Market meltdowns and herd mentality

I had an atheist friend who taught philosophy at the university in the town I was serving. We occasionally had lunch together while our kids were participating in one of the numerous birthday parties common of 6 year old kids. He was always trying to convince me into becoming a existentialist and I would try to get him to give theism a break. We disagreed on almost everything except politics. He was well read and bright and very outspoken, a rare and welcome combination in that small town. So we tolerated each other.
I will always remember one comment he made. His daughter had attended the community summer Vacation Bible School and came back with a lesson sheet talking about Jesus as the great shepherd of the sheep. He showed the paper to me and said, " see,this is what makes religious people so mindless and pathetic. You Christians think everyone should be like little sheep all following your great shepherd Jesus. You don't teach people how to think for themselves and follow their own free will. Christianity is such an outlandish fraud."
Strangely I thought of that as I watched the stock market plunge on Tuesday morning. Since we had a holiday to celebrate Martin Luther King Jr our markets were closed Monday. Meanwhile the Asian and European markets plunged Monday and so there was plenty of anxiety about what would happen here on Tuesday. I knew that the new Fed chairman would have to act to avoid another dramatic drop in asset prices. I also knew he didn't have many tools at his disposal. We are in for some tough sledding as the housing bubble deflates and the credit de-leveraging works its way out. There are no magic tricks to pull out of his hat.
Sure enough the Fed dropped rates . But 3/4 of a point reduction and before a regular meeting! Then the White House (which until recently has said everything is wonderful in the economy) suddenly agrees with a Democratic type stimulus package (i.e. short term money in the hands of people who would spend it) instead of long term tax breaks that produce no short term advantage (but feed his political base and grow our deficits) In other words---to forestall a panic of investors (who act like sheep although they are called by more carnivorous titles--Bulls and Bears) the top government officials panicked by throwing caution to the wind and in effect saying, "it's worse then we thought---just do something, anything, NOW."

I called my son who works as an economist for Prudentials international investment center.
"What's going on here?" I asked. "The markets are taking what should be good news (dramatically lower rates and a promise to throw $150 billion dollars of cash into the economy) and seeing it as bad news. "
"Well," he answered quietly (apparently not wanting to be overheard). The unspoken word on the street is that the overall bad behavior of the American economy (we are broke, we have unsustainable trade and budget deficits, we are fighting an incredibly costly and endless war, using 4 times as much energy per person as our European friends) has finally caught up with us. The question is how do you slow down the inevitable judgment day and keep the financial markets sound"

"But it must be more then that," i replied. The Asian and European investors are expressing deep distrust and a huge lack of confidence in our country and its leadership. The plunge around the world says they expect things that are already bad (some major US banks are technically insolvent) and assume it is really much worse."
"Well you are close to what we are hearing from our international partners. It is sort of that and then something more fundamental," he said.
"Well, can you state it simply for me," I pleaded.
"Try this," my son responded, " the rest of the world markets look at America to lead. When the Fed and the President suddenly change their well established principals they sense that no one over here knows what they are doing. (Apparently it took them this long to figure it out) Like frightened sheep, they are running for their lives."

So, what should followers of Jesus do as the wealth of Americans continues to drop (housings 20% decline is now matched by financial assets 20% decline) and we will probably see deeper loses? What would Jesus say?

I don't know. In my anxiety (I was wondering how many more years I would have to work to recoup my retirement savings that declined precipitously) I turned to read the Bible. I was reading ahead for the Lenten lessons and i came to the Transfiguration (Matthew 17:1-10).
Here Jesus takes his four top disciples up the mountain with him. While they are there suddenly Jesus is transfigured before them (he becomes translucent and dazzling white before them).
A voice from heaven tell them, "Listen to him (Jesus)."

This story has lots of symbolism. It serves to show the disciples that Jesus is the Messiah--even greater then Moses and Elijah, the two holiest figures from the Old Testament. It gives the disciples a glimpse of the glory that they will see when he is resurrected. Peter initially gets this right saying, "It is good that we are here."
Peter like anyone else needs affirmation that he is following the right course in life. Seeing the authority of Jesus affirmed in such a dramatic moment was not only inspiring to him but it would effectively eliminate any doubts he might have. Powerful spiritual experiences, from this story we have always called them "Mountaintop experiences," serve to give us confident in our faith and reassure us that god is alive and real in our lives.

Reflecting on the Transfiguration I immediately calmed my anxiety. I realized once again that the things of this world are really transient. I have lived through far tougher and panic stricken economic times . Remember the 25% drop in the markets on one day in 1987? You certainly recall the panic following 9/11. How about the Savings and Loan crisis of the early 90's when the banks lost so much money due to housing foreclosures following the bursting of that housing bubble. Same song different verse!

Our faith is supposed to give us the courage to handle the anxious moments in life. If we trust that Jesus is God's chosen one and we believe that participate in his glory as his followers, then nothing should cause us to panic. Change our habits: yes. Panic : no.

January and February are tough months. The gloomy weather. The post Christmas letdown. More people die in January then any other month of the year. Why? maybe they don't want to face February either. The scriptures have several verses that all essentially say the same thing.
"The Kings and kingdoms of this world may wax and wane, but the word of God is unchanging. god's steadfast love endures forever and his faithfulness extends to all generations."

Or it that doesn't work for you. Pitchers and catchers report to spring training in 3 weeks. and this is going to be the year. Cubs and Orioles in the World Series!