Vatican newspaper: “New economy” is a “sham”

Looking for a Catholic–some would say traditionally Christian–point of view on the economic meltdown?

The  church has long-standing teachings and resources that I think could be useful–and an antidote to some of the idolatry and fatalism of unfettered free-marketeering. (“Hey, stuff happens. No pain, no gain. Caveat emptor, don’t you know…”)

We haven’t heard much about those teachings, however, so I was glad to see this piece in L’Osservatore Romano, the Vatican’s official newspaper (with an increasingly provocative voice, however), as written up by CNS. The article, “A costly illusion,” was written by Ettore Gotti Tedeschi, an Italian economist and professor of financial ethics at the Catholic University of the Sacred Heart in Milan, Italy.


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.”

It said the world economy also needs to be run responsibly and transparently with precise rules.

Can I get an “Amen”?

Comments read comments(7)
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Charles Cosimano

posted September 25, 2008 at 11:36 am

Not from me you won’t. All such ideas would acheive would be to make all of us poorer.

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posted September 25, 2008 at 2:38 pm

THIS is the kind of clear moral teaching I have long valued from the vatican. I may have issues with the people who have roles of authority, but work like this shows why places like the Vatican are worthy of our attention. Not like I expect anyone in Washington (though this might make for a lively Georgetown v. Catholic Univ dialog) to read or take it to heart. But it is good to know someone is watching and expecting something greater from our leaders than a series of mutual bribes benefitting no one but themselves.

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Bill deHaas

posted September 25, 2008 at 3:57 pm

Interesting thoughts from the Banco Ambrosiano folks. Sort of like the kettle calling the pot black? But who better would understand shady financial dealings than the Vatican Bank.

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Rob Marczynski

posted September 25, 2008 at 4:26 pm

It is interesting that a friend of mine is a German economics professor at the Catholic University in Eichstadt’s business school in Inglstadt, made this prediction whane he was here in the U.S on sabbatical in 2000!

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Ann Turner

posted September 25, 2008 at 5:20 pm

I completely agree with the Italian journalist’s assessment of the U.S. Economy, and essentially, he is saying that poor ethics make for a poor economy. An economy that does not lift up the poor, that is not inclusive of those with scarcer resources, that weights tax cuts and privileges for the wealthy few is not only risky but unethical. And, I believe, we are seeing the results of that.
I hope the bailout will help the smaller guy with the too-high mortage payments, but don’t know if there will be a trickle-down effect. I just think we are reaping the fruits of years of poor economic policy and bankrupt social policy. I hope for a change in November.

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posted September 26, 2008 at 10:46 am

And here I was hoping for something along the lines of a return to the Christian ethic. Instead I get a socialist rant.
Will we never learn that imperfect men can never create a perfect society. The best we can do is try to make men as perfect as possible. The society will follow.

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posted September 26, 2008 at 12:10 pm

I have been waiting to here someone say something like this for far too long. Amen!!!!!!!!
Wealth, true wealth, can’t simply disappear over night in the amounts of trillions of $$$$, but false wealth, based on a deck of cards can and should come crashing down. When home prices were going up, up and away, I kept asking myself why? Real Estate/Economics 101: home values go up because:
1. Shortage of available homes to buy
2. Increase in salary base
3. Time (in years NOT months)
4. Brad Pitt moves into the neighborhood
I knew years ago that the market was going to correct itself in a serious way and that homes would be foreclosed on. People who had been taking equity out of their homes to finance whatever including our economy would have to be paid back and with incomes stagnant, those issuing loans were as guilty and culpable.
I also knew that the new titans of Wall Street who have been running rampant with no government oversight would be the only ones benefiting leaving the most vulnerable at risk. The left financially fortunate would be at risk because they are the ones who can’t afford to lose their jobs when firms go bankrupt and thousands are laid off.
I also know that real estate is incredibly complicated. Sure people should not buy more of a home than they can afford, but the complication of the whole process means they couldn’t have gotten into the situations the are in without a lot of fraud from the all the professionals who new better.
We don’t just have a moral obligation to our fellow man, but an obligation to be honest and to call greed what it is: one of the 7 deadly sins.

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