If I lend to some who is unable or unwillling to repay me, who is culpable? I surely am culpable for placing temptation in his way and for being foolish enough to give to be pared from my money.
I have a great sympathy for the Greeks who thought they had found a never ending source of wealth, which they took and redistributed and now find they, their children and grandchildren are being harassed for what is now been termed as the profligacy.
Nowadays it is almost impossible for us to understand the detestation Christians of an earlier age had for usury. For us, it is if anything, a theological curiosity. However, if the payback the EU is demanding from Greece is going to cripple her for several generations. If it is going to reduce pensions, seriously damage education and healthcare, undermine policing and justice, and bring about misery and serious damage the family, then the effects surely are the same as usury.
Perhaps we need to look again at Usury and rediscover why we had such problems with it for 1,500 years. Perhaps as a Church we need to examine our consciences about our use of money, most of us would be considered excommunicate by Bonaventurre or Aquinas. Are we just too happy to play the bankers game?
37 comments:
Timeo Danaos et dona mendicans.
The rule about usury is really quite simple. Any two quantities of the same fungible good are of equal value if, and only if, the quantities are equal.
Thus, regardless of the agreement of the contractants, the contract for the principal sum is repaid as soon as the aggregate repayments equal the principal.
Any amount exacted beyond this is usury unless there is a promise to pay it supported by valuable consideration moving from the promisee, different from the principal and additional to it.
The problem with Greece is that the country's a member of the Euro.
One day, Jesus was asked "Is it lawful for us to pay taxes to Caesar, or not?"
He said to them, "Show Me a denarius. Whose likeness and inscription does it have?" They said, "Caesar's." And He said to them, "Then render to Caesar the things that are Caesar's, and to God the things that are God's."
So the moral rule about taxes is that they are properly due when levied in the lawfully prescribed amount of what has been issued out of the public treasury.
Only the European Central Bank authorises the issue of Euros, but it is not the taxing authority. The State is. So it seems that you don't have to pay taxes denominated in Euros.
just out of interest Father I currently work in investment banking (albeit on the admin side) am I excommunicate?
Oh Jack, as you know I am always saying, "Who am I to judge?"
If you work in investment banking you're not necessarily excommunicate.
All you have to do is to find a camel and pass it through the eye of a needle, and you've made it.
In defence of our dour cousins from Deutschland the Hellenise DID lie through their teeth to get into the Euro in the first place, and to acquire the debt they owed. Having said that it would have been kinder to cut the greeks from the Euro years ago and let the markets sort things out, part of the problem has been an ideological mindset on the part of the ECB and co that the Euro must prevail no matter the cost (although admittedly the Germans aren't singing that line with such enthusiasm any more) and hence the Greeks were given bailout after bailout ............
As a retired bank official I was often faced with the dilemma of someone who wished to borrow money - perhaps for an energy bill. My first thought was always the capability of the borrower to repay the loan, not out of causing harm if they could not pay the bill without the loan but simply that by granting a loan we would be replacing one debt with another to which would be added interest. The question of usury is interesting until you realise that, effectively, banks do not have money, they simply hold funds belonging to those with unused funds and, as we all know, unused funds gather interest. Interest was always explained to me as the 'wages' of unused funds.
Returning to the lending of money. Unless a borrower can reasonably easily repay a loan then lending funds is not helping them. One should always 'cut one's coat to suit the cloth'. The same is true of the Greeks but the main culprit in causing the situation was the European Central Bank which made the loan without making basic checks regarding repayment. Regardless of the Greeks lying or not the ECB had a duty of care to ensure that loaning funds did not overburden the Greek economy when repayments became due. 'Just another mad Catholic' is, sadly, right in saying that "the Euro must prevail" and this has been seen throughout the EU when the Euro was first issued. Prices rose as did wages but not necessarily in the same percentages.
Thank God we did not join the Euro and' hopefully, we will withdraw from the EU after the promised referendum.
