Global finance expert offers sensible response to current crisis

Dallas/Ft. Worth, TX—As the country sinks further into recession, speculation concerning when and how the downturn will end is topped only by the sport of fiscal finger pointing. It was corporate greed, some say. It was regular people living far above their means, others protest. It was the Republicans…or the Democrats…or all the media pundits pointing fingers.

Financial expert David Cowan offers a more reasonable answer. “We’re all responsible. We share the blame. And it’s not so much that people got greedy. They just forgot the laws of gravity. What goes up must come down,” he says. “People should have seen this coming at some point and prepared for it. If you’re clever enough to fill out a credit card application or second mortgage, then you’re clever enough to plan for the day when the economy takes a downward turn. This is as true for the people on Wall Street as it is on Main Street.”

David Cowan has worked as a journalist, editor, and bank executive in Europe and North America for organizations such as Financial Times, Euromoney,and the World Bank Group in Washington, D.C. He has also written for the Washington Times,the Times of London,and the Middle East and been interviewed by major print, television, and radio media, including CNBC, Bloomberg TV, the Wall Street Journal,and BBC Radio.

As a native Briton who spent many years living and working in Washington, D.C., Cowan’s understanding of the reality of American politics and fiscal policies is informed by firsthand experience and untainted by political partisanship. He delivers insightful commentary on issues like:

· Financial Responsibility

· Monetary Ethics

· Basic Financial Planning

· Use of Credit

· How the Economy Functions

· The Basics of Business

· How Financial Markets Operate

· The Global Economy

With a graduate degree in theology from Oxford University, Cowan is also available to speak on the intersection of theological issues and the economy, a topic he addresses in detail in his book Economic Parables: The Monetary Teachings of Jesus.

In contrast to a growing number of media commentators advocating steps towards a socialized economy, Cowan believes that the free market economy is the only viable system for the long term. “The economy is not like the nice groomed garden that social planners are trying to create,” he says. “It is much more like a wild garden where the hardier plants and weeds keep on coming back, no matter what you do. The sooner people begin to understand the way the economy really operates, the sooner we can talk about the real world.”

For more information about David Cowan and his book Economic Parables (available from Paternoster), see www.economicparables.com.

 

That'll be 787 billion dollars.  Cash, check, or credit?

 

David Cowan

In the few days that have passed since President Obama signed the economic stimulus bill into law, many Americans have begun to wonder how this massive government spending will benefit their own lives.  Not much, according to economic expert David Cowan.  In fact, though some speculate that the price tag is high enough to finance 13 wars in Iraq and Afghanistan, the end result of the bill can be nothing more than a temporary (and very expensive) feeling of relief.

David Cowan has worked as a journalist, editor, and bank executive in Europe and North America for organizations such as Financial Times, Euromoney, and the World Bank Group in Washington, D.C. His perspective on the current financial crisis stands in stark contrast to the recent stump speeches and the alarmist reactions of many in today's media.  "People keep making these allusions to the Great Depression, and I simply don't think we are in that situation.  There will be enough resilience in capitalism and the economy to bring us back-if we let the free market work.  I think this current mess is more of a contraction in the economy.  Maintaining the equilibrium is a painful but necessary process," Cowan states.

Though there is no doubt that the U.S. is experiencing a recession, Cowan challenges the assertion made by any politician that the government can create enough jobs to reverse the current downward trend.  Sometimes, he says, there is nothing that can be done except to get on with life, bide our time, and wait until things turn around-just as they have done time and again when the free market has purged the ineffective or poorly run business and cleared the way for new opportunities.

"It's only the creation of wealth that will get things moving again.  The truth is that there are people in the economy who are finding opportunities.  They are finding wealth.  Yes, it will be very difficult for those who have lost their jobs and their homes.  As for the rest of the country, 787 billion dollars is an awfully high price tag for a package that is more about generating peace of mind than generating wealth," Cowan states.  "Politicians and bureaucrats will get their paws on the money and apply it to the causes that interest them.  These may be good causes, but, generally, they don't generate wealth."

Who, then, does generate wealth?  It is the people that a free market economy ultimately rewards-the individuals and companies that step up to the plate to meet demand, bring innovation, and invest wisely.  Cowan insists that it is those people, not the government, that will begin paving the way back to prosperity.

