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AMIDST THE WRECKAGE OF FINANCIAL RUIN, PEOPLE ARE LEFT PUZZLING ABOUT HOW IT HAPPENED. WHERE DID ALL THE PROBLEMS BEGIN?
For the answer, Jack Cashill, a journalist as shrewd as he is seasoned, looks past the headlines and deep into pages of history and comes back with the goods. From Plato to payday loans, from Aristotle to AIG, from Shakespeare to the Salomon Brothers, from the Medici to Bernie Madoff?in Popes and Bankers Jack Cashill ...
AMIDST THE WRECKAGE OF FINANCIAL RUIN, PEOPLE ARE LEFT PUZZLING ABOUT HOW IT HAPPENED. WHERE DID ALL THE PROBLEMS BEGIN?
For the answer, Jack Cashill, a journalist as shrewd as he is seasoned, looks past the headlines and deep into pages of history and comes back with the goods. From Plato to payday loans, from Aristotle to AIG, from Shakespeare to the Salomon Brothers, from the Medici to Bernie Madoff—in Popes and Bankers Jack Cashill unfurls a fascinating story of credit and debt, usury and “the sordid love of gain.”
With a dizzying cast of characters, including church officials, gutter loan sharks, and even the Knights Templar, Cashill traces the creative tension between “pious restraint” and “economic ambition” through the annals of human history and illuminates both the dark corners of our past and the dusty corners of our billfolds.
Boston is the home of one Melonie Griffiths-Evans. Were she to die unrepentant, which seems likely, she might well find herself in the fourth circle of Dante's Inferno among the prodigals. A word used less today than it ought, prodigal simply means "given to excessive or imprudent spending." The prodigals have long been with us. "For, as has been said," Aristotle writes in the Nicomachean Ethics, "he is liberal who spends according to his substance and on the right objects; and he who exceeds is prodigal." Prodigals matter here because historically they have kept lenders in business. They still do.
The ethics surrounding credit and debit-or debt, for our purposes-find expression in the oldest written records, those of the Greeks and the Hebrews. But the real history predates that, as the Mesopotamians kept records of borrowing and lending on stone tablets. And yet even when the terms of a loan were literally "written in stone," people sought to evade them, most typically prodigals like the aforementioned Ms. Griffiths-Evans.
Fortunately for Griffiths-Evans, she has the sympathetic David Koeppel of MSN Money to chronicle her tale, not thejudgmental Dante Alighieri. As Koeppel tells it, in 2004 Griffiths-Evans contracted to buy a $470,000 home in Boston's Dorchester section with no down payment. She claims to have been looking for an apartment, but those that suited her fancy cost about $5,000 to $6,000 a month. At that time, the amount was more than she could afford. Landlords, after all, demand rent. Lenders can be more flexible. Ambitious beyond her means, Griffiths-Evans heeded their siren song.
The first question the obliging Koeppel asks her in a recorded interview is, "Was your loan a predatory loan?" Griffiths-Evans answers without hesitation, "It definitely was." To swing the deal, she took out a fairly standard 8.5 percent loan on 80 percent of the purchase price. Lacking the traditional 20 percent down payment, she took out a second loan at a whopping 12.5 percent. Her combined monthly payment ran roughly $3,500 a month to begin, increasing as the loan adjusted.
Historically, lenders would not have allowed that size of a payment for anyone making less than about $200,000 a year, presumably more than Griffiths-Evans earned as a part-time teacher. But lenders in the first years of this new century were encouraged to accommodate people like Griffiths-Evans. She got the money. Still, she claims her lender told her that she could soon refinance into a lower-cost, fixed-rate mortgage. "That is where it became predatory," she reassures herself and Koeppel.
There is nothing unique about Griffiths-Evans. A million Americans just like her have unwittingly conspired to wreck the world's economy. Writing twenty-three centuries ago, Aristotle sniffed out their ambitions:
They become apt to take because they wish to spend and cannot do this easily; for their possessions soon run short. Thus they are forced to provide means from some other source. At the same time, because they care nothing for honor, they take recklessly and from any source.
