Shortselling and the Archbishop of Canterbury by Susan Easton. From here.
“Practice What You Preach.” It was a headline writer’s dream. The Archbishops of Canterbury and York (the two top prelates of the Anglican Communion) were the keynote speakers in London, last week, at the annual dinner of The Worshipful Company of International Bankers (no kidding). They had been asked to address the topic of the world’s financial crisis.
The AB of York, John Sentamu, decried an “Alice In Wonderland” market in which the share price of banks were not valued on performance, but on how willing the government might be to buy them out. Sentamu labeled those who profited from selling short
“bank robbers” and “asset strippers.”
The AB of Canterbury told the bankers that the financial world had become detached from reality and urged governments to be bold in their market interventions.
One single news cycle later, the Church of England stood accused of having used controversial short selling practices in order to maximize profits on its own £5 billion portfolio of investments. A Church spokesperson immediately denied any dubious financial activity, but the books indicate that there was fire where holy smoke had been detected.
The short-selling claim against the COE came from Ekklesia, a British-based religious issues think tank. Jonathan Bartley, co-Director of Ekklesia, called on the COE to “put your money where your mouth is.” (Another great headline some wag used). Fellow co-Director, Simon Barrow, observed; “Condemning others while playing the system to your own advantage will strike many as lacking the kind of integrity and creative endeavor the churches could be demonstrating.” Barrows is the author of a book entitled, “Is God Bankrupt?” (You can’t make this up).
Ekklesia made its claim based on a reading of the 2007 Annual Statement of the Church Commissioners, the group that manages the COE’s assets. The document records the COE’s holdings in oil and mining companies, banks and properties. The total portfolio
averaged a 9.5% return over the past decade -- and it would appear that COE did benefit from speculation in oil, commodities such as gold and copper, and sterling (the British Pound).
Mr. Bartley said the 2007 Report makes no attempt to dissemble the facts. The COE “hedged against a fall in the value of sterling and set up a currency hedging program in 2006, effectively short selling sterling in the currency markets.”
Now Jesus did say, Give unto God that which is God’s and unto Caesar that which is Caesar’s, but this author can find no New Testament verses regarding the morality of taking a profit by betting that your nation’s currency is going to tank.
Mr. Bartley’s suggestion that the COE should invest in "co-operatives, friendly societies and housing associations which added to the good of the country,” was astonishingly ironic in light of the fact that the Archbishop of Canterbury had recently delivered himself of another of his classic epistles. After causing an uproar by advocating for the incorporation of Sharia law into Britain’s system of jurisprudence only a few months ago, Rowan Williams took a leap by penning an article on economics and ethics for the conservative magazine The Spectator. His premise was that modern societies had turned wealth into an object of idolatry -- like the proverbial Golden Calf from the time of Moses. Wealth had become the worship of that which you made yourself -- an idol (American or otherwise).
The ABC went on to recognize that entrepreneurs “must be allowed to create wealth to help nations rise out of poverty,” but said belief in free market capitalism had now become “a sort of fundamentalism.”
"Fundamentalism is a religious word, not inappropriate to the nature of the problem, Williams explained, then added: “Marx long ago observed the way in which unbridled capitalism became a kind of mythology, ascribing reality, power and agency to things that had no life in themselves. He was right about that, if about little else,” Williams concluded.
For the record, the Church of England’s investments are informed by its own Ethical Investment Advisory Group, over which there appears to be no outside regulator.
Meanwhile, France’s President Sarkozy -- now serving as the rotating President of the European Union -- also had something to say about the current financial crisis. Mr. Sarkozy asserted that it was time for capitalism to be reinvented, this time with a strong dose of morality and a sturdy set of regulatory controls. “Laissez faire capitalism is finished,” Sarko proclaimed. By this he said he meant that the “all-powerful, under-regulated, marketplace was over and about to be replaced.” It was left to the German finance minister, Peer Steinbruck, to coin the term for what comes next: “the multi-polar world.”
Steinbruck is a vociferous critic of the US, predicting that its failure to act in preventing this meltdown would result in its loss of its status as a superpower. He told the German Parliament last Thursday: "The world will never be as it was before the crisis.” He blamed Washington for blocking stricter regulations, even when it was clear that this crisis was going to roll out last summer.
What Steinbruck seems confused about is which group stood in the way of the reforms which could have stemmed the tide of financial collapses. Steinbruck accused the free market purveyors of laissez faire who maintained an above-all attitude as behind this crisis. The record indicates that there is lots of blame to go around, but it was clearly the Democrats who pressed for affordable housing and blocked all attempts to establish rational regulatory policies to prevent wild-eyed and irresponsible home loans from being handed out to people who – under real free market principles – would not qualify for loans. For clarification have a look at: YouTube - Burning Down The House: What Caused Our Economic Crisis?
Late in the week, UK Prime Minster Gordon Brown flew to Washington to sit next to President Bush for a photo op in the Oval Office. Brown vowed that Britain would back the bailout, adding: “America deserves the support of the rest of the world in securing stability in the markets.” Brown had just been up in New York addressing the United Nations where he told the assembly it was time to end “the age of irresponsibility.” Say, who has been running the UK government for over a decade?
I’m thinking just the opposite. Perhaps it is time for us to be more responsible by tossing a few greedy CEO’s and self-interested bureaucrats into Boston Harbor as if they were tea.
If Bill Clinton had good intentions when he sent Janet Reno out to force banks to begin granting sub prime mortgages (or else), then he has proven that old axiom about what paves (or in this case ‘redlines’) the road to hell. And when the Archbishop of Canterbury short sells sterling and finds a silver lining in Marxism, there would seem to be fellow travelers going down the road with us.
BB NOTE: One wonders if TEC has been doing the same? How would we know?