Saturday, June 13, 2009

Finances and Gambling

Last Sunday there was a message from the Archbishop in the handouts as we arrived at church. I must admit that I am prejudiced in reading any missives from that man but, most unusually, the service started 5 minutes late so I read it but left it at church.

Not to worry as, since then, the information has been in all our news services and on various blogs I read. (Gafcon, Father David Herron, and great to see back again Caliban's Dream). At the moment, working 2 days per week, I find it almost impossible to keep up with reading blogs let alone write anything so I am rather late to the conversation.

THE world's richest and largest Anglican diocese has lost more than $100 million on the sharemarket and is investigating ways to cut programs and ministries across Sydney.

When Sydney was founded as a convict settlement, the Church of England was in a privileged position and received large land grants. A whole inner suburb of Sydney is called Glebe and the land was once owned by the church. I am not sure that the other dioceses were so endowed but it certainly was the start for Sydney to become by far the wealthiest Anglican diocese in Australia and some say the World. I fully acknowledge that wise investments since have maintained and increased this endowment.

My own family has a much smaller but similar history however much less happy. My Great Grandfather was the mayor of one of the inner city suburbs not far from Glebe and actually was a VIP on the first train to run back in 1855.
As a result my Grandfather owned a large number of residences in this area and they were divided between my Father, my Aunt and their Step-mother on my Grandfather's death in the late 1950's.

Unfortunately most of the properties were under rent control so they were costing more to maintain than they brought in. My father did not have sufficient other income to hold onto them until the rent controls were later removed when he could have made a killing. Instead he sold them and invested in shares. Within a few years (probably the recession of 1961, my economics major was still to come) the shares became largely worthless. They continued to dribble a few dollars ever couple of years. In fact I received the princely sum of $14 last year, having now inherited the shares, and believe there may be one more similar payment to come.

Although I was only a teenager, my parent's experience gave me a distinct suspicion of investing in shares which still remains today. Friends have often advised me I should realise the capital invested in my house and land and borrow to buy shares but my mother always told me that to own one's house outright is a great blessing. I have not become wealthy but have not suffered any great loss either.

It was therefore a shock to learn that the Diocese had borrowed money to invest during the recent stock boom.

The letters to the editor have been highly critical, some gloating over the losses.
For example:

With millions of dollars in property, shares and other interests, and with one diocese alone investing hundreds of millions of dollars, it all prompts the question: why are such profitable institutions tax-free?

And of course some of the pious replies for example from the hypocritical and frequent letter writer, Rev Nigel Fortescue, who has the hide to criticise others for creating division, something the Diocese of Sydney is very good at doing.

surely creating scapegoats is not the key to our future. Working together to serve Jesus might be better than embedding division.

The main supporters point to the losses nearly all investors have suffered in the past year but as the following letter points out, not everyone borrowed to invest and this is the grievous error the Diocesan leaders and their financial advisers made.

Clearly Finance 101 is not on the Moore College syllabus. The sin of the Sydney Anglican diocese was not that it invested and suffered the same losses as other investors. It was borrowing money to invest with a higher level of return - and therefore a higher level of risk than lenders were willing to take.

Those who lent money to the diocese got a lower return in the good times, but with less risk of losing their capital when the boom turned into a bust. Taking risks prudent people are not willing to bear is gambling.

My favourite comment however is:

Ah, the House of Jensen crippled by a bad gambling habit. God works in mysterious ways, doesn't she?

Apparently the average parish will not suffer, the main areas mentioned as taking hits are Moore College, Youth Works and the expenses of regional offices including those of bishops. Might keep at least one gentleman at home in dreary old Australia.

So I am not crying too much. If it reduces the funds flowing to certain notorious GAFCON bishops in Africa and other meddlings by the Sydney Diocese in the Australian and worldwide Anglican communion, it can be seen as 'a good thing'.

My own parish is finding things difficult because a lot of our parishioners are lawyers and business people who would have seen their incomes decline so offerings are down. And the Diocese of Melbourne has reported a loss of $1.6 million (a far cry from Sydney's $100 million). However this is not the same as borrowing to invest which even respected financial commentators are describing as 'gambling' - a heinous sin in evangelical circles.


motheramelia said...

It seems as though the "borrowing to invest" bug hit Sydney hard. I can't say I'm sorry that they will find it difficult to support some of their junkets and support to certain African bishops, but when such actions hurt those who need help I get angry.

Leonard said...

One wonders where all the money goes anyway within the Gafcon many ¨envelopes¨ with cash make there way out of parishes taken over by Global South leeches are fully accounted for? What percentage of the ¨cash¨ gets to where it was thought to be going? There is a whole money laundring opportunity that is easily rationalized into evangelizing EXPENSES that is totally off the books. If I were a immigration official in a 3rd World country, it would be the clergy (and sometimes wives) who would be subject to extensive interviews and searches (and audits by National tax officials later)...especially ¨clergy¨ who wear the color of a Bishop.

Alcibiades said...

Sorry - I honestly wasn't copying you: I also liked that letter so much I used it in a post, only to come over here and see you liked it as well.

I was also disappointed to see the Archbishop's letter made no apology for having pursued this very risky strategy, and despite claiming to have reported on events during the past year "through the proper processes of our diocese" gave no information as to what they'd actually done with our money, or what investments they'd pursued to be able to lose so spectacularly.

Instead of facts, and a transparent admission of errors, it was just more spin.

BTW - my wife (a lawyer/accountant) & her father (a retired bank manager) both think your mother's advice 100% correct!