The result was $26 million in pledges and a decision to scale back to do only part of the project, doing more education and gym space but deferring the new auditorium. This seems reasonable to me at this time since we have more options on how to do multiple worship services than on how to provide education and recreation ministry space, and it avoids taking on any more mortgage debt at a time when a loan would be hard to get for a church group anyway. Some are wondering if this means that the elders were wrong in the first place, that they had mis-read God’s will. Perhaps. Or maybe this was just a process God intended to teach us some things. For one thing, during the fund raising process there was a noticeable attendance drop. This made it clear that some folks are there just for the ride and do not really intend to invest in the Lord’s work at this church. I think it may also set a good example of how to live within your means by not taking on more debt at a time when that looks like it is unwise. I think not having the auditorium to make it easy to have just 2 services (one traditional, one contemporary) may also force us to better think about how to do church differently. I was recently in Korea and visited the world’s largest church. To carry out their 7 services on Sunday, they have 3 ‘senior pastors’ that all preach to share the load. Why not start looking to that kind of model sooner that when you get 100,000 people showing up? Why not learn how to have more than one excellent preacher and have preachers learn how to share power rather than requiring a single ‘CEO’ model? I have never liked the idea of a ‘CEO’ model for the church anyway, since CEO’s tend to be autocratic and dictatorial, and those characteristics should be anathema in the church. I think we need to manage risk better in the church as well as in our 401K. We need to be more comfortable with the ‘risk’ of having more than one key preacher at a church. We also need to be sure that our financial stewardship for things like buildings sets the right example for a membership that appears to need that example desperately.