Walter Kasper demands debt forgiveness for middle class divorced German Catholics. I don't hear him campaigning for the same in his own country in respect of the Greek people. Recently, I heard a priest extolling the virtues in a sermon of a Times article in which Timothy Radcliffe advocated killing more Muslims. Curiously, Tim's dear relative and Catholic toff Louise Mensch (who stands to benefit from the restructuring of divorce debt come October), celebrated the collapse of the Greek economy on social media by describing the Greek people as "disgusting".
21st century Catholicism - don't you just love it?
Timeo Danaos et dona MENDICANTES.
David O Niell
I'm sure that the ECB did make checks at the time, it was just that the checks used by everyone (right up until Lehman brothers it seems) just weren't good enough, and only realised that they weren't good after the horse had well and truly bolted.
Also the Greeks in part brought it upon themselves with their ludicrous employment policies and totally laissez faire attitude to tax evasion (although I'm told that in the Med tax evasion is considered something of a national sport. I guess the Greeks might need to get down on their knees to help pay the fees.
Father,
You raise also the issue of judgement, tongue -in cheek though it may be. Judgement is something we use a hundred times a day. Distance, speed, risk, danger, honesty, when eating/drinking, when working, in fun, in morality, in committing or not committing sin. We judge using our God-given intelligence, insight, knowledge, experience. Not to do so is a denial of this God-given ability.
I suspect that so many of the worlds ills at present are because so many have lost the will or inclination to judge. the sooner we all get back to judging the better. The sin not the sinner of course!
The Greeks can never pay back what they owe. They know that. The ECB knows that. And yet the Greeks go back to the ECB asking to "borrow" more. It is nonsense to "lend" them any more money and they will have to find some other way of managing the Greek economy. I certainly would not lend them anything and they would have to pay in advance before I would supply any goods to them. They could ask me for charity and I would not want to see any of them really suffer but I would make it clear that I was not lending them anything.
Forgive me if I utter a 4-letter word!
Wonga
What I do not understand is the reason why the defaulting by the Greeks should mess up the Australian economy.
JAMC,
The way it's been explained to me is that all interest is usery in a society where there are no capital markets. But once there truely are capital markets, the time value of money becomes part of the loan since a person holding that capital could reasonably expect a certain rate of return with very little risk over the course of a period of time(say, the amount payed by a municipal bond or index fund per year). At that point, the time value plus inflation become part of the true value of what is being loaned. So if municiple bonds are paying 4% and inflation is 2%, then principal plus 6% is noy usery. Amounts above that amount are usery, think 19% on your credit card.
The old way of profiting off of capital, apparently, was simply sharing in the profit of a venture based on a agreed upon rate. So if you put in all the money for someone to take a ship to the West Indies, but that person did all the work, you would get your money back plus a share in the profits (say 50%).
Maybe it's time to remake the Jewishness of living. It has been a problem all along for many centuries, and it IS what makes Banks a pain to live with and likely the worlds nations to undergo much suffering. So remove usury remove banks. It is not capitalism, it IS USURY!
Nearly all the money in circulation exists only because it was lent into circulation by the banks and didn't exist before it was lent.
Why should governments go into debt when legislatures have the power to create money by law - debt free - and declare it to be good for the payment of taxes.
As Shylock put it,
If you repay me not on such a day,
In such a place, such sum or sums as are
Express'd in the condition, let the forfeit
Be nominated for an equal 453.592 grams [to conform with EU regs]
Of your fair flesh…
Greece is only the everyday condition of many individuals who go to the loan-sharks to get money to pay off their credit cards/banks/mortgages/hire purchase etc. Nations and citizens live in spiralling debt which ends up in poverty, homelessness and demanding their loans be written off.
In a year when we are to see £12 billion worth of austerity measures being taken in the UK, should we should tell Greece to forget the 10.8 billion they owe the UK banks?
Feeding the hungry, homing the homeless etc is a duty we should perform, albeit it seems to be treating the symptoms and ignoring the causes.
My old mum was the world's best economist, 'If you can't afford it, you can't have it' ...Simples
This rhetoric must stop. The Greek people, and their polititions want the rest of Europe to maintain them in the North European standard of living to which they, the Greek people, have become accustomed.
