The effects of the 2008 Financial Crisis are still with us. Despite significant efforts on the part of central banks and national legislatures to minimise the consequences of future financial crises, much of the world remains sceptical about the efficacy of these measures. Both mainstream and minority-position economists are concerned about a new crisis beginning this year or in the near future.
Various theories have been developed over the years to help managers develop strategies for their businesses. Among the most well known tools and theories are PESTEL, SWOT, VRIO, and Porter’s Five Forces. Each of these gives at least some space to the vulnerabilities of a business. The interconnectedness of our institutions and our world mean that vulnerabilities can be amplified. A business struggles to meet demand because war has disrupted its supply chain. Consequently, it defaults on a loan. The financial institution that extended the loan to this business manages to recover only part of the debt via insolvency proceedings, and the pension fund that had invested in this institution loses out. Ultimately, the pensioners lose out.
These are the realities of the world in which we live Life involves risk. Human nature drives us to take risks, because the potential gains are valuable. Designing a system that seeks to eliminate risk-taking is, therefore, foolish. But a system that allows people to take individual responsibility for the risks they take, without imposing burdens on others who have not consented to those risks, is fair.
This where the matter comes into contact with political philosophy. Various financial crises in history were caused, ultimately, by government action as a contributing factor, while various governmental “fixes” provided, at best, temporary solutions to underlying problems. Governments are institutions of men: therefore, they are subject to the passions and ideologies that influence men. We cannot expect that a government will necessarily decide on the right course of action to solve the root causes of financial crises.
Ultimately, we, as individuals, have very little power when it comes to this large issue. At present there are few viable options to using commercial banks; our governments are dominated by the established political class, which is generally not amenable to arguments from minority-position economists regarding the dangers of central banks, etc; and the globalised nature of the world economy prevents us from controlling the spread of contagion.
However, as Christians, we can pray about this matter and seek the Lord’s guidance on what a just financial system would look like. Prayer is a mighty tool, and listening to the Lord can help us to devise the correct earthly strategy for suggesting and creating solutions to our current financial vulnerabilities.
All Along the Watchtower 
When it comes to personal investments and wealth management a bit of common sense goes a long way just as PESTEL, SWOT, VRIO, and Porter’s Five Forces actually speak to commons sense matters that any business should be monitoring if they are going to be responsible business men; for it speaks to the very fundamentals of what sound business practices should encompass.
So we all know if we are investing in businesses or a basket of businesses through investment in the stock market that diversity is a rule that we should follow and that since we cannot always sell high and buy low the average person is likely to fail in this ideal practice . . . usually doing just the opposite.
But that being said, if one can is not dependent upon the funds invested for day to day living and if they have money set aside for 6 months to a year for emergencies that we ought to be willing to loan our money to business enterprises who likely need this investment to fully recover and then move ahead. It is the closest thing to buying low that we can probably achieve and is relatively safe if we have chosen investments in companies that are solvent, have a unique place in their sector and seem to be managed by astute financial officers.
So rather than bite my fingernails till they disappear entirely, I generally hold in a rapid downturn and perhaps take profits when I see that a stock is no longer selling for price that is fair market value. Otherwise, recouping is generally a process that takes a year or more to fully recover but it is a loge sight better than flushing it down the toilet. A good company will rebound but unsound companies will disappear or be gobbled up by larger enterprises. However, the risk is far less than trying to beat the market as a day trader or an inexperienced person who finds himself fretting over decisions and putting themselves into a panic.
The only downside in my honest opinion is governments who are unstable and at risk to change from a democracy to a totalitarian or socialist milieu . . . where overnight one finds that they are living in an economy where inflation is so bad that nobody can possibly recover. In such a case, everyone is screwed and it really didn’t matter what course of action one took. The government then, simply stole the goods of all its citizens and I suppose we are no worse off than any of our neighbors. That is the one time that bullets, guns, vegetables and water and farm animals seems to be a better choice of ones assets. Hopefully in the EU or the US this will not ever happen thought when we hear the liberals push for such radical ideas it is a concern. I pray that cooler heads and the sanity of Western Civilization might prevail.
I guess that I keep from worrying because I believe that those thriving enterprises and those who work for them are not going to elect such radical leaders . . . or support ideas that go against that which has worked for an awfully long time. But the unexpected may happen at anytime and anywhere; there is always risk just as you say.
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I have a variety of concerns, but one of them is taxation. I have a strong dislike of income tax on dividends and of capital gains tax on sale of shares because this deters people from investing in companies. Investment is messy enough as it is – we don’t need the government putting its sticky fingers in our wallets at the same time. My heart is for the “average Joe” who could be more directly involved in investment if we had governments that didn’t view the business of making money as inherently defiling.
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Indeed so and then there are the taxes on previously taxed income and, of course, the most egregious of them all, the estate tax. It is criminal at best. Anyone that supports this ought to be charged with robbery.
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Agreed – and it is galling to know that taxpayers’ money is used (in this country) to pay for abortions and other objectionable practices.
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Naturally. No sense in stealing money unless you can parlay it into a political statement and future power.
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Indeed – this where government and politics blend their streams: truly a toxic stew. I do not know how we can prevent people like that from holding office – they promise what the squeaky wheels want, and they get elected. Corruption is everywhere – it makes me want to head for the hills. Perhaps I should have become a monk; maybe it would have been better overall.
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I guess we have to keep hope alive that the people will not lose their collective heads and fall for the lies and the propaganda that abounds. One would think that Venezuela ought to start changing some of these uneducated college grads something about what liberalism looks like; and it doesn’t look too good. No money, no food, no amenities, no jobs, no freedom and then the specter of prison camps or death if you complain about the government and its policies.
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Here’s hoping that Brasil under Bolsonaro can become a success story. Venezuela has set SA back by quite a bit. To some extent, we sink or swim together. A nation that falls into poverty like that ceases to be a market for various goods and services until it is reasonably recovered. Rogue states mean everyone loses.
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Indeed they can become places that resemble the movie Mad Max; little tribal lords who wreak havoc on all the innocent and fight endlessly between one another. No cohesion of anything remotely resembling a cohesive society.
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