Pope and King both proclaim mea culpa
Tactical moves in the great games of theology, finance
by David Marsh
Mon 20 Sep 2010
LONDON (MarketWatch) — A pope and a King both apologized last week – with the aim of gaining strength in hard-fought spiritual and temporal battles that lie ahead. In disparate settings and over totally different policies, they used remarkably similar formulations to ward off their adversaries. A guide, perhaps, to the right approach for monetary policy-making in the months ahead.
Pope Benedict XVI, on a four-day state visit to Britain, revealed that the pedophilia scandal by Catholic priests had come as a “great personal shock” to him. “How was it possible,” the pope asked, “that priests who had been trained for years to be good pastors could fall into this state? The church must show penance and humility.”
Have you heard Hank Paulson or Alan Greenspan saying similar things about the run-up to the collapse of Lehman Bros.? Not quite. They may be the high priests of international finance. But monetary policy-makers don’t normally “do” contrition – for fear of losing credibility.
Ask Jean-Claude Trichet of the European Central Bank, for instance, about the financial turmoil of the last three years. He will tell you, in so many words, that the ECB saw it all coming. A line in a speech at Davos here, a passage in a learned article in the bank’s monthly bulletin there. The message is: “We got things right. Other people, not the central bank, messed up.”
However, Mervyn King, the distinctly monk-like governor of the Bank of England, likes to tread a more saintly path. He came closer than any other central banker to religious-style ruefulness when he told Britain’s annual Trades Union Congress in Manchester last week that the financial sector and monetary policy-makers were to blame for the financial crisis and the recession.
“We let it slip,” said, adding he understood the strength of feeling over the size of bankers’ bonuses and said “radical reform” of the U.K.’s financial system was needed.
Both Benedict and King seem to be showing the right tactics. Neither has gone quite as far as medieval German King Henry IV, who walked to Canossa in January 1077, crossing the Alps barefoot wearing a penitent’s hair shirt, to seek forgiveness from Pope Gregory VII. But, by putting on a show of mea culpa at a symbolic time, they are preparing their own ground for future struggles. And these are fights they mean to win.
In the pope’s case, saying sorry about pedophilic priests will give him the operational and public relations leeway to hang on to a substantial portion of conservative theology without making thoroughgoing practical compromises.
The Vatican chief anyway was under pressure in the U.K. to be on his best behaviour after a senior papal aide ruffled British feathers by saying (a mite insensitively, some might think), immediately prior to the pontiff’s touchdown, that someone landing at Heathrow airport might think they were in a “Third World country.” (It wasn’t immediately clear whether the overly-critical German cardinal was referring to the variety of faces he observed in the Heathrow departure areas or the poor quality of the walkways.)
King, at the TUC, like the Pope in traditionally anti-Catholic Britain, faced a potentially hostile audience when he spoke to the unions in Manchester – only the second Bank of England chief to do so in the TUC’s 142-year history. But – by making no secret of his fundamental antipathy to the unbridled power of big banking – King has won some support from the unions for the ultimate power-game in British finance. This centres on whether or nor the main High Street banks are split up into commercial and investment banking RMS. King thinks they should be. The banks such as HSBC and Barclays think otherwise. And, unfortunately for King, there is little doubt that the banks have the upper hand.
Last week, both pope and King were essentially engaged in gesture politics. Tactically, they may have scored points. Strategically, they have barely advanced. “How many divisions has the pope?” asked Stalin. The same question could be asked of the Bank of England.
With their displays of mea culpa, the pope and the Bank of England may be demonstrating mastery of the laws of tactics. Whether this is enough to propel them permanently ahead in the great games of theology and finance is, however, very far from clear.
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