Wednesday, September 24, 2008

Vatican Editorialist on U.S. Financial Crisis

It's a great sadness that the Vatican's newspaper, L'Osservatore Romano, has no English web presence. A very significant column appeared there yesterday by the Italian banker, economist and ethicist Ettore Gotti Tedeschi.

As you can tell by the mug, Signore Tedeschi means to be taken seriously. And since his target audience is composed of English speakers, it's a shame I can only find his article in Polish and Italian.

Tedeschi, according to Italian Wiki, is a firm believer in the superiority of Capitalism informed by Christian morality. Capitalism, though originally inspired by 13th century Franciscan theologians, has been perverted by protestant and enlightenment values like survival of the fittest, Tedeschi believes - at least according to my best effort to translate Italian.

CNS has a summary of his editorial which is excerpted below. I'll post the whole column when available in English.

The booming growth of financial markets did not correspond to real growth or concrete development for society because it created an artificially robust gross national product, said a Sept. 24 article in L'Osservatore Romano.

The only real growth registered in this crisis has been "the commissions, profits of the banks and bonuses for the managers," it said.

The article, with the headline "A costly illusion," was written by Ettore Gotti Tedeschi . . .

The U.S. financial meltdown has been blamed on "the greed of managers and lack of regulations. But curiously, no one ever refers to the indirect responsibility of the government's economic policy" which, he wrote, tried to cover the lack of any real economic development with a booming Wall Street.

He said the U.S. government's proposed bailout may stave off any worst-case scenario for its troubled financial markets, but it will not repair the root causes of the crisis.

"Despite various attempts, the Western world does not know how to map out a model of development that is capable of guaranteeing stable wealth," the article said.

The West has "not succeeded with its new economy project, it did not succeed with accelerating growth in Asia by transferring low-cost production (there), and it did not succeed after inventing a boom in the GNP through risky financial models that were poorly conceived and badly regulated," it said.

"In order to maintain this sham GNP, the banks financed things that were not guaranteed" and that should not have been financed, like the subprime loans, it said. Financial institutions created an "economic growth out of debt and, therefore, (created something) very risky," it added.

The article said the lesson to be learned is that nations cannot build a healthy economy or experience real development if it is not based on "balanced demographic growth."