As we approach the last hours of 2012 I think it would be a good idea to take a few moments and reflect on the year that has past.  2012 brought with it some amazing and also tragic events that have forever shaped our country and world.  The important thing is to embrace the good memories and learn from the hurtful ones.  We must look forward to 2013 with a sense of anticipation, joy, and growth.

     Probably the biggest event of the year was the election (yeah I'm tired of politics too) of the President of the United States.  To most Christians there was great disappointment in the country's choice, but don't get too down.  What we must do at this point is pray for President Obama to have a revelation of God's will for his life.  That is all that is required of us.  If we truly believe that God is in control then we have nothing to worry about as far as our lives are concerned.

     The second biggest story was the tragedy that was hurricane Sandy.  I think a lot of people still do not fully comprehend the extent of damage and loss of life that occurred.  People went without power for weeks and water was scarce to come by, but our country once again showed its compassion as donations came in by the millions and volunteers arrived ready to help.  It may take years to rebuild and recover, but I believe with our spirit of brotherhood it will happen.

     One of the great stories of 2012 was the performance of the stock market as it gained nearly 6% in an otherwise weakened economy.  Even as our Congress is letting the country go over the fiscal cliff later tonight, the stock market still surged over 100 points.  To a person interested in economics I really don't see the reason for the optimism that traders have, but none-the-less it has been a remarkable year.  Hopefully next year these same companies will open their vaults and begin to put Americans to work.

     I have high hopes for 2013!  I want everyone to have a great night celebrating the New Year, but make sure to be safe so you can make it to next year.

Let Big Banks Fail and Not Show Other Countries How to be Corrupt

            Robert E. Litan’s article “Toward a Global Financial Architecture for the 21^st Century” couldn’t be more relevant to what the United States and other developed nations are facing today.  Litan raised important points about how the global banking and monetary systems need to evolve to face future crisis’s, but in light of the current banking situation in the developed world I don’t know if ‘our’ system is the best answer.  The one idea Litan mentioned that seemed to be legitimate was that in order for market forces to correct inefficient or corrupt banking practices the security of government bailouts needed to be taken out of the equation.  While I don’t think this will happen, it is definitely a real problem that the market must figure out.

            The idea that the United States and Western European banking systems are superior to that of the developing world is correct, but maybe the superiority is a bit exaggerated.  Litan argues that developing countries need to allow foreign banks (from the developed world) to set up shop on their soil.  The idea being that these banks will bring in their knowledge and expertise and in effect help the developing countries banks learn more prudent financial practices.  There is one major problem with this idea though, and that is ‘our’ banks are mired in high-risk and in some cases outright fraudulent lending practices.  The very thing that Litan warned about when he wrote, “…U.S. banks that had weakened capital positions as a result of uncollectible loans to less developed countries were not forced by regulators to recognize the full extent of their losses, and instead were allowed to take risky bets-primarily in commercial real estate.”  While the author stated that the United States, ‘…learned the lesson of regulatory “forbearance” the hard way’, that is obviously not the case.  

            The ‘Western’ banking system may be a technically superior way of monitoring financial markets, but one could argue that the same problems still exist.  In “Toward a Global Financial Architecture for the 21^st Century” the author showed many examples of how the modern banking system was regulated, but I have to ask myself if the so called ‘prompt corrective regime’ and other regulatory agencies actually do what they are credited with.  The current housing situation and failure of many banking institutions help tremendously in answering that question.  I would argue further that even while ‘our’ system is technically superior, the consequences of failure are much greater as we may soon find out.