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The Great Recession

October 31, 2013 | by Bob Diener

Sometimes we need to be reminded why we're given wealth.

In the fall of 2008, the world economy was falling off a cliff. All of a sudden, major financial institutions started failing. The stock market major indexes lost over 50% of their value between the fall of 2007 and the spring of 2009. Housing values plummeted. Lehman Brothers and Bear Stearns ceased to exist. Citibank, Merrill Lynch and AIG were about to collapse. Money markets were no longer safe. Most of us witnessed out net worth plummet in value and our businesses come to almost a grinding halt.

How could so much wealth evaporate in such a short period of time? It all seemed impossible.

From a logical perspective, this could never happen. How could the world’s largest financial institutions fail? How could major world economies be on the brink of failure? How could so much wealth evaporate in such a short period of time? It all seemed impossible. But from a Torah perspective, it was very possible. “God gives, God takes” (Job 1:21). This was the Great Wake Up Call of 2008, not the Great Recession of 2008. Did we wake up? What changes have we made in our lives? What have we learned?

On Solid Ground?

We go to sleep every night and wake up every morning with certain basic assumptions. The sun will rise and set. The moon will go through the lunar cycle. Our houses are on solid foundations and will be in the same place when we wake up. Prior to the fall of 2008, we assumed that when we deposited our hard earned funds at major brokerage firms or in money market accounts, that they were safe. We assumed money markets would never go down in value. We assumed that the checks we wrote from these funds would be honored and paid. We assumed that the cash and securities we held at major investment banks such as Merrill Lynch, Bear Sterns, Lehman and others were safe. Who would think that the world’s largest and best known financial institutions in the world would go out of business?

Those of us that invest and run businesses rely on certain norms to operate our businesses. We write checks daily to vendors and have funds in commercial banks to provide cash flow for our businesses. The FDIC insurance limit is not enough to cover the daily cash flows of our businesses. That’s why we bank at Citibank or Merrill Lynch, because it was unthinkable that they could go out of business. How can we possibly operate a business if there is a possibility of those funds being lost? Worldwide business would shut down. It would take us back to the Stone Age where we would have to trade in commodities or barter instead of using a currency. How can we accept a credit card payment if the bank deposited into may be bankrupt tomorrow and not pay us? How can we pay our vendors when the checks we send them with sufficient funds in our account are not honored because the bank went out of business?

This was all unthinkable. We went about our daily lives with these basic assumptions. I held all kinds of insurance but never considered the risk of AIG going out of business and the insurance policies being worthless. But despite all these risk reduction efforts, the impossible happened. Lehman Brothers went bankrupt. Merrill Lynch, Citibank, AIG and most other financial institutions were about to fail. Goldman Sachs had to be bailed out by Warren Buffett.

The world was in shock. The world economy was on the brink of shutting down. Even the savviest investors saw their net worth plummeting in value.

A Jewish Perspective

As I sat back and thought about what was going on, I realized that the solid ground we walk on is an illusion. As a Jew who studied the Torah in yeshiva for 12 years, I knew that everything we have is a gift from our Creator. I learned that God placed each of us in this world with a mission to help improve the world He created. If there is an omnipotent Creator that created the ground we walk on and gave us life, health and wealth, why can’t He take it away? Why can’t He test us?

This is how I understood our history and the many tragedies that have befallen on our people. This is how I understood the great times we have had: Exodus, Mount Sinai, Joshua leading us into Israel, the eras of King David, King Solomon and the holy Temple, returning to Israel and re-building the second Temple, the Talmudic period, the re-building of the modern Jewish State, the success of the Six Day War, and more. Just as our Creator gives us great wealth, He can take it away. He gives us life and can take it away. Nothing is impossible when you view the world this way.

With rising wealth and success, did we lose focus on our mission?

When I studied prophets, I was always amazed how the Jewish people kept detracting from their mission. The prophets kept warning of great tragedy if they did not return to the laws and mission of their Creator. They didn’t head these warnings and the result was the destruction of two holy Temples, being dispersed among the nations and almost being annihilated as a people.

With rising wealth and success, did we lose focus on our mission? Did we wake up every morning being thankful for our health, family, friends and wealth? Did we think about the consequences if any of these are taken away from us? Did we think for a moment that these can’t be taken away? We work so hard our whole lives for wealth, place such importance on it, and we assume it will always be there. But God can take it away anytime. And when He does, what do we have left?

