The following editorial analysis of the raising of the debt ceiling is from the Vatican newspaper, L'Osservatore Romano.
I think it makes alot of sense.
The roots of the crisis and the difficulties of politics
The United States was not able to produce a new “bubble”: they threw in the towel and reached an anti-default agreement, preceded by a real political drama which reconfirmed the liberalistic, but responsible, soul of the country. What does it mean to raise the ceiling on public debt? It means essentially to nationalize private debt, which had become unsustainable. But it also means inflation, more taxes and the devaluation of the dollar. The ratings of the American economy worsen and the cost of debt increases.
We are faced with economic choices of survival, without prospects, not convinced and not convincing. Uncertainty reigns in the real functioning of the global market, and everyone thinks of himself in the short-term. In European countries, there is disagreement – in contrast to the United States – on how to privatize public debt, using the still substantial savings of citizens. In the end, the solution for both economic areas, will not be other than a more prominent role for the State, with the consequence of higher taxes. One could almost say that the political systems want to make citizens regret protected markets and pay for the cost of twenty years of apparent growth.
Not long ago, economic plans were developed in the service of politics. Then, politics became necessary in order to make economic plans. Now, it seems that false economic plans are invented without even attempting the politics. In some countries, there have even been plans for a sort of patrimonial tax in order to have resources which can continue to be wasted, in absence of serious planning. It is as if a doctor, to stop the bleeding, cut the injured artery.
Or if a nation banned childbirth, temporarily increasing the pro capita GDP. Separated from ethical considerations and assuming a moral autonomy, the economy ends up in the hands of people who transform it into an instrument of power, including political power. To paraphrase Sollicitudo rei socialis, these men have sophisticated instruments at their disposal, but they do not have sufficient wisdom and maturity to think of the common good. How politics can get on top of this situation is not entirely clear and there are many difficulties.
The solution to economic problems would necessitate a long-term politics of austerity. But this is an unpopular strategy and risks electoral defeat for whomever attempts to put it into practice. The threat, then is one of choices which are electorally popular but not economically prudent. In Europe, the need to govern the common currency imposes equivalent rules for very different contexts which are unable to be homogenized, and risks producing unsustainable solutions which will aggravate eventual political crises. Looming unemployment in countries with mature economies is the fruit of competitive weakness due to de-localization, which aims to consume more, at a cheaper price. To improve unemployment rates, production should be returned to its home countries. Which would mean, briefly, advantages for producers, but serious disadvantages for consumers.
But are all of these problems really the consequence of today’s economic crisis? Or are we only experiencing the effects of a preceding crisis, which is not economic but has produced economic effects?
In reality, the real crisis has been created, lived and fed by the Western world, in accepting the idea of a man who needs to be satisfied only materially, making him consume.
Ettore Gotti Tedeschi
August 4, 2011