What changed over time, as shall be seen, was the nation's willingness to oblige its prodigals. To fix her innocence, Koeppel asks Griffiths-Evans no questions about her elusive husband, her income, her seeming inability to save money, her job prospects, the alleged cost of rental housing, or any potential plans she might have had to surf the rising tide of real estate prices and flip the house for a profit, plans possibly swallowed in the subprime morass.
Like most in the media, Koeppel thinks less harshly of prodigals than those who enable them. In this comprehensive article, the reader hears not a word from Griffiths-Evans's lenders or any other lenders. They remain as faceless and generic as the Jewish moneychangers in Radford's Venice. Koeppel gives the final word to one of the predatory lender's presumed prey: "If you're given fraudulent loans," says still another bamboozled woman, "someone needs to go to jail. Someone needs to be held accountable."
Unlike Dante, Koeppel does not seem to think of prodigals as sinners, preferring instead to think of them as they think of themselves-as victims. Indeed, it could be argued that the real divide in America today is not between left and right, but between those who would sympathize with Griffiths-Evans and those who would not. The latter we will call traditionalists; the former, social puritans, shorthand for those secular moralists who confuse their local banker with the devil and Wall Street with hell.
Koeppel has no sympathy at all for lenders and no apparent interest in their motivation. And yet as offended as he seems to be by predatory lending and lenders, Koeppel, I suspect, would scoff at the whole concept of usury and usurers. To the modernist ear, the very words sound hopelessly papist and mired in medieval superstition.
When social puritans survey the moral landscape, they see aggregates of predators exploiting aggregates of victims, the goodness and badness of each fixed by little more than fashion. Koeppel, for instance, titled his article "Single women slammed by housing mess." A traditionalist might just title the article "Single women help cause housing mess" and, if feeling churlish, talk of Griffiths-Evans as a "predatory borrower."
Traditionalists like Dante and Shakespeare have a distinct artistic advantage: they believe in sin. When they survey that same moral landscape, they see a thousand different souls struggling with a thousand different demons. Nor do traditionalists attempt to exculpate sinners by downgrading their demons to disease, depression, addiction, or "circumstances beyond Melonie's control." Sin makes for much better drama. It might also make for a much better economy.
Dante, in particular, was a connoisseur of sin. He could divine its subtle gradations as finely as an Eskimo could snow. Indeed, the first part of his Divina Commedia, "Inferno," reads like a veritable taxonomy of sin.
Written in the first person, in vernacular Italian, almost exactly seven centuries ago, the Divine Comedy recounts Dante's guided tour through the three zones of the dead-Inferno or hell, Purgatorio, and Paradiso. He begins his journey on Holy Thursday of Easter Week in the year 1300 and ends the following Wednesday.
His tour guide through hell and purgatory is not a saint or even a fellow Christian, but the Roman poet Virgil. From Dante's perspective, sin transcended the priestly imagination. It was a universal, as was salvation, which "shows the road to everyone, whatever our journey."
The opening of "Inferno" finds Dante in the full throes of a midlife crisis and on the verge of moral breakdown, perhaps even suicide. It is at this low moment that Virgil rescues the troubled Florentine, and the two begin their journey through hell. The condemned sinners occupy nine descending circles: the self-indulgent the first five, the violent the next two, and the treacherous the bottom eighth and ninth.
The first circle is reserved for those otherwise good souls who did not know or accept Christ, including Virgil himself. In this halfway agreeable Limbo-like state, Virgil and others live out an eternity deprived of a joy they cannot even fathom.
Eternity starts getting rough in the second circle. Here, just as they were torn by their own passions in life, the lustful are torn about forever in eternal storms. In the third circle gluttons are made to wallow in a nasty slush of freezing rain and black snow.
The fourth circle holds the miserly and the prodigal, now condemned to ram huge massive weights into each other for eternity. In the fifth circle the wrathful slug it out on the surface of the swamplike River Styx, while the grim and sullen get waterboarded, or something much like it, below. Things literally heat up in the sixth circle, where various and sundry heretics find themselves trapped in a flaming tomb from which they cannot escape.