"In a healthy economy, these jobs come about spontaneously.  Does a massive social employment program actually solve your problem?" he asks.  "My feeling is that the approach President Obama and the U.S. Congress have taken is a bit like pulling off a band-aid slowly instead of just ripping it off and getting it over with.  This will only prolong the pain."

With or without a stimulus plan, many companies are already assuming 2009 will be a write off, while hoping cautiously that we might begin to see recovery next year.  Cowan states that businesses have been taking actions in the last four months to equip themselves to ride through this current economic storm, and this effort will do more to improve our economy than all the talk from government quarters.

David Cowan is also the author of Economic Parables, available from Paternoster. For more information about David Cowan, visit www.economicparables.com.  

Investors and business leaders know all about the “January effect”, when the stock market rises in the first week of the year. However, in 2009 busines s leaders are having to learn about another effect of January, namely psychological depression. The weeks following Christmas are the most depressing time of the year for most people, and that’s in good years!  With jobs constantly being cut, the depression will only get worse this time round.

 A couple of years back, a British psychologist Dr. Cliff Arnall suggested that the 24^th of January is the most depressing day of the year. He even gave it a formula:

                                [W + (D-d)] x TQ

        M x NA

The equation is broken down into seven variables: (W) weather, (D) debt, (d) monthly salary, (T) time since Christmas, (Q) time since failed attempt to quit a bad habit, (M) low motivational levels and (NA) the need to take action. If Dr Arnall is right, then the key variable for business in 2009 will be M, the motivation factor.

With companies large and small laying off workers, there will be a pressing need to motivate the workers whose jobs are not cut…yet. In many cases this has been a sudden shift in company behavior. One moment financial results have been crowed about, the next redundancy notices have been hitting the workforce. The great case that business leaders can make is that everyone is affected. In other words, “don’t blame us, it’s the economy”.

Undoubtedly, some are using this as an excuse to downsize at a time when it has become socially acceptable to do so. Others are reluctantly matching their resources to the business flow. The other advantage has been that the Christmas season acted as a distraction for employees. There was something to look forward to. This may be lulling business leaders into a false sense of security, or complacency, about the docility of their employees.

So, here’s the newsflash to business leaders: They aren’t docile, they are scared and depressed. The rationale for taking actions to beat the economic crisis, and the distraction of the holidays, will give way to a new force in January. While there is a natural sympathy for those who have lost their job, what needs to be better understood is the effect on those still working. Watching colleagues leave causes anxiety for any worker, but is then added to insecurity that they may be next.

Which brings us to the January effect business leaders will have to face in January. In a normal economy, after the holiday splurge comes the guilt, and the bills. This calls on huge resources of self-motivation to sort out the bills, and to get through the remaining dark winter months. In this economy, motivation will be considerably more difficult than usual. The feelings of job insecurity will be magnified, and it is difficult to reassure employees that they are safe, since many companies are still going through a difficult phase of restructuring. More jobs will be lost in the coming months; both white and blue collars will find themselves on the outside.

This means that business leaders need to act, and act fast, if they are to maintain a healthy corporate culture. Rumours and speculation will be rife. Who’s next to go? How many will go in the next tranche? Will I survive this? Do I want to survive this? The level of corporate dissonance will impact two key areas, especially for industrial companies.

First, performance and productivity levels will suffer. Workers are distracted. More time is spent on the shopfloor exchanging nervous views, or round the water cooler discussing the difficulties the company faces or speculating about the “big guys” who will fall. Yes, business leaders are just as vulnerable as anyone else. This is a crisis that is affecting companies from the shopfloor all the way to the top. Executives trying to motivate their team will be harboring their own nervous views about self-survival as they try to reassure their teams that “we’re gonna get through this, together” . Togetherness may mean walking out the door together and collecting unemployment.

Second, health and safety will suffer. The uncertainty will strain nerves, and the anxiety will challenge the mental and physical health of employees. Employees will report in sick, simply because they are depressed about the daily grind of worrying or watching people go. The distractions on the shopfloor will cause inattentiveness, and as we all know that leads to accidents. Already industrial firms will tell you that December has seen a noticeable increase in safety incidents. By year end, the health and safety stats for companies will not look too great.

