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When The Dow Goes Down

When The Dow Goes Down

A Jewish perspective on the widening financial crisis.

by

As we watch the turmoil on Wall Street, our sinking portfolios, and the financial crisis that may be leading us to a severe recession, we're left to wonder what is the deeper spiritual message.

After all, what we are seeing now isn't something new – although we wanted to fool ourselves into thinking that it wouldn't happen to us again. Too bad we can't be as smart as Warren Buffett, universally recognized as the world's best and most intelligent investor. In 1999, as analysts kept insisting that "this time there is no limit to how high the market could go," Buffett warned of what he called "an almost biblical kind of symmetry." He was referring to the Book of Genesis, where Joseph is called to interpret the dreams of the Egyptian Pharaoh: Seven lean cows ate seven fat cows, and seven lean ears of grain consumed seven plump ears. The interpretation, said Joseph, is that seven years of bounty will be followed by seven years of famine.

Almost eerily, Buffett linked Joseph's seven-year cycles with the performance of the Dow Jones at the close of the 20th century. He recognized that the concept of economic cycles discovered by Joseph is as relevant today as it was then, and could only be ignored at our own peril.

The concept of economic cycles discovered by Joseph is as relevant today as it was then.

And so, just about seven years after the bull market again began to roar in 2001, the seven "fat cows" of prosperity are being swallowed up the "lean cows" of sub-prime mortgage defaults, bankruptcies and hedge-fund collapses in 2008.

There is a stark truth that somehow never seems to be acknowledged. Crashes are treated as total surprises, unpredictable and beyond reason – as if Joseph's words weren't part of our ancient legacy. It is a mistake to believe, as most do, that people had no advance warning for the Crash of 1929. In the book Blood in the Streets, the authors Davidson and Rees-Mogg quote Paul Clay who in 1928 identified major financial fallacies. "First among these fallacies," he wrote, "is the New Era delusion, as typified by the famous dictum, ‘This is a new era. Statistics of the past don't count.' Every period of great prosperity is considered to be a new era and so much better fortified to give promise of permanence."

Sound familiar? Before the most recent crash of 2000, newspapers and magazines overflowed with stories about the "new paradigm" – the notion that thanks to increased global competition and technological advances, inflation and the business cycle are dead. The advanced economies, in other words, could look forward to uninterrupted years of strong growth and low inflation, and the exuberance of equity prices around the world was thereby justified. As a spokesman for Merrill Lynch put it in 1999, "We are genuinely in uncharted territory – there are no chart points or critical levels we can refer to."

And that's what the Wizards of Wall Street repeated in 2007 as housing prices soared beyond any justifiable barometer and the herd of investors borrowed heavily against their mortgages to buy stocks they were assured could only move to as yet unimaginable highs. In other words, forget the past and the theory of economic cycles. Joseph, it seems, was wrong.

Manna from Heaven

But Joseph wasn't wrong. Cycles are here to stay. They can always be counted on. And the Jewish sages not only accepted them as economic realities, but explained them as having deep spiritual benefit.

Do you want to know why God doesn't simply keep showering His blessings on us in uninterrupted fashion? The answer appears in the Talmud in response to a question about the manner in which the Jews received manna from heaven as food when they traveled through the desert on their way out of Egypt.

"Why," asked the students of Rabbi Shimon bar Yochai, "didn't God give the Jews their entire food for the year at one time, rather than doling it out in a daily fashion?" To which the rabbi responded, "Let me offer you a parable: A king used to give his son a sizeable allowance once a year. The prince would only visit his father when his funds were depleted. The king then changed his arrangements to distribute only enough money for one day at a time. In this way he would see his son on a daily basis. So too, God provided the manna in daily portions to keep every person's eyes focused toward Heaven as source for his sustenance."

What we want from God is His blessings. What God desires of us is awareness of the relationship. Give too much and we take it for granted. Give uninterruptedly and we assume our blessings are coming to us without any need for gratitude or acknowledgement.

The Code of Jewish Law tells us in the first chapter that every day "Every Jew is required to recite the biblical chapter that tells the story of the gift of the manna." Why? So that we reaffirm our awareness of God's role in providing our daily necessities. With technology creating an illusion of total control, that lesson applies today now more than ever.

Every so often, we need a reminder that it is our Father who doles out our allowance.

God wants the world to run in a seemingly natural fashion. Incomes are earned, moneys accumulated, portfolios allowed to grow in ways that offer us the semblance of security. But every so often, perhaps seven years – corresponding to the weekly Sabbath meant to remind us of God's ongoing rulership – we need a reminder that it is our Father, the King of Kings, who doles out our allowance and to whom we must give thanks.

Every Seven Years

When our coffers are full, our granaries overflowing, the Torah reminds us that there is an all-too-human trait of distancing oneself from God. "And Yeshurun (the Jewish people) waxed fat, and they kicked [away their attachment to the Almighty]." Wealth sometimes brings with it forgetfulness. Forgetting where we came from. Forgetting to whom we owe our good fortune. Ignoring the One Above without whom we would have nothing.