This is wrong and dishonest. They should, like others, earn their living, and live at a level they can earn and sustain. The vulnerable and hungry apart, always a separate issue for Catholic, is another matter.
They borrowed knowingly and refuse to repay. That is dishonest and the rest of us, whether banks, or governments or taxpayers, should ensure they face the consequences of their dishonesty.
This applies to the rest of "poor" who seem anxious to come to Europe in, potentially, their millions. This is not possible otherwise and regardless of whether the climate in warming or cooling, the shear numbers will overwhelm this little part of the globe.
We need to consider the message of Laudato Si, namely that we must all, including the Greek people, reduce our consumption to a long term sustainable level and that will probably be below that of the current level of the Greeks.
Not a nice message, but there it is.
But the paying of interest on loans surely just can't be wrong. Is every mortgage holder and every business complicit in sin? I accept the 1500 years argument, but I simply don't see how this can apply to present day conditions. We need a theologian, or a saint, to show us how to apply the traditional teaching.
I think it is really important to look at what is usury - where it begins and where it ends. Both Hilaire Belloc and Elizabeth Anscombe wrote interesting essays on the subject which are highly relevant. It is not an easy subject but it would be great to have clear moral guidance on the subject. Credit card scams charging 19% and more are a disgrace and as for pay-day loans! We try and control the excesses of capitalism by ever more complicated regulation but ignore preaching simple morality; morality about usury, honesty, lying, gambling, fraud etc. Levying fines on financial institutions that flout regulations get us nowhere. What is needed is prison. The Portuguese chairman of Lloyds bank recently had his bonus reduced by some £300,000 as a result of the misdoings of people in his bank. Hard cheese when his bonus was £11,000,000. Why were the people directly responsible for the misdoings not sent to prison? They do that in the USA but not in the corrupt UK.
It`s the accepting of interest that worries me. How can I accept bank interest on an investment, when that interest comprises profits from pharmaceutical companies ( including abortifacient and contraceptive products), from the manufacture and sale of arms, from pornography? The whole system stinks. Best to keep the savings under the mattress or give the money away.
JAMC says that all interest is usury in a society where there are no capital markets. But once there truely are capital markets, the time value of money becomes part of the loan.
This is incorrect. Time value is about the subjective disposition of an individual to prefer a hundred pounds today to a hundred pounds in a year's time. It has nothing to do with commutative justice, which is about the exchange of one thing for another according to strict equality of value.
The general rule is that equality of exchange value is according to the agreement of the contractants. But this does not apply where quantities are of equal value by definition (as with two equal quantities of the same fungible good) or by public policy (as in the case of the family wage).
The political economist Fr Heinrich Pesch SJ defined usury as "the contractual appropriation of obvious surplus value in the process of buying and selling." (Ethics and the National Economy, p85). Thus a moneylender who, having contracted for the return of the principal, demands interest without having supplied valuable consideration in return for a promise to pay any, is a usurer, as is the employer who pays his workers less than the family wage which the law does, or ought to, prescribe.
But where there are capital markets, it becomes common for investors to use money to purchase shares in the equity of a business. These investors are not moneylenders, since they contract, not for the return of the principal, but for the purchase of equity. They undertake to share in the profits and in the losses of the business.
Jane is worried about accepting bank interest on an investment.
This is a case of a deposit account which bears interest and where you have to give so many day's notice before you make a withdrawal.
The arrangement is that the bank promises to pay you interest in return for a promise not to demand your investment without giving contractual notice. Your promise to the bank counts as valuable consideration, and so you have a valid contract for interest.
There is a neat cautionary adage: if you owe the bank £10,000 that's your problem; if you owe it £10,000,000 that's their's .
In 2010 it was claimed, and is still claimed today, that the Greeks 'cooked the books' to get into the Euro. If the true figures were known at the time they would never been allowed in. Their standard of living once in the Euro went up 100%. If anyone takes time to look at what was going on their mouth would fall open e.g., I read in the Observer, I believe, that when a Greek became unemployed they were entitled to full pay for one year - Not surprisingly there were many scams based on this one.
