Warren Buffett once called them “financial weapons of mass destruction.” Now Pope Francis, of all people, is taking aim at derivatives.
"For all nations have drunk of the wine of the wrath of her fornication, and the kings of the earth have committed fornication with her, and the merchants of the earth are waxed rich through the abundance of her delicacies." Revelation 18:3 (KJV)
EDITOR'S NOTE: Pope Francis, who rarely misses a chance to miss the chance to preach the gospel of the grace of God, never misses the chance to pontificate on such biblical topics like global capitalism, credit default swaps and income redistribution. Not finding those topics in your King James Bible? Well, they're not there, just like the office of a pope, a ruling class of priests, and a magic cookie that becomes the 'body of Christ' aren't there either. Ruling over Babylon is not enough for Francis, he desires to be the king that Revelation 17 says the Roman pope will be.
In a sweeping critique of global finance released by the Vatican on Thursday, the Holy See singled out derivatives including credit-default swaps for particular scorn. “A ticking time bomb,” the Vatican called them. The unusual rebuke -- derivatives rarely reach the level of religious doctrine -- is in keeping with Francis’s skeptical view of unbridled global capitalism.
“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. 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," the Vatican said in the document.
CLICK TO READ WHY THE CATHOLIC CHURCH WAS NEVER A CHRISTIAN ORGANIZATION
The critique echoes comments made by Buffett in 2003, when he criticized the “unchecked” expansion of the derivatives market. Francis has been a critic of Wall Street in the past. He has called for regulating speculative financial practices and reining in the “absolute power” of the financial system, which he said would bring more crises.
The Vatican said that in certain areas of the derivatives markets there’s an “ethical void which becomes more serious as these products are negotiated on the so-called markets with less regulation (over the counter) and are exposed more to the markets regulated by chance, if not by fraud, and thus take away vital life-lines and investments to the real economy.”
A similar assessment can be “applied for those uses of
credit default swap (CDS: they are particular insurance contracts for the risk of bankruptcy) that permit gambling at the risk of the bankruptcy of a third party, even to those who haven’t taken any such risk of credit earlier, and really to repeat such operations on the same event, which is absolutely not consented to by the normal pact or insurance," according to the document.
Income inequality is a priority concern for Francis, who has made humility a distinguishing feature of his papacy. He refused to live in the opulent Apostolic Palace, choosing a guest house for Church officials near St. Peter’s Basilica instead. He uses an old Ford Focus to get around the Vatican and Rome.
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