Economic Epiphany at St. Luke's: Saving, Borrowing, Spending

Posted on January 4, 2010


I don't have a photo of St. Luke's handy, so I'll use a picture of Ocean City's first church, St. Mary Star of the Sea, built in 1877. St. Mary's can be found downtown on Baltimore Ave. at Talbot St. Saint Luke's is uptown on the Coastal Highway at 100th St.

You never know when you might experience an Epiphany about the American economy.

St. Luke’s Catholic Church in Ocean City, Maryland, was closed for renovations last winter. Sunday, I went to Mass at St. Luke’s for the first time since it reopened. The reason: St. Luke’s has an 11:30 a.m. Mass on Sundays, the last Mass of the weekend in Ocean City during the winter.

Do you remember Christmas Clubs??? The priest asked the question in his sermon. CHRISTMAS CLUBS! Banks used to advertise free Christmas Club accounts this time of year. It was a great marketing tool to attract new depositors, and especially to introduce children to the habit of saving.

Here’s how Christmas Clubs worked. You went down to the bank, S&L, or credit union in January and opened a Christmas Club account with a  deposit of $1 or $5 or $10.  You went back every week all year and added to your Christmas Club account.  Around Thanksgiving, you withdrew your savings and had a great time buying Christmas gifts for friends and family! What a concept! It used to be the American way of life!

That was a long, long time ago, in an America far, far away. That was “BCC.” Before credit cards. Before home equity loans.

The American economy now is the exact polar opposite of the Christmas Club. We borrow money with credit cards, or take out a Home Equity Loan on the house. We go to the mall and shop til we drop. In January, we  are deep in debt, and begin paying it back slowly, plus interest.

The change in the American way of saving, borrowing, and spending, over a few decades has been our downfall.  All the bubbles burst, and sent us spinning into the Great Recession of 2008-2009.

A virus of “irrational exuberance” infected American investors, and spread to business leaders and consumers.  Our natural optimism was warped when business adopted a rigid code of “positive thinking,” according to Barbara Ehrenreich in “Bright-Sided: How The Relentless Promotion of Positive Thinking Has Undermined America.” Bright-sided: How the Relentless Promotion of Positive Thinking Has Undermined America

Corporations enforced positive thinking on executives and employees alike, Ehrenreich reports. Voicing concerns or pointing out weaknesses in business or investment strategy was labeled “a bad attitude”  — and it was enough to get you fired.

The culture encouraged risk-taking. Businesses encouraged consumers to borrow and buy. (The house you bought today could be flipped for a profit in a year or two.) It was the new American economic paradigm — the consumer-based economy. With the American industrial base hollowed out, consumer borrowing and spending was the only game left.

At the micro level, businesses and consumers became addicted to borrowing and spending. We were hardly aware that we were living way beyond our means.

At the macro level, the American lifestyle was financed by the imbalance of trade — America imported and consumed far more than we exported and produced. Governments and bankers around the world were only too happy to finance the American binge.

Now the American consumer engine has seized up, housing values have crashed, unemployment has soared, and most of us, the U.S. Government included, are deep in debt. Wall Street and the stock market are deep in denial.

Is it possible for America to return to the Christmas Club paradigm of save first, spend later? Perhaps, but we’re not ready or willing to go that route just yet. Almost everyone would like to return to the status quo ante — borrow and spend, re-inflate all the bubbles.

My thanks to Father Christopher Hanley for reminding the congregation about the Christmas Club. The message of his sermon was not really about saving money, of course; it was more about preparing spiritually for next Christmas. The church was celebrating the Epiphany, the travels of the Magi, the three kings bringing the first Christmas gifts from afar. “Epiphany” means the manifestation of Christ to the Gentiles, represented by the Magi.

As a layperson, I won’t attempt to relay the spiritual content of Father Hanley’s sermon. But in secular language, the word  “epiphany” means a moment of revelation or insight. I’m thankful that the reminder about the Christmas Clubs of yore gave me a moment of insight into the financial spirit of contempory America.

(BTW, St. Luke’s Church, viewed from the Coastal highway at 100th Street, looks quite ordinary. Inside, the renovated church is spacious, bright, warm and beautiful.)