My own opinion is that there is much blame to be parcelled-out among all the players, not only the Greek people and their government. An acquaintance of mine declared bankruptcy not long ago and the first item he received in the post following his insolvency was a bank credit card. I suggest the Greeks were tempted and fell into the EU trap. There, but for the Grace of God, are we all.
Remember too that whenever any policy, membership, or treaty of the EU was put to the democratic vote of the people, it invariably failed. Recall the Treaty of Lisbon rejected by Irish voters and other states which permitted a vote. The other EU States were roped in by their parliaments or other governing bodies without a plebiscite or referendum. Ireland was forced by the EU and national politicians to re-vote on the Lisbon Treaty after having first rejected it.
Finally, may I suggest that NATO cannot afford to let its southern flank slip away with escalating tensions in Ukraine and Turkey a coquettish ally. NATO needs Greece to be stable and has a vested interest in assuring Greece remains within NATO otherwise and will not want to risk anarchy in Greece from a financial Sarajevo.
Yes, vetusta, and that neat cautionary adage came from none other than John Maynard Keynes.
FWIW, Zippy Catholic has an excellent series of posts up discussing usury in Catholic moral teaching: https://zippycatholic.wordpress.com/category/moral-theology/usury/
He concludes that the Church has never reversed its condemnation of usury and that it remains morally wrong in almost every conventional case. He does not, however, include interest on a loan used to purchase property which itself becomes the collateral as usury, because he sees this, basically, as rent paid to the partial owner (the bank) for the use of the property.
There are some good explanations on the internet of why charging interest in modern conditions is not usury, why the Church's teaching on this subject has NOT changed and why the underlying principles are still applicable. Dissenters, of course, want to claim that the Church has changed its teaching. They argue that if this teaching could be changed, then so could the teaching on contraception. Google "usury", "Catholic", "Noonan". John T. Noonan was a lawyer who tried to use just this argument.
The mercantilism and commerce, which replaced the supernatural presence that had hitherto imbued Western Civilization under Catholicism, has reached its natural conclusion - a humanistic society where everyone owes mammon, and no one owes Christ the King a thing.
Fr Coulter defines usury as charging interest *without just title*: i.e. it is not just charging interest per se. There can be factors for which one may charge more than the principal.
If I lend money for a year at 3% interest and inflation is 25% p.a., as it was in the 1970s for a brief period, I do not get back what I lent at the end of the year. I get less.
Yes I would like to learn more about the Church's teaching on usury. I know when I worked for Arab Bank they called interest rent. So a borrower paid the loan principle and rent. It was simply interest by another name. I am not sure how inflation is factored in or if including it is usury. What enabled non Christians in the Middle Ages to act as money lenders was not being bound by laws against usury. Perhaps it is the media but I though years ago when Greece and Italy joined the EU they lacked the self discipline and had a culture of tax evasion that would ensure overspending. They saw the EU as a gravy train. Has anyone heard the Greeks say they apologise for overspending? No... they assume the EU wants them. I am anti EU because I recall it was about free trade alone. Not political unity with a wasteful European Parliament. Not liberal immigration laws and the French and German conquest of Europe.
RJ quotes Fr Coulter who defines usury as charging interest *without just title*.
In line with my previous explanation, you have to distinguish the contract for the principal from the collateral contract (if any) for interest. Since any two equal quantities of the same fungible good are of equal exchange value by definition, the only way there can be a just title to interest is that the borrower promises to pay it in return for which some valuable consideration moves from the promisee.
If the promise or the consideration is lacking, there is no contract, and thus no title.
On this analysis, we can explain the Old Testament ban on interest in terms of a provision that a contract for interest collateral to a contract for the principle is contrary to the public policy of the Law of Moses.
Did the Welsers and the Fuggers, early 16th century bankers , exact interest from the Popes whose elections they financed?
Should the Bard have the last word ?- "Neither borrower nor lender be, for loan oft loses both itself and friend, and borrowing dulls the edge of husbandry".
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