By Susan Brinkmann, OCDS
Staff Writer
An article appearing in the Sept. 24 edition of the Vatican newspaper, L’Ossservatore Romano, blamed the current U.S. financial meltdown on greed and a lack of regulation and said the proposed bailout by the U.S. government might ward off a catastrophe but it won’t fix the underlying cause of the problem.
The article, entitled “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.
Tedeschi, who is a firm believer in the superiority of capitalism informed by Christian morality, said the problem is that 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.
The only real growth registered in this crisis has been “the commissions, profits of the banks and bonuses for the managers,” Tedeschi said according to a translation of the article by the Catholic News Service.
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,” Tedeschi wrote.
“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,” Tedeschi 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.
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