LOFT The Nordic BOOKazine Volume#9, Editor’s note

I have always felt like the black sheep of the family, in spite of the name Pio – from the latin ‘pius’, a kind, dutiful, devout man. Having passed the mid-life marker, although slightly less rebellious, I realize that under the ashes the fire is still smouldering.

As a man weathered more by the street than by science, I feel a rising rage against the brutish actions of financial, political, and religious powers that clash even against common sense. Governments are taking measures to counter a financial crisis with bills that often go under the common name of ‘stimulus package’, reminiscent of the abstract fogginess of our teenage discussions on how we, totally inexperienced males, should approach female erogenous zones.

The parallel could stop here if it weren’t for the realization that the present crisis’ trial and error period will be long and painful because we started off with the wrong foot forward. I’ll attempt to support my distrust with a few arguments and some examples.

   I can’t help noticing that these measures planning on long-term expenditure on infrastructure, education and technology have an ironic short-term commonality – they reward the actors if not the outright originators of the crisis.

   The globality and urgency of the crisis has created a frantic search for solutions and fatally combining the incompetence of the legislators with that of those responsible for the crisis.

   Let’s look at the role of the banks that are supposed to lend money and, in return, earn a premium for the credit risk. Those who run these institutions, as well as pension or investment funds, claim to ‘know’ how to manage economic risk, having developed, together with economists, elaborate mathematical tools to manage the risk of a loss in their financial assets. Unfortunately, haphazard instances of success have induced them to complacently believe in their own (unproven) professional ability and in their ‘so-called’ predictive models, rather than viewing it as sheer luck.

Simply put, financial leaders and institutions have taken huge risks with their clients’ money and, despite their lack of qualification, have continued to earn shamelessly large salaries and bonuses. Furthermore,other institutions that were supposed to be society’s safety net, like the European Central Banks, the US Federal Reserve, or the IMF (International Monetary Fund), conditioned by a long practice of ‘I-scratch-yourback- you-scratch-mine’, not only approved this laissez-faire attitude, but continued to loan money to institutions that were taking risks far beyond the acceptable.

   And so we come to our politicians. Because this close-knit circle would not be complete without including callous politicians, performing their customary role of sleepy doorkeepers, but finally forced to stir from their lethargy, have with noisy indignation closed the doors of the barn once the animals had escaped. Sanctimoniously, they have decreed that the fault lines arose from greed and ignorance, and since these vices are widespread, the responsibility for the errors leading to the crisis belongs to everybody, and thus to nobody, in any case especially not to them.

   Does it not feel like we are in the middle of a scene from a tragicomic ‘Comédie humaine’? The ‘Originators of the credit’ — bankers, fund and asset managers, loan sellers are having an incestuous ‘affaire’ with the ‘Controllers of the credit’ — governors of central banks, finance ministers, boards of directors, and the like. The relationship has been sanctified in a ‘stimulus’ marriage celebrated by the ‘Protectors of public interest’ — the politicians, who were either absent from duty or plainly incompetent, as the crisis has shown without a doubt.

Am I grossly over-generalizing?

   Yes, of course. Not ALL of them were so bad, only 95 %.

   Highly instructive is the ‘reward for failure’ given by the comatose (now on the verge of bankruptcy) Royal Bank of Scotland to its CEO, Sir Fred Godwin, who stepped down on the 1st of January, 2009. He receives a pension estimated at £20 million (GBP) while the Royal Bank of Scotland, under the leadership of Sir Fred posted a loss of £24.1 billion, the biggest ever in the history of the United Kingdom.

   And there are additional illuminating examples of such hypocrisies. Although some of them occurred in progressive Sweden, they apply equally everywhere and illustrate the case of political, financial and religious leaders acting virtuously in public and behaving quite the opposite ‘behind closed doors’.

