Bankers' moral, cultural responsibilities

The book by HSBC chairman Stephen Green, Good value: reflections on money, morality and an uncertain world has been highlighted by our very own Fr Peter Serracino Inglott.

Fr Peter's reputation as a loving teacher and philosopher is well deserved. I wish to see him write more on economics, especially on the moral and cultural responsibilities of bankers as analysed by Pope Ratzinger. In a prominent article in the Financial Times, Christopher Coldwell wrote that the Pontiff made "a convincing case that the recent financial failures are best understood in the context of a wider moral failure".

A very recent book on Goldman Sachs, The Partnership: A History of Goldman Sachs by Charles D. Ellis says (inadvertently) a lot on moral decadence. It contains a devastating statement by a top Goldman banker, which spells out the moral philosophy of some, but definitely not all, bankers of that extremely successful institution.

This statement has revealed its aggressiveness in high finance at times reaching comic proportions. Is the US the dog which wags the Goldman tail, or is Goldman the dog which wags a tail called America?

A prominent Goldman banker had the temerity to say that honesty was only one way of dealing with people. He probably meant that the Goldman banker was expected to sleep with The Prince of Machiavelli as interpreted at Harvard, under his pillow. 'The Prince' was taught and analysed wrongly in old Harvard MBA programmes.

There is now widespread protest proclaiming that faulty MBA courses were behind the subprime banking mess and the Enron financial catastrophe. No book has had a greater influence on interpersonal relations than The Prince of Machiavelli, and no book has been more difficult to interpret.

Moral decadence was certainly at the base of the great subprime banking upheaval. The subprime rout was incidentally supremely convenient for a US fighting the stranglehold of a rising price of oil and gold. These two commodities, one of which is also a currency, were promising to destroy the dollar, if not the American economy. That country has natural oil reserves of only about 10 years as revealed by The Economist.

Oil could only be put down a year ago by massively deflating the world economy. This deflation had already begun almost two years ago, when it was discovered that the world economic system was becoming clogged as banks were no longer able to lend to each other as they could not trust each other's balance sheet. Derivative off balance sheet credit creation had gone out of hand. That is in more prosaic form, banks had become such liars that they refused to listen to each other's lies.

This is the moral decadence which led to the subprime rout, along with the deluge of economic and financial inconsistencies which came out of the mouth of great central bankers, Trichet not excepted.

Mr Azzopardi Vella, economic consultant with DBR Investments Ltd, has promoted the Malta Development Fund and advised S & P.

johnazzopardivella@hotmail.com