Until this point in Dante's narrative, the modern reader would find little to disturb his or her finely tuned sensitivities. Dante gives the heathens a break in the first circle. He comes down relatively lightly on adulterers in the second, and since the greedy, the gluttonous, and the grim are always other people or their children, the reader would not particularly sweat their fates either.
It is with the seventh circle, and only in its innermost ring, that Dante begins to challenge modern presumptions. The outermost ring is the unhappy home of the murderous and tyrannical. They stew in a river of boiling blood while centaurs shoot arrows at those who would dare escape. Few today would object to this consignment. Some would like to see Congress so consigned.
In the middle ring dwell the suicides, now reduced to "stumps of wood," painfully sensitive to any touch, eternally plucked at by Harpies. The punishment might seem harsh to the modernist, but he would not be surprised that people once thought thusly or that many still do.
Condemned to the inner and most frightening ring of the seventh circle are those whose offenses run counter to "nature and her gifts": the blasphemers who defy God; the sodomites who defy their own nature; and, yes, the usurers who defy the right order of things. All are condemned to a half-life in a desert of flaming sand with fire raining upon them from the sky-Bakersfield as imagined by a San Franciscan.
The sodomy he gets, but Dante has a hard time understanding why usury is sinful. "Please," he asks Virgil, "could we retrace our path back to that place where you said usury offends celestial Goodness, and solve that knot." Usury here means no more than the lending of money at interest, even at a moderate rate. Anyone today who has ever deposited money in a bank, which in turn lends that money at interest, has committed this sin as Dante understood it.
To make his case, not an obvious one even then, Virgil cites several esteemed sources, both secular and Christian, to the effect that "man should thrive and gain his bread" either by nature or art, that is, either through working the land or working with one's hands. The usurer, however, "takes a different way," and in so doing defies God's plan for man. That much said, and it is frankly not much to go on, Virgil ploughs ahead with his student in tow.
Only two circles remain in the pair's descent, and they host the consciously fraudulent and treacherous. The eighth circle is subdivided into ten truly vile pits. Here suffer the pimps, the flatterers, the false prophets, the corrupt politicians, the hypocrites, the thieves, the alchemists, the counterfeiters, the perjurers, and the "fraudulent advisors"-but more on Bernie Madoff later.
The icy hell of the ninth circle belongs to traitors, the most notorious of whom-Brutus, Cassius, and Judas Iscariot-hang from the bloody mouth of the greatest traitor of them all, Satan. As is fairly evident, the conscious act of betrayal-of one's friends, one's country, one's nature, one's God-troubles Dante more than the everyday vices that bedevil all of mankind.
Wiser for having seen the horrific fate of traitors and the other evildoers, Dante follows Virgil down and out through an opening where he sees, on this glorious predawn Easter day, a sky brightly studded with stars, "some of the beautiful things that heaven bears."
Dante did not write the Divine Comedy just to sell books. He wrote it to instruct his fellow man in the remarkably structured Christian cosmos and man's place within it. To be sure, all cultures have their gods, their cosmogonies, their system of rewards and punishments, but none have anything like medieval Christianity's intellectual order.
Even in 1300, that sense of order, a reflection of God's divine plan, shaped Dante's perception of the economy. After showing Dante the squalid materialists condemned to hell's fourth circle, Virgil instructs his pupil in the ways of Fortuna, the angelic regulator who oversees the economic sphere. God has assigned her the "invisible" role of distributing "goods of worldly splendor"-not at all unlike the famed "invisible hand" that ruled Adam Smith's eighteenth-century economy. Try as he might, man proves incapable of fully grasping how the invisible hand works, how Fortuna "foresees, judges, and rules her appointed realm." Adds Virgil, "She is cursed too often by those who ought to sing her praises." Dante has come to understand that those doing the cursing have likely violated God's good order.
Much to her misfortune, Melonie Griffiths-Evans had no Virgil in her life, no guide through Boston's unmapped moral terrain. And that has proved costly for all.
"Society cannot exist unless a controlling power upon will and appetite be placed somewhere," said the Anglo-Irish political philosopher Edmund Burke more than two centuries ago, "and the less of it there is within, the more there is without." The denouement of the Griffiths-Evans case shows just how intrusive and expensive that controlling power can be when imposed from without.