When the markets were crashing, after watching CNBC non-stop, I decided to turn it off. I stopped reading every article in the Wall Street Journal and Barron’s. I stopped listening to commentators trying to explain what was going on. As a Jew, I recognized what was going on. As I watched the total panic on Treasury Secretary Hank Paulson’s face, I realized that God has stepped in. Modern Portfolio theory no longer applied. Diversification didn’t matter. All asset classes were declining quickly. God was testing us. Was wealth all that mattered? Wasn’t our health and family important? What have we accomplished, other than the accumulation of wealth that may no longer exist? I did my best to secure my portfolio and realized that it was time to focus on my real mission. Was I accomplishing it?

Our wealth is an illusion. Use it the right way. Earn it the right way.

If it takes such hard work to earn wealth, and so little time for it to evaporate, why do we focus almost all our energy on wealth accumulation? Judaism does not discourage us from accumulating wealth provided it includes our obligation to use this wealth for tikkun olam, to improve the world around us, giving a minimum of 10% to charity. (If we have sufficient wealth, that percentage should be higher.) This is a small percentage; we pay more in US taxes. This is God’s take for giving us this wealth. God doesn’t employ IRS auditors and examiners to question whether we paid these 10%+, but He knows what we have done with our wealth. If it has only been for ourselves, we have not been a proper steward of these assets. And remember, these assets may be in our account, but they don’t truly belong to us; they belong to our Creator. We only have it temporarily. It can be taken away anytime, as we witnessed in September of 2008. Our wealth is an illusion. Use it the right way. Earn it the right way.

Tools for Your Mission

From a Torah perspective, wealth is just one tool we have been given to fulfill our unique purpose and mission in life. God has given each of us unique talents. It may be great speaking ability, great motivational ability, great teaching ability, great organizational skills, and great ability to accumulate assets and/or other talents. When we use these talents and skills to fulfill our mission, we feel great inner happiness and meaning. When we realize our purpose in life, we also realize that the tools we have to get there are loaned to us and can be taken away anytime.

Sometimes we need to be woken up and reminded that we were given tools for a purpose. Until they are taken away, we don’t appreciate them. Are we using them for the purpose intended?

The great recession made me even more focused on my mission. I remain active in business because the business world gives me access to people and organizations that I may not otherwise have access to. It allows me to continue to add to our Foundation assets. I wake up every morning and thank our Creator for what he has given me. The Great Wake Up call of 2008 reminded me to ask these questions every day: Am I fulfilling the mission? Am I doing enough towards that mission? Have I done something today to make the world a better place? Am I using the talents my Creator gave me effectively?

I asked myself these questions (and I suggest you do the same):

  1. Are you raising a family and making sure that the values and principals you hold most dearly will continue? If you don’t have your own children, or they are grown, are you making sure that your community has the resources to teach the continuity of your values and principals? Do you lead a life for them to emulate? Are you teaching them what is important to you? Are you motivating them?

    After the 2008 recession, I doubled down on teaching my kids. I have prepared four of my kids for their Bar/Bat Mitzvahs. I studied Torah with my oldest son almost every night for years. I have had no greater pleasure than studying with my kids. The Great Recession brought me much closer to my children.

  2. Are you leading an ethical life? Are you honest in your business dealings? We spend so much of our time at work, what if all the funds we saved from years of working were wiped out? Could we look back and say that all that time was productive? Was there more to our job or business than the funds we saved? Did we use our positions to make people around us charitable? Did we encourage charitable giving in our organizations? Did we create an environment of honesty and integrity? Did we pay our workers on time and fairly? Were we honest to our customers and our partners? When faced with difficult questions, did we choose the ethical route, even though it may not be the most profitable route?

  3. Are we fulfilling our mission? What have we done to improve our world? What people have we helped? What organizations have we helped? Have we given at least 10% of our income to charity? Have we used our talents to improve the world around us? Have we dedicated time to improve our people and community? Will we leave this earth in better shape than when we arrived?

With the Jewish perspective I gleaned from learning Torah, the recession of 2008 became a great opportunity to focus on our mission and purpose in life.

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