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Week 5: Dialogue

We learn this week that businesses, banks, and the federal, state and local governments rely on the ability to access funding to expand and pay its bills. In an initial post of 300 words or less, what were some of the issues that started in 2007 and later on became the great economic crisis and how could it have been avoided. See the timeline of events here. How does 1 Corinthians 9 6-7 reflect on us in being good stewards?

Support your post with two scholarly journal references from outside sources and/or Regent University database.

Reply to two, in 125 words or less in APA format, supporting or challenging their beliefs.

Above is the original post that I have done already. Below is one of my fellow students post that I need to respond to.

For years, banks have played a major role in stabilizing a nation’s financial stability and managing possible threats and crisis. Of course, for many first-world nations, governments often become involved in economic and financial crisis as well. Many central banks provide stability through providing liquidity: if an institution cannot obtain cash or short-term revenue (through debt) perhaps otherwise preventable negative impacts on the institutions at risk and eventually the economy as a whole.

In 2004, the Federal Reserve raised the fed fund rate when the mortgage rate reset. This caused housing prices to fall, as the demand lessened due to increased interest rates. Homeowners were approved for interest-only mortgage loans causing the sub-prime loans to double. Soon, banks stopped loaning to each other as the values dropped and liquidation decreased. This cause the Great Recession (also referred to as the Housing Crash) in 2008. This could have been avoided if the banks would have increased the difficulty in getting the interest-only mortgages, they would not have been so easily accessible which would have prevented the housing bubble. Prices were over-inflated and not substantiated.

1 Corinthians 9:6-7 specifically address the need for not only people to work for a living (as has been established since creation in Genesis) but also that those who work are deserving of the fruits of their labour. It also addresses the need for people to live conservatively within the abilities that God has given them – to be faithful with the skills that are God-given and use them to create a profit. With this, Christians must be good stewards of what God has given them as they will be held accountable for their actions.

Gramlich, Edward. (2007). Booms and Busts: The Case of SubPrime Mortgages. Economic Review. Journal. Web.

Cecchhetti, Stephen. (2010). Central Bank Tools and Liquidity Shortages. Economic Policy Review, Vol. 16, No 1. Web.

The Holy Bible


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