Global Econimic Crisis

+ Cardinal George Pell, Archbishop of Sydney
30 Nov 2008

Two weeks ago the heads of government from the G20 nations (the richest in the world) concluded their meeting on the financial crisis with high promises and less action.  The markets were not completely reassured.  Since then Obama's appointments and proposed policies have boosted confidence.

What might an archbishop say usefully on this disaster, especially an archbishop who acknowledges the benefits market economies have produced?  A few thoughts come to mind.

While Australia is better placed than many countries it is still likely to be some time before markets settle.  Effects on the real economy are likely to persist with heavy job losses continuing to occur.

It is one thing for the rich to lose a lot of their wealth, while remaining rich or at least comfortable.  It is quite another matter for a wage-earner to lose his or her job, especially if they have dependants.  This is a brutal reminder once again that good times never last forever and we must never plan as though they do, even if we cannot personally remember the bad times.

The modern economy is built on debt and I often claim that a good parish usually has some debt.  But the interest on debts always has to be repaid, even in bad times; and so does the capital eventually.  Reckless lending and imprudent borrowing provoked this catastrophe.

No one seems sure how much debt there is or where it finally resides, but debts are mountainous and not just in Eastern Europe or the Third World.  Credit card debt in the U.S.A. and Britain is worrying and unfunded superannuation liabilities a long term challenge.  The situation is not like the Depression of the 1930s because Australian social security is much better, while the U.S.A. now has massive debts unlike its situation in the 1930s.  Moreover governments now know that their task is to spend and encourage spending.

 Today the world is very much a global village.  No country can stand apart from the effects of a global financial crisis.  Even though the Australian economy is in much better shape than the U.S.A.? or Europe?, it is caught up in the maelstrom.  We must do what we can to solve our own problems but we will be dependent also on what others do.

Leadership means a concern for the common good.  Regulators must remember this as they strive to achieve greater transparency, protection of those unable to protect their own legitimate interests, self-regulation to diminish enormous salaries and long term programmes for recovery.

People need jobs, but when these are not to be found, special consideration is needed for the jobless.

Greed is not good; never good.  Reckless greed provokes disaster.

And finally (and unfortunately) good intentions are no substitute for intelligence and effective solutions.  We hope and pray the movers and shakers can put things right.