There are occurrences of rich irony that require pause and present reflection. One such occurrence emerged from the darkness and into the spot light earlier this week. We could hardly believe our eyes…
“A Vatican monsignor already on trial for allegedly plotting to smuggle 20 million euros ($26 million) from Switzerland to Italy was arrested Tuesday in a separate case for allegedly using his Vatican bank accounts to launder money,” reported AP.
“Financial police in the southern Italian city of Salerno said Monsignor Nunzio Scarano, dubbed ‘Monsignor 500’ for his purported favored banknotes, had transferred millions of euros in fictitious donations from offshore companies through his accounts at the Vatican’s Institute for Religious Works.”
Here at the Economic Prism we’ll chalk this up as more evidence we are living in the epoch of mammon warned of in the New Testament. “Ye cannot serve God and mammon,” reported Matthew from the Sermon on the Mount.
How else can one explain a world where everyone – including a high ranking priest – is out to get theirs? Obviously, earning money by honest means is no longer a generally accepted rule for living with integrity. What’s more, this mendacity carries down to the very underpinnings of our government fiscal and monetary system.
Book Deals and Directorships
As far as we can tell, Monsignor 500’s actions are akin to the hanky-panky going on between the Federal Reserve and the Treasury. The Fed creates fictitious money and loans it to the Treasury. The Treasury uses the fraudulent money to paper over its deficits and sprinkle out benefits to people for things the populace can’t afford.
How is this any different?
One important difference is the priests actions do not produce economic distortions the world over. They do not monkey down the price of money and monkey up the price of assets. The same can’t be said for the Fed’s and Treasury’s shenanigans.
Another key difference is rather than sending the scoundrels to the hoosegow and throwing away the key, former government officials are given book deals and directorships at private equity firms. No kidding. This is exactly what happens…
Take former Treasury Secretary Timmy Geithner, for instance. He’s been out of office for a year. When he finishes writing his book on how he transferred taxpayer funds to private corporations during the financial crisis he’ll join Warburg Pincus as president and managing director in March.
Debt Downgrade Retaliation
Yet what does Geithner know about managing investments or directing a private company? He’s been bouncing between the Treasury, the Federal Reserve, and the International Monetary Fund since 1988. His expertise is more suited to committee meetings, issuing government debt, and orchestrating bailouts.
Naturally, his insider connections are more valuable than his experience managing money. We wish the man the best in his new endeavors. However, before we close the doors on his old line of work, there are some lingering incongruences that need to be straightened out. Here’s what we mean, as reported by Business Week…
“Former U.S. Treasury Secretary Timothy Geithner told McGraw Hill Financial Inc. Chairman Harold W. McGraw III in 2011 that Standard & Poor’s downgrade of the U.S. debt would be met by a response, S&P said.
“S&P filed a declaration by McGraw yesterday [Tuesday] in federal court in Santa Ana, California, as part of a request to force the U.S. to hand over potential evidence that the company says will support its claim that the government filed a fraud lawsuit against it last year in retaliation for its downgrade of the U.S. debt two years earlier.
“In his court statement, McGraw, 65, said Geithner called him on Aug. 8, 2011, after S&P was the only credit ratings company to downgrade the U.S. debt. Geithner, McGraw said, told him that S&P would be held accountable for the downgrade.”
The Justice Department lawsuit came shortly after. Could it be this is all one giant coincidence?
‘“The allegation that former Secretary Geithner threatened or took any action to prompt retaliatory government action against S&P is false,’ Jenni LeCompte, a spokeswoman for Geithner, said in an e-mailed statement.”
No doubt, Ms. LeCompte was crossing her fingers behind her back.
for Economic Prism