This all means that business leaders will need to put greater efforts into the health and spirit of their workforce. Health and Safety, Human Resources and Internal Communications leaders will need to work together to establish a motivational plan on the one hand, and to offer pastoral counseling for workers on the other. There are many external providers of these services, including business chaplains if you take into account the spiritual nature of most workers.

Understanding this January effect and supporting the workforce through this period, if done well, will have a positive effect on the company. It may even define a new corporate culture. All the talk of brand and values is going down the pan at the moment in corporate America, only actions speak to the workforce. Now is certainly the time to breathe life into tired values, and offer compassion and not just words and numbers.

 

Secondly, we should look forward to 2009, not with fear of an unknown Recession, but with the hope that the Christ child brought into the world. If we take on the hope that God is beside us in these troubled times, then we need not fear.

 

Lastly, we should remember that the joy of Christmas Day stays with us all year round. Daily we have the opportunity to look at the world anew with the full faith and credit of Jesus Christ.

 

The point to remember is that Christmas is what we make of it. It is that unique time of the year that is all about the joyous atmosphere, and the opportunity to look back as well as forward.

 

So, maybe the downturn in the economy offers us all the opportunity to realise in this coming season of Advent that while times were good, we forgot to prepare for the bad times. We can ask ourselves whether we honestly saved for a rainy day, like our grandparents did. We can also ask ourselves whether we clung to Jesus as surely in the good times as we certainly need to do now that times are not so good.

 

This festive season why not look at your material and spiritual bank balances? We may not have much in left the material bank, but we always have to make sure we have enough in the spiritual bank. If we have financial problems, we need to seek help from our church, debt counselers and others. If we are doing well, then we can see how we can help others get through this.

 

And what about the three automakers, when times were good for them, did they manage their resources well? This downturn was easily foreseeable by any chief executive. Do they deserve an early Christmas present? I suggest not, because it is the road to dependency, as much as any addictive drug, and is nationalisation by another name. Britain nationalised its car industry, and do you know how many cars are British today? None. The British car manufacturing industry had a hand out for gifts, and is now left empty-handed.

 

David Cowan is author of “Economic Parables: The Monetary Teachings of Jesus Christ”, and a regular guest on Christian talk radio. www.economicparables.com

DHL Plan Threatens Over 7000 Ohio Jobs

(IN)  DHL Express said on Monday it intends to reduce US operations and proceed with plans to strike a deal with fellow package-delivery company UPS.

The announcement all but dashes hopes of saving thousands of jobs at DHL's operation in Wilmington. The mayor of Wilmington says the move is disappointing but not unexpected.

David Cowan, a former bank executive, is now a pastor, author, and theologian. He told Impact News that the parables of Jesus reflect on a number of economic principles.

"Have we saved for a rainy day?" he says. "Have we listened to those things? Or did we just kind of spend like there's no tomorrow? But hey! Tomorrow has arrived! And Jesus warns us against that kind attitude of mind in the parables."

He says that the sad thing is that it may be too late for some people to begin saving.

DHL is working on a deal to hire UPS and move work away from DHL's hub in Wilmington, which will result in the loss of about 7,400 jobs there.

Cowan says that the Bible commands Christians to be good stewards and to use their wealth wisely.

"All the economy does is reflect what our motivations are," he says. "If we're greedy, if we're selfish, if we only want material things, the economy will reflect that. It will also reflect the adverse. if we don't want those things, it can reflect that as well."

Impact News interview with Chad Bresson. This was a hard-hitting interview. This news show highlights stories and issues of special concern to the follower of Christ. The Impact News FrontPage interview program encourages kingdom citizens to be Christ incarnate in the church and their communities. FrontPage provides a kingdom perspective to the events and issues of our own redemptive history.

 

You can hear the full interview with Chad here:

 

Bill's 'Faith Matters' Weblog

Bill Tammeus writes about matters of religion and ethics.

* Economic Parables: The Monetary Teachings of Jesus Christ, by David Cowan. This will be a great study group book in Christian churches as people try to sort through the current world economic crisis. The author, a pastor and former journalist, considers some of Jesus' parables having to do with money and economic matters as a way of getting readers to ponder how to live Christian lives that are authentic no matter what the economy is doing. Study questions after the chapters help guide readers through the primary issues.

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