Pope Bendedict Warns France on Money, Power and Greed

Tuesday, September 16, 2008
Pope Benedict’s visit to secular France and its reformist President Sarkozy has proved to be successful above all expectations, as reported by Vatican newspaper L’Osseservatore Romano. During his Paris homily, at the Esplanade des Invalides, the Holy Father encouraged the 250,000 faithful in attendance to turn to God and to reject false idols, such as money, thirst for material possessions and power.

In his homily the Pope referred to the teachings of Saint Paul to the early Christian communities in which the Apostle warned the ancients of idolatry and greed. The Pope explained how modern society has created its own idols just as the pagans had done in antiquity.

The Pope emphasized that these idols represent a “delusion” that distracts man from reality, that is, from his “true destiny” and “places him in a kingdom of mere appearances” as quoted in Zenit’s article. Benedict underlined that the Church’s condemnation of such idolatry is not, however, a condemnation of the individuals per se, but more so of the evil temptations themselves.

“In our judgments, we must never confuse the sin, which is unacceptable, with the sinner, the state of whose conscience we cannot judge and who, in any case, is always capable of conversion and forgiveness,” he said.

The Pope recognized that the path to God is not always easy, but through the Eucharist, he said, man understands that God “teaches us to shun idols, the illusions of our minds” and that “Christ is the sole and the true Saviour, the only one who points out to man the path to God.”

This does not mean that the Benedict condemns business, trade, all the positive economic phenomenon that allow for wealth and prosperity. But concerned for France’s extreme tendencies toward materialistic relativism, the Pope rightly pointed out how France cannot marginalize itself from religion.

Benedict’s sermon strongly underlined how every believer in the light of God should pursue his own vocation, which may include business or particular talent God has instilled in him.

Had it not been so, I doubt that secular and business orientated President Sarkozy would have ignored State protocol and met the religious leader on his arrival at the airport. The French President was eager to promote “a new dialogue” with the Church and to talk about the need of a “positive laicity” in Europe and its expanding economic unity.
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'Casino Capitalism' or Personal Failure?

Tuesday, February 5, 2008
Two weeks ago, French bank Société Générale announced that off-balance sheet speculation by a single “rogue trader” had cost the company 4.9 billion Euros ($7.2 billion). The scandal had enormous repercussions in international markets leading some commentators to decry the rotten nature of global “casino” capitalism and to call for the reversal of financial liberalization. However, the actual circumstances of the case do not justify more government intervention in financial markets but illustrate individual moral failings and poor internal governance on behalf of the bank.

A new report also suggests that a lack of internal controls and weak enforcement of existing rules may be the real source of the problem at one of the oldest banks in France.

On January 24th, Société Générale said that it had discovered a “massive fraud” through “a scheme of elaborate fictitious transactions.” The event caused a great stir not only for the magnitude of the bank’s losses but also because it is partly blamed for the worst European stock market collapse since September 11, 2001.

Jerome Kerviel, who worked as a junior trader in the arbitrage department at Société Générale, was responsible for betting on markets’ future performances. The bank claims that he had made unauthorized and concealed bets of around 50 billion Euros on European markets. According to the New York Times, Mr. Kerviel told prosecutors that his bets would have resulted in a profit of 1.4 billion Euros for the bank if they had been cashed out by the end of December. However, at the start of this year, stock markets experienced a sharp downturn turning the projected profits into losses.

The French bank discovered the bets in mid-January when auditors in the risk management office noticed a series of fictitious trades on its books. Société Générale then conducted a dramatic market sell-off operation in order to neutralize Kerviel’s deals. Traders estimate that the bank unwound contracts in the range of 20 billion to 70 billion Euros from January 21st to 22nd.

Many suspect that selling all these positions into an already volatile European market contributed to the shocking stock market performance in Europe around that time. This in turn, provoked an unexpected and controversial interest rate cut by the Federal Reserve of 0.75 per cent in order to protect the New York Stock Exchange which had been closed on the day when European markets dived. The curious series of events was summed up by a hedge fund manager who told Reuters that: “The real story here is basically, this guy, paid 100,000 Euros a year, sitting in some office at SocGen, forces the Fed to cut interest rates by 75 basis points, which is basically what happened”.

The huge and wide-ranging market repercussions have given ammunition to the critics of financial liberalization. An editorial of the French newspaper Libération sarcastically entitled “Casino” laments that no one controls the huge sums of money moving around in financial markets and demands tighter regulation of financial markets. It also claims that the scandal embarrasses President Sarkozy’s alleged embrace of laissez-faire capitalism.

Continue reading "'Casino Capitalism' or Personal Failure?"
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Connecting France with Good Economics

Monday, April 10, 2006
It seems that it may be possible. An interesting article from yesterday’s International Herald Tribune:
Danielle Scache tries to avoid using the term “capitalism” in her economics class because it has negative connotations in France.

Instead, she teaches her high school students about the market economy, a slightly less controversial term she started using last year after a two-month internship at the dairy giant Danone. That was an experience that did away with more than one of her own prejudices, she said.

“I was surprised to see that people actually enjoyed working in a company,” said Scache, who is 59. “Some of them were more enthusiastic than many teachers I know.”

“You know,” she confided with a laugh, “in France we often think of companies, especially multinationals, as a place of constant conflict between employees and management.”

This view of bosses and workers as engaged in an endless, antagonistic tug-of-war goes some way toward explaining the two-month rebellion against a new labor law.

Read the whole thing for an interesting look into the state of economic education in France.
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