Church of England

Church of England investment chief warns of financial crisis 'doomsday machine'
The global financial crisis was triggered by greed and has become a "doomsday machine" that is still gathering momentum, according to the head of the Church of England's £6billion investments arm.
Andreas Whittam Smith, the First Church Estates Commissioner, said governments around the world had unwittingly created the conditions of the current "deep" recession by encouraging globalisation and relaxing bank regulation in recent decades.
As a result, he said, financial institutions had created bubbles in housing and consumer debt that finally burst in late 2007 as property prices in America began to fall.
Since then, borrowers have been unable to repay their loans, putting banks under pressure and forcing them to try to claw back some of their debts.
Mr Whittam Smith, a former financial journalist who founded The Independent newspaper, said this process is still gathering pace, driving property prices down and ruining lenders.
His comments ahead of a debate at a meeting of the Church's governing body, the General Synod, on the "international financial crisis and the recession".
In a background paper, Mr Whittam Smith wrote: "The deep recession now under way differs in two respects from anything we have experienced in our lifetimes.
"It is totally global in nature. Its proximate cause is a sudden withdrawal of credit by banks that has reduced business activity.
"The over-trading by the banks that created simultaneous bubbles in housing, in consumer credit and in the financial industry itself - driven by greed - finally collapsed under its own weight in the second half of 2007. These booms were not confined to the West."
He explained how governments since World War Two had promoted free trade, linking economies around the world, and then led by the Thatcher and Reagan administrations of the 1980s had begun to deregulate banking industries.
This created a "dark side" as banks invented a technique that allowed them to package up debts and trade them, taking the original loans off their books so making lending "costless and riskless".
Meanwhile, the growing economies of developing countries had helped push interest rates and inflation in the West to very low levels, meaning that "money was free" for banks.
Mr Whittam Smith said it was then rational for banks to hand out money "until there is no one left to lend to", with the result that the sum of global financial assets was approaching four times output of actual goods and services by 2007.
However the "first cracks appeared" in summer of that year as American property prices began to fall.
Heavily indebted borrowers were asked to pay back their loans, but many became bankrupt and so lenders began to suffer. Banks were forced to ask another rank of borrowers to pay off their debts.
"Some 18 months since it began, this de-leveraging process is still under way and, if anything, gains in momentum. It is a doomsday machine."
Mr Whittam Smith said this explains "almost everything", from why property prices continue to fall to why banks continue to lose money and "remain terrified of lending unless governments remove the risk of them so doing.
"The recession will continue until this process is over," he concluded.
As The Daily Telegraph disclosed last month, the Church itself is not immune to the effects of the recession.
Its pension funds, stock market investments and property portfolio have all suffered while £30 million in expected interest payments has evaporated from its accounts because of falling interest rates.
Wealthy parishioners are to be asked to dig deeper and put more into collection plates in order to make up losses.