If Griffiths-Evans lacked a guide, she did not lack for advocates in the streets or in the media. City Life/Vida Urbana, a Boston community activist group, organized noisy street protests to forestall two separate eviction attempts. "We're going to take back our cities! We're going to take back our neighborhoods! We're going to do what's right for families, not what's right for bankers!" Griffiths-Evans told the fifty or so protestors at a 2008 rally, four years after she bought the house. For all of its rhetorical bluster, her call to political action would have left Fortuna's head spinning. It made no economic sense whatsoever. As amplified and ratified, her rallying cry has pushed Western civilization to the edge of an economic abyss.
In his benchmark book The Spirit of Democratic Capitalism, Michael Novak insists that to be successful, "the moral cultural system of democratic capitalism must resist hedonism and decadence with all its power, and not merely accommodate itself to fashion." The moral cultural is one pillar out of three that Novak sees as sustaining the capitalist enterprise. A functioning democracy provides the other two: the freedom to take risks without undue interference, and a reliable system of laws to protect the rights of the risk takers.
The media covering the Griffiths-Evans saga knew little about the moral cultural history that brought them to this moment. The protestors knew less. Playing to their cameras, they embarrassed the lender into allowing Griffiths-Evans to stay in her home for three more months, presumably free of charge, while she tried to find a buyer. When she failed to find one, the lender gave her still more time to find an apartment. Through it all, this poster child for the subprime meltdown remained confident that she would not be evicted. As she confided to the Boston Globe, likely without consulting her source, "The Lord is on my side."
High on the list of historical ironies is this: Jews were the first people to prohibit usury and, in the pre-Christian era, the only people of consequence to do so. Hittites, Phoenicians, Egyptians, and Babylonians accepted usury as a matter of course. Future developments aside, the Jewish prohibition should not be surprising. Jews were the first people to divine a monotheistic God, one who cared deeply enough about his people to share with them a how-to guide to life.
As chronicled in the first five books of the Old Testament, God gave this law to the Israelites through Moses. The law begins with the Ten Commandments and includes many narrower rules of observance. These Jews call the Torah, or, as translated, "the Law." An atheist might challenge the source of the law, but he would be hard pressed to deny that it transformed human history.
By contrast, the Code of Hammurabi, developed during the eighteenth century BC, has all the inspiration and ethical punch of a set of government regulations. In this spirit, the Code treated usury as a matter of ordinary Babylonian commercial life. The relevant articles of the code, in fact, were niggling enough to have been written by an IRS lifer: "If a merchant lent grain or money at interest and when he lent [it] at interest he paid out the money by the small weight and the grain by the small measure, but when he got [it] back he got the money by the [large] weight (and) the grain by the large measure, [that merchant shall forfeit] whatever he lent." Word to our political betters: enduring civilizations are not built on regulations.
Excerpted from POPES & BANKERS by Jack Cashill Copyright © 2010 by Jack Cashill. Excerpted by permission.
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Posted August 5, 2010
Initially I was excited to read this book. I am interested in finances and I love history - perfect match, right? Well, it would be except the book was so boring, I couldn't stand to read it for too long. The chapters went into too much detail, especially about things like what level of hell debtors were sentenced to in Dante's Inferno. It needed to move much faster through history than it did.
Maybe someone whose job and life revolves around money and finance would have found redeeming qualities in this book, but I sure didn't.
Posted June 15, 2010
The book is an attempt to explore the history of credit and debt; and how the factors that led to the evolution of credit and debt have led to the current economic crisis (American economic crisis). (Going by writer's take on the subject, it'll not be too wrong to say that, the book is more critical on present day average American's habit of opting for loans beyond his/her means to pay the loan back; than on the bankers).
Looking towards Aristotle, Shakespeare, the Medici, Bernie Madoff, and others, the author uncovers an interesting narrative illuminating the history of credit and debt. Beginning with the biblical times, the book tries to emphasize the role played by prominent religions influencing the contemporary public thought; and how the issue of credit and debt kept swinging between "pious restraint" and "economic ambition" till present times.
