In response to the burst bubble of subprime mortgages shaking the financial system of the globe, an economist writing in the Pope’s newspaper, L'Osservatore Romano on December 4th suggests a solidarity bubble to be created by the wealthy countries for the poor countries.
“In order to absorb the financial bubble that is threatening the entire world, they are thinking in the United States about producing a new one – possibly involving energy, or the automotive market – using the only form of liquidity available, Chinese capital. The new bubble would probably ignore even more that part of the world which is excluded from prosperity. But instead of this, a creative economic process of global dimensions could be created that would reestablish more sustainable growth. In other words, a bubble of solidarity that would include poor countries. A humanitarian bubble that would correct the error of the past bubble of egotistical development, the result of the crisis of human values.
“The economic phenomena that are most worrying today, apart from the crisis of liquidity, are: difficulties in getting credit because of the prospect of recession; the negative trend in the stock market; the collapse of demand and consumption; the resulting overcapacity in production and the rise of unabsorbed fixed costs; the specter of unemployment. How can the balance between productivity, employment, and purchasing power be restored, supporting the activity of companies listed on the stock market?
“There is a courageous response, and it's not a short-term measure: to develop the potential demand on the part of poor countries, making it possible for them to participate in the global recovery plan thanks to their unexpressed demand, a demand that would have to be fostered and financed. What this means is a project for a humanitarian bubble. But the problem of how to finance it remains.
“The financial bubble that was maintained until just recently in the United States – that of "subprime" mortgages – was founded on the hope of higher returns and housing values, while underestimating risk. The humanitarian bubble could, analogously, be founded on the hope of higher returns and investment values in countries populated by people full of dignity and wanting to improve their lives. Asia has liquidity, the United States has technology, Europe has heart, ideas, and entrepreneurial initiatives on the small and medium scale. Poor countries have two or three billion candidates for economic progress, who could be the recipients of investment in a long-term perspective.”