In autumn 2008, in an international televised debate, the Swedish Finance Minister Anders Borg thundered against greed and bonuses, arguing that they have played a major role in the crisis by encouraging the banking and financial world into higher risk taking. But only a few days ago, in an astounding somersault of reasoning, he and the center-right government of Sweden have changed their tune, erasing the clauses of “general opposition to bonuses” and “no bonus is allowed in case of loss”. For good measure, the government has added a new clause “no roof to the amount of bonuses”. Immediately thereafter, the usually slow-reacting boards of directors of two of the four AP state pension funds ‘approved’ an increase in the top executives’ bonuses from two to four months of their salaries! When journalists asked the wishy-washy Swedish Minister of Financial Market, Mats Odell, a formerly loud antiincentive crusader, why give a bonus to these managers who, in the last year, had lost 100,000 crowns of every Swedish citizen’s pension, he candidly answered that in a competitive market one has to encourage loyalty in valuable fund managers (sic!).

But what if their reckless behaviors, for which they are being rewarded bonuses, could cost human lives? An example of this is the case of Hans von Uthman, responsible for nuclear power stations at the state-owned Vattenfall. He receives a yearly bonus of several million crowns based on the company’s profits even though, after two consecutive accidents at the power stations in 2006, their own internal investigation reported that the security breaches leading to these accidents were a consequence of degradation in the firm’s security culture. Isn’t it remarkable that the highest officer of a nuclear energy company, where accidents could have a devastating social and environmental impact, gets a bonus related to profitability and not to security?

Another instance relates to Annika Falkengren, head of SEB, one of Sweden’s largest banks, who in the midst of the crisis most generously proclaimed that she would renounce her bonus. Yet, despite having posted an appallingly negative 2008 SEB year-end result, we have learned that in 2009 she will increase her salary as well as that of the top executives by up to 25 %. Luckily, there is a reason to smile. Thanks to quite a few days of intense media and public protest (the politicians were too busy), the announced increases in the salary and bonuses of SEB and AP Fond executives have been canceled, at least temporarily.

And such hypocrisy is not restricted to our financial and political leaders. I cannot omit the role of religion, taking the lead from Cecco’s sonnet where he refers to a jocund Pope who wishes to consign his ‘Christian flock’ to a state of intoxicated oblivion. So, let me add a couple of examples by religious leaders that defy reason. In the wake of Britain’s Bishop Richard Williamson denying that the Holocaust occurred and the continuing drizzle of pedophilia among Catholic priests, I refer to the reaction of the Catholic Church to a recent incident in Recife, Brazil. On March 4th of this year, a medical team performed an abortion on a nineyear- old girl, pregnant with twins, having been raped by her stepfather for two years. The Catholic Church’s amazing reaction? Brazilian Bishop José Cardoso Sobrinho excommunicated the doctor, the girl’s mother and the medical team, but not the rapist, because, in his words “abortion is a graver act”. To add insult to injury, one of the high-level Vatican clerics, Cardinal Giovanni Battista Re, Prefect of the Congregation for Bishops and President of the Pontifical Commission for Latin America, reiterated that the twins had the right to live, supporting his colleague’s utterance that “God’s law stands above those of man”.

When I hear these words of ‘men-of-god’, oblivious of a raped little girl, I denounce such fundamentalist Christianity as an invention of priests’ bigotry, which turns religion into a tool of enslavement, alienated from humanity.

   Now after 700 years we witness the fulfillment of the wish of an obscure medieval troubadour, Cecco Angiolieri, “I’d make all Christians drunk”, presumably so that they are in no state to question the Church’s brazen abuses.

Yes, the religious fundamentalists, whether Christian, Muslim or other, are drunk, intoxicated by their power and idiotic laws created by men who believed that they could be the word and the arm of God.

   I don’t know if there is a God, but if there is one, I doubt that this God would have any resemblance to the man-made God — fearful, sad, lonely, male, vengeful and bloodthirsty.

In the end, many more of such crimes against humaneness will be uncovered and some of them may be rectified. However, I am optimistic about our ability to “Be the change that [we] want to see in the world”, in the words of one the world’s great humanists, Mahatma Gandhi.