Pope Francis has more pressing concerns than excess leverage in the global financial system. Yet the new leader of the Catholic Church has both the experience and the principles to help overcome the current debates on austerity versus stimulus.
The experience stems from Argentina's sovereign default in 2002. Francis, then Jorge Mario Bergoglio, was the leader of the nation's Catholics. The church took a strong line against slavish efforts to repay debts fully, and against reckless cuts in programmes which helped the nation's poor. Thomas Trebat, a professor who studied the episode, concluded that the Church helped avoid a difficult situation turning into a disaster.
Of course, Argentina was a middle-income country which had put too much trust in a fixed exchange rate. That is quite different from the rich countries now smothered with debts, which expect too much from monetary and fiscal policy. But the economic malaise might end sooner if Francis could persuade governments to follow Bergoglio's two main principles.
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Second principle: mistrust finance. The trade's best thinkers designed Argentina's disastrous dollar dependency, the deregulation which allowed credit to increase to dangerous levels before the crisis, and then the unjust save-the-banks recovery plans. All these arrangements have a common theme: sticking to financial dogma was considered more important than finding social justice.
Francis took his papal name from the saint who sought enlightenment through poverty, Francis of Assisi. He will no doubt remind the world that finance shouldn't get in the way of higher duties. Right now, a global deleveraging would cause losses, but would make the global economy healthier. Francis could help design a just way to do it.
