Six years have already passed since, on August 9, 2007, many beliefs were shattered. That day the main Central Banks of the world had to intervene to quell an anomalous rise in interbank interest rates. What is missing, however, is not liquidity. In fact, the confidence of banks to lend money to each other has collapsed now that securities, manufactured by the creative finance of Wall Street and the surrounding area, deemed reliable, unexpectedly become "toxic". The disease worsens to the extreme fibrillation following the bankruptcy of Lehman. The violent shock is transmitted from finance to the real economy. And when, towards the end of 2009, it is thought that the recovery has started, it is Europe that is preparing an unexpected attack on sovereign debts, due to a sum of policy errors and incapacity of leadership.
The first wave hits the rich countries more, the second is concentrated in Europe, especially in the South. Thus, on the one hand, the emerging countries equip themselves with development models based on internal demand and South-South trade – to replace the fugitive demand from rich countries – and the USA is somehow pulling out with ultra-expansionary policies, although sustainability is called into question by the persistent current account deficit (still at 2,7% in Q1 2013). On the other hand, however, Europe is still there to lick its wounds with recovery prospects still smoky and uncertain progress in institutional consolidation of the euro.
What is most worrying, the two waves of crises have been brought together by serious theoretical errors. “How did economists get so wrong?” wonders Paul Krugman, Nobel Prize for Economics in 2008 and critical conscience of world thought. Up until the eve of the economists said almost in unison "everything is fine", but then this epochal crisis exploded precisely in the advanced countries. The crisis reveals that those beliefs were wrong. Today even the global balance of power is affected, with the West appearing to have lost its global leadership. Therefore, economic science, while not alone, bears serious responsibility for what happened.
Precisely for this reason, to overcome the crisis, the economy needs to be understood more and better. Before the crisis, the diversity of thought and approaches to the economy had almost been lost, absorbed in a single thought, a sort of idolatry of the free market. In a certain sense, the market from being a "tool" had become an "end" in itself. Today, awareness of the multiplicity of economic dictates has been regained and it is clear that, to respond to the specific needs of each situation, combinations between the market, public intervention and the presence of operators with non-profit objectives must be chosen. The market must once again become a tool on a par with other solutions, all aimed at improving the well-being of humanity. Krugman calls for a return to Keynes's 1936 “General Theory” thinking, that is, to recognize the need for stimulus public policies to avoid spiraling into an economic depression following instability from excess debt.
As regards the European wave of the crisis, it has been said several times that the fundamentals of the Eurozone would have made it possible to avoid it (an area that has balanced or surplus foreign accounts can afford even very high debt/GDP ratios, Japan docet) . If the crisis comes from the USA, which was living beyond its means with strong foreign imbalances and indebtedness to the Chinese, it is in fact more difficult to understand how it could have had a second, more serious, epicenter in Europe which, overall, has foreign accounts balanced and does not live off the savings of others. Therefore the European crisis is self-inflicted: the unfortunate fiscal austerity is immediately imposed on Europeans (especially in the south) not by the distrust of foreign savers but by our leaders. Moreover, just when the idolatry of the market was being discredited by the US crisis, austerity was justified by the judgment of the markets. But, here too Keynes' farsightedness could help us, this time that of the "Economic Consequences of Peace". Why was his exhortation (from 1919) ignored for the Greeks not to make the Germans pay all and immediately for the massive war reparations, on pain of causing socio-economic destabilization in Germany? In short, if first of all we must observe that for the excessive debts that have arisen the responsibilities lie with the debtors but also with the creditors (and therefore both should contribute to the solution), it is even more important to note that only gradual adjustments are sustainable for the debtors because sudden ones don't work. And common sense would have been enough to understand it without having to wait for Thomas Herndon's thesis to disprove the results - discovering that they depended on errors in entering data on an Excel sheet - of the paper by Reinhart and Rogoff, which had acted as the architrave to European fiscal austerity policies.
Furthermore, progress in terms of re-regulation of finance remains too timid and contradictory, while evidence of unethical (if not fraudulent) practices by some of the main financial institutions continues to emerge, such as in the Libor manipulation scandal. In particular, a regulatory approach which struggles to separate commercial banking from investment banking and is still based on automatic quantitative rules for the determination of weighted risk assets appears inadequate. This set-up seems to discourage the return of banks to traditional activity, incorporating one of the main lessons of the crisis. However, a sign of hope comes from the Vatican under the guidance of Pope Bergoglio, not only because he has chosen to bring the name of St. Francis of Assisi to Peter's threshold, clearing it from an oblivion that lasted almost 800 years. In fact, as soon as he took office, Pope Francis appointed a Commission of eight cardinals for the reform of the Curia. Among the hottest subjects is the safety of the IOR, the Vatican financial institution often talked about in the past. Well, Archbishop Maradiaga, coordinator of the Commission, declared that the IOR must become an ethical bank and this orientation was reaffirmed by the Pope himself. There is a great need for a recovery of ethics in the entire financial world and removing that anomaly in the Vatican would be a good signal not only for Catholics.
