How to Cruise through a Crisis
"When you have eaten your fill, be sure to praise the Lord your God for the good land he has given you. But that is the time to be careful! Beware that in your plenty you do not forget the Lord your God and disobey his commands, regulations, and decrees that I am giving you today. For when you have become full and prosperous and have built fine homes to live in, and when your flocks and herds have become very large and your silver and gold have multiplied along with everything else, be careful! Remember the Lord your God. He is the one who gives you power to be successful, in order to fulfil the covenant he confirmed to your ancestors with an oath." - Deut. 8:10-12, 18 NLT
A global financial crisis (GFC) both causes and is caused by a crisis of confidence in people, institutions and practices. There is no longer faith or trust in one's words, agreements, legal contracts and so forth. It destroys not just savings and investment, but also the economy, social relationships and, often, whole nations.
A GFC happens when people forget the Deuteronomy 8:8-18 injunction!
The current GFC is an extremely serious event which impacts virtually everyone, though to different degrees. Like people everywhere, Malaysians are bracing themselves for the global recession brought on by the total collapse of the international financial system as a result of years of abuse.
This economic earthquake has its epicenter in the US, and from there, the waves spread through Europe, South Korea, Australia, and all over the world. Whole countries - such as Iceland, Pakistan and Hungary - have been incapacitated and more are on the borderline of bankruptcy. Analysts have also warned that this round of recession would be worse than the 1997 crisis (which was largely confined to the Asian region), and may be even worse than the 1929 depression.
The crisis has five components:
(1) large drops in asset values, capital and wealth; (2) failure of financial institutions; (3) inability/unwillingness of financial institutions to lend; (4) sharp appreciation of safe haven currencies; and (5) contraction in demand for goods and services.
The full extent has yet to be uncovered, and we will have to live with high risks and volatile swings, at least for the next year.
Governments have so far managed to tackle the most urgent problems - financial institution failures, dollar financing and short-term financing. Will they and can they continue to prevail over markets especially in the longer term? Unfortunately, they face many problems and have not addressed most of them.
Right now, the most pressing problem is how to continue to grow the economy (or avoid falling into deep recession) without adding debt and worsening financing imbalances.
How does the GFC affect Malaysia?
Malaysia is a small trade-dependent economy. Thus, it is highly unlikely that it will escape the GFC unscathed.
In the months to come, demand and output growth are likely to decline, and the outlook for investment returns is dim. Open unemployment may rise only marginally but employment demand is likely to be low or negative. Interest rates of medium- to long-term tenures are rising while bank loans for businesses and corporate deals may be more difficult to secure.
Meanwhile, political demands for income redistribution are expected to increase alongside, social and family tensions as people are forced to make major lifestyle adjustments.
Cruising through the hard times
Churches and para-church organisations too are very likely to face financial difficulties as offerings and donations dip.
Amidst these challenges, let us remember we have a Father who "will supply all our need" (Phil. 4:19). However, since His Word promises that He will meet our "need", this is a good time to review and make radical changes in our lifestyle, to trim the fat.
Pray for the government, for it is an institution ordained by God - for the fear of God to be upon the people in positions of authority that they will not misuse public funds for selfish gains; that all economic measures implemented during this time will benefit everyone, especially the poor and needy; pray against all forms of greed and corruption among the authorities and against any wastage.
Pray for companies and organisations. Pray that bosses will exercise prudence in their business and honour in their contracts.
Pray for families to hold together in tough times and for Christian families to be good testimonies of prudence and calmness.
Pray for churches: to reach out with Christ's compassion to those in need - whether materially, emotionally and spiritually; and to educate church members on godly financial management and prudence.
May God give us, His children, the wisdom to know what to do, and give us the strength to make the necessary changes in our lifestyle (Phil. 4:13 - "I can do all things through Christ who strengthens me."); and to be good stewards of His money.
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