Rome (AsiaNews) – The world’s economic crisis is taking an odd turn. In addition to attacks against US debt, the possible downgrading of French banks, hits at Italian treasury bills, the deterioration of the Spanish economy and the implosion of the economies of Ireland, Portugal, Iceland and Greece, the current political crisis is going global, humiliating world leaders who are losing their grip on power to the point that they appear useless because of their incapacity to find solutions and stability.
It is all very curious because when the crisis began (with the collapse of US subprime mortgages), political leaders were seen as the “saviours” and financial and credit institutions as the “culprits”. At that time, some even called for the “political” control of the world’s financial system, which had destroyed wealth and caused havoc, betraying people’s confidence and showing no sense of social and moral responsibility.
Eventually, it became obvious that the political system was in fact a captive of the financial system. Central banks, like the US Federal Reserve, saved financial institutions, pouring freshly printed cash into them. The latter found salvation, but savers and families lost out as sovereign debts hit the roof.
This was especially true for the United States, but also to some extent for Europe, where doubts were raised about the usefulness of the European Union and the euro for national economies.
A year after the financial crisis of 2008-2009, financial institutions boasted of their “success”, proud of their managers’ benefits, even though ordinary people had to put up with unemployment, deprivation, job insecurity and poverty.
Europeans and Americans have become increasingly critical of their rulers, seen as incapable of stopping the economic decline and often unwilling (in Italy for example) to tighten their belts.
Things are not so rosy for China’s rulers as well. The recession in the United States and Europe is affecting China’s own outlook since its economy is export-driven and dependent on the aforementioned regions of the world. Beijing tried a stimulus package to change direction but ended up stocking inflation. In an attempt to raise average revenues (and spending), it has pushed business (including Chinese-owned) to sunnier climes, causing unemployment and social tensions.
As in the United States and Europe, China’s decision-makers have been criticised for their incapacity to manage their nation’s economy.
China, Europe and the United States are the driving forces of the world’s economy. If we add to their crises, the shocks of the ‘Arab Spring’ in the Middle East and North Africa, we see that almost the entire world (except for Kuwait and Scandinavia) suffers from a crisis that is as much political as it is economic.
Increasingly, people are calling for an international agency that would watch over national economies, check the value of currencies, and monitor financial movements.
The question is who would control such an agency? How would it be set up? The world already knows how the directors of the International Monetary Fund (IMF), World Bank (WB) and even the European Central Bank (BCE) are picked: on the basis of less than transparent criteria (with behind-the-scene involvement of political leaders, financial powerbrokers and lobbies), far from the real life of real people.
Everyone is aware of how the IMF and the WB looted Third World countries, advising them “for their own good” to privatise, sell off, and thin out the social safety net in order to bring them into the vortex of globalisation.
Unless we want a world political and economic world order (like a new emperor) ruling over the (restricted) lives of ordinary people, we must make sure that any new authority (putting aside for now the question of how it could be established) is rooted in democratic and national checks and balances. The demands that many have made for governments to be placed under some form of “trusteeship” on behalf of the world’s financial system could in fact end up throttling democracy and undermining freedom.
In his encyclical Caritas in veritate
, published during the 2008-2009 crisis, Benedict XVI said, “In order not to produce a dangerous universal power of a tyrannical nature, the governance of globalization must be marked by subsidiarity, articulated into several layers and involving different levels that can work together [. . .] if it is not to infringe upon freedom and if it is to yield effective results in practice” (n. 57).
The “quality” of a new international agency is also important. Until now, the financial lobbies that are causing havoc in the world had no standard but balance sheets and profits at any cost. No one has shown any concern for unemployed Americans, or the hundreds of millions of Chinese treated like slaves, or the Middle Eastern crowds driven this or that way by the changing prices of grain . . . . to this, we must include the aid policies to poor countries whose attached strings include practices that are anti-population, pro-abortion and pro-sterilisation.
On this, Caritas in veritate
has something to say, even if it might a voice in the desert, when it argues that finance “after its misuse, which wreaked such havoc on the real economy,” must go back to being “an instrument directed towards improved wealth creation and development” for people and peoples (n.65).
Regrettably, the crises that are now causing mayhem in the world show that the existing financial order based on material profit as its one governing standard will be “validated”, so that all nations will be turned into “debtors”.
Indeed, all this is true. People do prefer credit (and debts) to productivity and innovation. Creativity and learning are less important than selling useless or outdated objects. . . . Above all, people prefer a life of idleness to one of sacrifice and work.
All this means is that the world’s crisis cannot be solved by an ultimate sovereign authority empowered to manage the wealth of nations. What is necessary is a conversion to a new and more global model of development, where creativity and responsibility are in forefront.