Q. Around the year 2005 you wrote two articles about a Great Depression coming upon our country. Where can I find those? Can you post them again? I’d like to re-read them.
Answer:
Thanks for your interest. It’s a “mind blower.” We wrote these when the real estate boom was at its height. No one would believe back then that real estate could end as badly as it has.
Here is Part 1 and Part 2 for you:
We have Credit – We don’t need God
“Now there is great gain in godliness with contentment, for we brought nothing into the world, and we cannot take anything out of the world. But if we have food and clothing, with these we will be content” (1 Tim 6:6-8 ESV).
This is what the church should be teaching its members.
But, the reality is the attitude that says: “We don’t need God…. We have American Express.” Amazing, isn’t it? When we want something in this country, too often we automatically purchase it even if we do not have the money.
We seldom take the time to ask or consider if the item we want is really necessary, much less if we are being good stewards of God’s money and our time. The complacency and foolishness of many Americans, including those of us who are Christians, borders on silliness.
Indentured Servants
When we use credit what we are actually doing is offering up ourselves and our spouses as indentured or indebted workers who promise to work for a number of hours or years for the benefit of another. We are not “getting a loan,” we are giving up a portion of our lives! We must make sure that our time is well spent.
Financial Ethics 30 Years Ago
Less than thirty years ago the financial profile for most Americans was to save between 5% and 10% of their income and have home mortgage payments which totaled no more than 25% of monthly take home pay.
No lender would finance a house for more than 80% of its market value, and credit cards were rarely used, having strict limits placed upon them by lenders.
This profile was based upon a value system which said, “If you cannot pay for it, do not buy it.” This value system was embraced by the consumer and enforced by the lenders. But now, all has changed.
Ethic of Greed
Today it is common to mortgage homes for over 90-100% of market value. In this present Real Estate boom, increases in home values of 25% in six months is not uncommon.
With this increase in market value the temptation to take out loans based upon the appreciation is too much for many. These loans are seldom used to fund additional income streams such as small businesses, or rental property.
Rather, these loans are used to pay off exisiting credit card bills, costly trips, new cars, a boat or two, plastic surgery, or speculative real estate. To often we have traded our future working life for junk or objects of little value.
Turning Homes into Junk
I wonder how God views His people who turn His provision of a home into stuff, a quest for youth, prestige, and greedy pursuits? It comes down to an issue of trust. Do we trust God to provide what He knows is best for us, or do we trust American Express to provide what we crave now?
Interest-Only Loans before 1930s Depression
Here is a shocker. Interest-only home loans are not a 21st century invention. At one time in our history they were very popular. When? In the 1920s, right before the stock-market crash of 1929.
Many of these loans defaulted and homes and farms faced foreclosure when jobs became scarce. Interest-only loans disappeared during the Depression and were not seen again…Until now.
Today, many property owners have taken out interest-only loans with adjustable rates, expecting that home prices will continue to skyrocket. These owners are betting that gains from properties will continue ever higher, making their loans easier to pay down.
Greenspan’s Warning
Fed Chairman Greenspan has already warned Americans that housing is a “bubble” in which home prices will first stall, and then begin to deflate.
This has already begun in Great Britain and Australia. It is even starting in places like San Diego, CA. We are warned that real estate is the biggest bubble in world history…Ever.
Credit Card Reality – Beinning Oct. 17, 2005
Do you remember the new bankruptcy law that was recently passed in Congress? “Good for them,” we think. “People shouldn’t run up huge bills and then be allowed to declare bankruptcy.”
Not so fast…this law is called the Abuse Prevention and Consumer Protection Act of 2005. Watch out when Congress calls something a consumer “protection” measure. It usually means the opposite.
In this case, a little known provision was added to the bankruptcy bill increasing the minimum payments on credit cards from 2% to 4% of the outstanding balance plus interest.
What does this mean? The average American carries a credit card balance of around $8,000 and pays a minimum of about $170 monthly. As of October 17th the new minimum payment will be $240 monthly. Those who carry balances of around $20,000, and have paid $400 monthly, will now be required to pay $800 monthly!
The World’s Value System
That hurts! Maybe that home equity line-of-credit doesn’t look so bad after all! Or maybe instead of living the value system of the world, we should begin to reevaluate this system under which we operate. Then again, maybe not…
Aliens Among Us
“The alien who is among you shall rise above you higher and higher, but you shall go down lower and lower. He shall lend to you, but you shall not lend to him He shall be the head, and you shall be the tail” (Deut. 28: 43-44 NKJV).
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Authors Valorie Emilio has her M.A. in History from U.C.L.A specializing in early church history. Ken Emilio is a 30 year career executive owning and operating companies in the industrial chemical engineering and environmental protection fields. He holds an M.A. in Biblical Studies from Louisiana Baptist University.