VATICAN NOTEBOOK Edward Pentin
he American economy should not be written off, but growth will only be achieved if the country comes together with other nations on implementing austerity measures, according to the Vatican Bank president.
Writing in the Vatican newspaper L’Osservatore Romano, Ettore Gotti Tedeschi said it was “pointless to insist that the situation in the US is one of a nation in decline” or that it has been “struck to the core”. He also said it was useless, in this emergency, “to attempt to assign responsibility for errors committed”. Rather, it is better “to use creative resources in a productive way”.
He noted that the US remains the most technologically advanced and prosperous country in the world. Its recent financial downgrade won’t therefore “flatten it to the ground” but it will probably cause the country “to be more humble and open to collaborating with Europe”, he said.
Mr Gotti Tedeschi believes that to recover from this crisis, the world’s largest economies must “stop looking for individual solutions which contrast with each other” and instead have a summit meeting “with a precise agenda” on recovery. A common consensus was needed on a period of austerity, managed in a integral way, he said, as this “can be the real key for returning to growth”.
The Vatican Bank president offered some practical solutions including a reliance on “family savings”, an “efficient system of small-medium size business” and strong banks.
But his generally optimistic assessment disappointed some. Benjamin Harnwell, chairman of the Dignitatis Humanae Institute, a Rome-based think tank, said the financier’s comments reminded him of Ronald Reagan’s famous observation: “The more the plans fail, the more the planners plan.” He would have liked instead to have seen him question the role of the international banking industry in the crisis, particularly central banks. “We go from boom to bust, to larger boom to even larger bust, crushing families and shattering local communities in the process, and central banks’ manipulation of the money supply and interest rates are responsible for creating this recurring phenomenon,” Mr Harnwell argued. And he added that “vested interests are now so great in perpetuating the cycle, the root cause goes unaddressed”.
As an example of central planning failure, Mr Harnwell highlighted that President Obama added more to the national debt (in real terms) over just four days this month than during the entire 19501960 decade – a period that included the Korean War. “The last few years have seen the US monetary base balloon by hyperinflationary proportions,” Mr Harnwell said. “Gotti Tedeschi is one of the few men in the Vatican – if not the only one – who truly understands and appreciates the inevitable consequences of these policies. He has a unique role to play in the unfolding of upcoming events. He should, therefore, find the courage to be a little franker in exposing the responsibility of international central banking in facilitating the catastrophic damage to the common good.” Sound and objective economic analysis is crucial, Mr Harnwell said, as it is economics that often “directly diminishes human dignity in the world today”.