Although the title of the book chosen by the writer gives an impression that the book is for readers with academic interest; I found the book very readable, something any person inquisitive about the connect between past and present will find interesting. In short, the book can be kept into the category, which even if makes the reader disagree countless of times; makes the reader think after every page, chapter and the entire read.
Fact wise the book introduces, even a prolific reader to ample of information and thus satisfactorily quenches the information thirst of those readers who picked the book for some tangible facts.
I would recommend this book.
[ I received this book free from Thomas Nelson Publishers as part of their Book Review Program For Bloggers. I was not required to write a positive review. The opinions I have expressed are my own. I am disclosing this in accordance with the Federal Trade Commission's 16 CFR, Part 255]
Posted May 5, 2010
This and other reviews may be found at www.thispilgrimland.com
"Is it possible that monks and other Judeo-Christian moralists were useful, maybe even essential to the creation of this [the thriving Western] economy? If so, then is it possible that their dismissal from the marketplace has condemned us to our current economic purgatory?" That is the thesis that Jack Cashill lays out and attempts to answer in his latest book Popes & Bankers: A Cultrual History of Credit & Debt, From Aristotle to AIG. Taking the reader through the history of what was once known as usury but is now called credit, Cashill lays out for the reader a concise story of the development of the credit system that leads to today's conversation about predatory lenders. Measuring the historical evidence and documents at the time and often measuring that against the churches response to banking trends in history Cashille presents the reader with a very educational and at times entertaining, stroll through the history of usury.
I enjoyed this book much more that I thought I would. I had thoughts that this book would read like an IRS tax-form but was pleasantly surprised to find that Cashill had expertly crafted a book that allows history to talk for the reader. The book is an easy read and provides more of an insight into cultural response to rules and trends in banking than the actual rules and trends themselves. Perhaps my favorite aspect of this book was the fact that Cashill drew so much of his thought not from "experts" on the time period but, especially in the earlier parts of the book, from the actual literature and poetry from the time. Cashill presents the reader with the reaction of culture to the trends and the trend setters from the works written at that time. This, for this reader, added credence to Cashill's work.
I believe that people should read this book. Cashill presents thoughts and history on a subject, usury, that has baffled mankind since currency was invented. Is it alright in the eyes of God to lend money expecting repayment with interest? I can't say that this book necessarily answers that question but it will make the reader more prepared to develop his or her own answer.
Disclosure of Material Connection: I received this book free from Thomas Nelson Publishers as part of their BookSneeze.com book review bloggers program. I was not required to write a positive review. The opinions I have expressed are my own. I am disclosing this in accordance with the Federal Trade Commission's 16 CFR, Part 255 : "Guides Concerning the Use of Endorsements and Testimonials in Advertising."
Posted April 8, 2010
This is a really interesting and informative book. So far I've learned why there is so much animosity between the Catholic Church and the Jews, and where it's from that the stereotype of Jews being, in general, very business savvy. I also seems that the adage "money makes the world go 'round" has some very real weight, which as the book points out is quite unfortunate. Though the book is from the economical and financial perspective it makes clear the relationship that finances and religion had in history and why we are lacking today in it's separation.
It was quite enlightening. By the end, I think the author was asserting that it was the lack of personal accountability and responsibility that led to the stock market crash and resulting recession and despair. The individual greed of everyday people (investors)fed into the greed of the corporate traders, lobbyists, and politicians.
The economic and political bigwigs acted as enablers to investors, and took advantage of the greed so salient in today's culture. It was the lack of an overarching set of morals and guidelines that allowed the people to act in selfish and greedy ways without restraint or thought to the consequences of the actions.
The book traces the disappearing relationship of religion on the actions of the economic movers and shakers in the world through time. Read this book and you will realize "in truth, it was a team effort. We all f***ed up. Government. Rating agencies. Wall Street. Commercial banks. Regulators. Investors. Everybody.", Cashill 'Popes & Bankers'2010.
I receive these books free from Thomas Nelson Publishers as part of their BookSneeze.com book review bloggers program. I was not required to write a positive review. The opinions I have expressed are my own. I am disclosing this in accordance with the Federal Trade Commission's 16 CFR, Part 255 : "Guides Concerning the Use of Endorsements and Testimonials in Advertising."
