Finance - Sound Advice From The Pope
No fan of capitalism, Pope Francis is warning that the world's financial markets are repeating the mistakes that led up to the 2008 Global Financial Crisis (GFC).
In a statement released by the Vatican, the Pope says that derivatives are "a ticking time bomb ready sooner or later to explode, poisoning the health of the markets".
Derivitives are those risky, overly-complex, and largely unregulated financial products slapped together by financial institutions that derive their value from an underlying and often unseen asset or bundles of assets. They were to blame for nearly blowing up the global financial system a decade ago.
"The market of CDS, in the wake of the economic crisis of 2007, was imposing enough to represent almost the equivalent of the GDP of the entire world," read the Vatican document. "The spread of such a kind of contract without proper limits has encouraged the growth of a finance of chance, and of gambling on the failure of others, which is unacceptable from the ethical point of view."
Instead of learning the lessons of the GFC "to develop a new economy, more attentive to ethical principles, and a new regulation of financial activities that would neutralize predatory and speculative tendencies", the statement accuses Wall Street of returning to "the heights of myopic egoism".
Pope Francis has criticized capitalism several times during his time at the helm of the Roman Catholic Church. And while the Vatican Bank has had its share of problems - such as this year's indictment of a former president for money-laundering - Francis himself has walked the walk. In cheap shoes, because he has refused to go get the custom-made red shoes of his predecessors. Pope Francis also eschews limousines, preferring to get around Rome in a used Ford Focus; he also declined to reside in the opulent Apostolic Palace, choosing a guest house for Church officials near St. Peter's Basilica instead.