Only a year since the American stock markets were at record
highs, they have fallen hard and fast, back to the levels of
almost two-and-a-half years ago. The NASDAQ stock average,
until recently the leader with huge yearly gains, has so far
lost some 60 percent of the value it had only so
recently.
The older, more established averages like the Standard and
Poor's 500 stocks, and the Dow Jones Industrial stock
average, are also down but not as sharply. They never
reached the same dizzying heights.
According to analysts, the decline in the American markets
wiped out almost $5 trillion in value. The Israeli
government could run its budget for more than 50 years with
all that money.
The economic system of the world, now that globalization has
spread almost everywhere, is based fundamentally on greed to
soup everything up, until it gets stronger and stronger and
eventually collapses of its own excesses. The collapse has
the effect of returning a measure of discipline and sobriety
to society as a whole, and eventually laying the groundwork
for another cycle of boom and bust.
This time around, many people thought that we would avoid
the busts. The world was supposed to be developing a new
economy based on technology that would only grow and grow,
without ever collapsing. The Internet and the technology
that drives it were supposed to be creating new rules, and a
new reality that needed new tools and new ways of looking at
things. Everything would grow so fast and create so much
wealth that the main problem was to get in first and fast to
ensure a large piece of the ultimate pie. The future
fabulous profits would take care of the costs.
This line of reasoning was heard from almost all of the most
respected observers of the economy. The few who were
skeptical were brushed aside. For ten years everything did
go only up, so that the greedy optimists even had a track
record of success to prove that they knew what they were
talking about.
The truth is that this kind of reasoning is an essential
part of every speculative fever and is heard during every
bubble. John Law's Mississippi Scheme in France around 1720,
based on the supposedly fabulous wealth to be had in the
French Colonies of Louisiana and along the Mississippi
River, as well as the South Sea Bubble in England which
ended only a few months earlier, were both touted by learned
and convincing men who said that they would only grow and
grow and earn their holders untold wealth.
In all these and other, similar cases, if one listens
carefully one can hear that the arguing voice is the voice
of the yetzer hora. It is he who marshals the power
of lust for money (ta'avas mammon) in order to
distract people and to lead them to speculative excess.
Critical parts of the modern economic system are based on
greed. As an exceedingly powerful force, greed pushes people
to material accomplishments that would not be possible
otherwise. There is no doubt that the world is richer for
being driven by greed.
Nonetheless, as one of the prime tools of the yetzer
hora, greed will always bring instability. Thus, an
economic system that incorporates it cannot be stable and
must experience boom and bust.
So we must expect and endure this economic retrenchment as
an inevitable part of the way things are set up these days.
We must not let it distract us from the important issues of
avodas Hashem, and pray that any suffering is
minimal.