Posted March 23, 2010
Usury (as lending with interest was widely called until at least AD 1800) a term used frequently by the author as he explores our economic history . from Dante to the subprime housing crisis, "from Plato to payday loans, from Aristotle to AIG.to the Salomon Brothers, from Medici to Bernie Madoff.."
The Bible is quite clear about lending money to neighbors: "if thou lend money to any of my people ... thou shalt not be to him as an usurer. Strangers however, were fair game: "Unto a stranger thou mayest lend upon usury.. The Hebrew word for usury is neshek and by the 15th century Gentiles who were a little short at the end of the month were paying neshek to their Jewish brothers.
While the Old Testament has a lot to say about the subject, Jesus it turns out had little to say beyond the parable of the talents and the pounds. Oh, and the time he threw the money changers out of the temple. We don't know how Jesus, the son of a small business owner felt about usury or profit making. Jesus was busy preaching about a different type of ROI.
Usury continued to be a hot topic prompting Pope Innocent II to define the practice as "detestable and disgraceful." Pope Alexander III added "usurers should not only be excommunicated but also be denied a Christian burial."
Enter the knights . The Knights Templar "a unique monastic order" aka "warrior monks" were created when 300 cheerful Christians were killed by a swarm of Saracens. The monks lived by the Rule, served the church and created "the first great international banking enterprise" with "branch offices stretching from one end of the Mediterranean to the other. The Templars interacted with kings and popes, and they did so precisely when those leaders needed money, namely, on the way to the battlefield." In their spare time, they "raised taxes ... paid bills, minted money, collected tariffs, chased down deadbeats, provisioned the army, supported diplomatic missions, and advanced loans to the kings' friends and relatives-even Grandma." They also charged interest. Their demise forty years later had nothing to do with usury, but everything to do with scandal, power, timing, money and debt.
Standing in front of the 1933 inaugural crowd FRD railed against those who proposed "the lending of more money" as a solution to their and the nation's problems. "To drive the point home about the evils of such wanton usury, he continued with an analogy that America's biblically literate population understood, "The money changers have fled their high seats in the temple of our civilization. We may now restore that temple to the ancient truths."
Despite the charming fireside chats, "the New Deal did not deliver." Secretary of the Treasury Henry Morgenthau Jr. told a Congressional hearing . "We are spending more money than we have ever spent before and it does not work. . We have never made good on our promises... after eight years ... we have just as much unemployment as when we started and an enormous debt to boot."
Today, financing the good life has nearly brought America to its knees once again.
Popes & Bankers will surely capture the attention of those interested in our economic past and present. This book is for readers who agree with philosopher George Santayana's prediction, "Those who cannot remember the past are condemned to repeat it."
Reviewed by Patricia Punt. The book was supplied by Thomas Nelson.
Posted March 16, 2010
One word comes to mind when reading Jack Cashill's Popes and Bankers: comprehensive. The cover of the book claims to illustrate the cultural history of credit and debt from Aristotle to AIG, and that is certainly not an inaccurate statement. Examining the constant balance between 'pious restraint' and 'economic ambition' throughout the story, Cashill's work will appeal to financial gurus and novices alike as the author does an admirable job of engaging those well-versed in finance while simultaneously educating those just beginning to develop an understanding of the field, all while doing his best to (successfully) prevent coming off as overly professorial. An accurate example of Cashill's explanatory style is the point in which Cashill compares the town of Cairo, Illinois to St. Louis. Speculators attempted to make small-town Cairo the rival of St. Louis through deceit which, when revealed, eroded confidence in America and discouraged foreign investment: "This all, of course, is at least partially true. The fact that Cairo today has 3,000 people compared to the nearly three million in St. Louis suggests that the scheme to put Cairo on the map was not a roaring success. Still, it was the schemers [...] who unbound the West and built most of its cities. Had 'dull honesty' been America's defining characteristic, Chicago would still be a swamp and Kansas City a floodplain." I would recommend this book to just about anybody with an interest in finance, history, politics, or simply an engaging educational story.Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.
Posted March 19, 2010
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Posted July 12, 2010
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