This idea finds expression in the biblically-ordained Sabbatical (Shmita) year. Every seven years in the Land of Israel, not only do we let the land lie fallow, but we must allow other people to freely enter our fields and take any available produce. We unlock our gates, in effect proclaiming that we have no individual dominion over the land; all privileges emanate from God, Who can give and take at will.

Ironically, this year (5768 on the Jewish calendar) is indeed a Shmita year.

So when the Dow drops, as it always must, and the divinely-ordained cycle brings us back down to earth, as it has now, it's important to remember this: When times get too good, and our relationship with God is threatened by the kind of self-assured egotism that often accompanies extreme wealth, He reminds us of where we could be without Him. And when times are bad, He renews His role as Provider in the hope that the lessons we learned when humbled by diminished prosperity will make us better human beings... as we enter the next cycle.

Published: March 29, 2008


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Visitor Comments: 28

(28) Anonymous, October 29, 2012 2:41 AM

this story reminds me of my family. they forgot G_d and became too dependant on the family business -a successfull transport company and suddenly adopted lifestyles that ruined the peace and quiet at home. the transport company became a failed business by 2006. we are happier now with less money and more peace at home.

(27) Stan Mueller, November 6, 2011 1:00 PM

The 10 Generations from adam and their economic meaning or cycle.

10 generations separated Adam from Noah. Epochs follow predictable trends; Material acquisitiveness, then spiritual quest, then cultural decline. What are the economic meaning of the first 10 generations/names? And which according to your opinion is our economy in now? Thanks, Stan Mueller

(26) ellie Hall, October 22, 2008 10:50 AM

Have we learnt the lessons of God?

What a wonderful perspective. It gives meaning to the ups and downs of the economy......but does not foster understanding of the repetition of our history and therefore does not help us know our RESPONSIBILITY. After all, if GOD's intent is to teach his chosen children a lesson...have we over the generations grown and learned from this recurring lesson? This perspective may softening the blow of those that are not experiencing too much pain (which means they are not wondering homeless without knowing which garbage dump they will find some partly edible food) and therefore, they are able to survive and in reality need little more than consolation and the words of higher meaning. Is it not time for man to notice how time and again we have crashes that do more than discomfort people...they leave some with no recourse but attempting base survival and often become angry enough so that hate can spin out of control and be directed to a holocust? A holocust may happen because mankind hates....but if it were hate alone than how do you explain the years of living in peace, prosperity, and working, fighting and thriving shoulder to shoulder. I would like you to carefully note the connection between a large downtrodden populace and mass murder....and Jews are often the scapegoats. There is after all much to gain from picking on Jews...1. Jews are hard workers and have learned that money often saves lives.....so they have what to rob which is an immediate side benifit. Also, the society instead of growing with innovation and business that brings new jobs is overpopulated and many are unemployed. Why do you think that countries like France and Latvia.. started rounding up, taking away assets and often killing Jews before Nazis even marched into their country.... So, my point........belief in God's will is good. However, maybe it is time to stop thinking that God means to teach us to relax and realize true value...perhaps it is time for us to realize that God chose us because we have the ability to work hard and can point the way of how human nature can catch up with technology. To accomplish this, we need to alter the structure of our economy so that we can control the excesses that allow human nature to cross over the line to greed. Investing should be done in companies that are offering a service to mankind and we need transparency to protect us and government backing. Without transparency investing is like gambling and time and time again some humans allow themselves to cross over enough lines so that they become the fat cows who eat the skinny cows which almost always leads to a Pharoh who having allowed greed and poverty to spread uncontrolled and cannot find problem solve solutions is replaced time and again by a Pharoh who did not know of Joseph and finds that diverting people's attention from their pain. We were lucky....in this country last time we got Roosevelt.....Germany got Hitler. OUr problem is..that we, like Pharoh for get or do not understand our own history. I very much like the wisdom of the 7th year of ancient times...we surely have lost that understanding...it is clearly not only good for man..but for the recooperation of the earth. Forgive me, you are clearly a beloved and accepted leader and a good Rabbi, who cares about his people...however, we are reaching scarey times....and earmarks are all arround....we can only hope that this time we will not get a McSame and can dig the world's way out without more blood shed. If you think that the coming of the crash was not noticable....let me tell you ...before Crystal nacht I would guess most Jews did not the holocust could happen in Germany.

(25) Anonymous, April 6, 2008 4:45 AM

a wonderful explanation about the financial crisis. God bless Rabbi Benjamin Blech.

(24) Yisroel Pensack, April 4, 2008 9:44 AM

This problem has been solved

The entire world has ignored the true solution to the problem of poverty amidst plenty, low wages and business cycles. The answer was set forth in 1879 by Henry George, the prophet of San Francisco, in his classic "Progress and Poverty." See www.arwep.org for details. George was an ohev Yisroel.

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