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Today your humble blogger transitions from the subject matter of sinking polls for our “genuine Modernist” Francis and turns to the recently released SUMMARY OF THE VATICAN’S 2014 FINANCIAL STATEMENTS. Yes, the actual financials have not been released to date, as those who have been carefully following this story will confirm. However, if what I have written is not correct, please feel free to send me the Vatican financials link. Apropos the release itself, I have been waiting with bated breath for the actual financials to appear before writing about them, but one week on I guess the summary will have to do. I will use the WSJ post as my source. (see here)
Now on to the subject matter at hand. The casual reader of this blog will recall that your humble blogger has been observing and writing about the Greek crisis over the last month or so. The reason that this blogger has been paying attention to what is happening in Greece, aside from the fact that the current Prime Minister is what can be termed a FrancisPolitician, (see here) is that the root cause of the Greek crisis is exactly that which is plaguing the Bride of Christ. Just as a quick reminder, we have hypothesizes that the crisis in both cases is rooted in the adaptation of an irrational “business/theological” model. This blog has dubbed this “irrational business/theological model” as TransRational. (see here) The reason that I am digressing here is that summary of the Vatican financials confirm this hypothesis.
Furthermore, in the case of the Greeks, the adopted TransRationalism has led to Greece accumulating amounts of debt that the country is not in a position to repay. €9 billion more was added just this past Monday. In the case of the Catholic Church, where debt levels do not appear to be a problem, like they are with the Franciscan Order (see here), this TransRationalism has led to a rejection of a rational philosophical theological basis and replaced it with a TransRational neo-modernism. This TransRational philosophical basis in turn has driven the faithful away from the Catholic Church, which in turn has created problems with the underlying source of income. This source of income is what is known as contributions made pursuant to Canon 1271 of the Code of Canon Law. And further confirmation of the TransRational impact on the Vatican’s finances.
And this is where we pick up our commentary on the Financial summary of the Vatican financial statements that were release last week by the Economic Secretariat.
1) The Vatican ended the year 2014 €38 ($41.8) million in the black.
The Vatican consolidate financial statements are composed of two entities: The Holy See and the Vatican City State.
a) The Holy See finished 2014 with a deficit of €25.6 million.
b) The Vatican City State finished 2014 with a surplus of €63.5 million.
2) Breakdown of financial results for the underlying entities very telling.
If we look at the Holy See as the bedrock of the TransRational Modernist Rome and the Novus Ordo liturgy, while looking at the Vatican City State as the remnant of Eternal Rome, i.e. the museums and tangible assets, we can see what Catholics are willing to support. In other words, Catholics (and non-catholics) will pay an entrance fee to visit the Vatican museums, but will not support Modernist Rome through the collection plate, i.e. contributions made pursuant to Canon 1271 of the Code of Canon Law.
3) Comments about the Holy See financials:
a) In 2014, the Holy See reported € 1 billion in assets that were never reported earlier. The actual figure is €939 million and represents the information that was provided by Card. Pell in late 2014 and that we presented in our post titled Funding: Off Balance Sheet Financing. (see here)
b) All departments, bodies and foundations of the Holy See reported assets of €1.1 billion and liabilities of only €222 million. Therefore, in an accounting sense, the Holy See has an Owner’s Equity of €878 million. On an aside, this is what can be termed as a solid Balance Sheet.
c) It would appear that the net assets of the Holy See are in the form of liquid securities. The reason for this assumption is that since it is stated that if these new accounting practices were introduced in 2013, the operating loss would have stood at €37.2 million. Furthermore, it is difference between the €37.2 m and the 2014 €24.4 million is attributed “largely due to favourable movements in investments held by the Holy See”, this would imply that the rate of return on investments for the Holy See in 2014 was € 12.8 million on net assets of €878 million, or 1.45% per annum. This figure could be explained if the Holy See held a large part of the €878 million in cash, which is exactly as Card. Pell described these missing assets. Furthermore, the observation that a professional investment manager be hired is a very good idea.
d) By far the most interesting information provided, with respect to one of our primary concerns, i.e. the amount of financial leverage that the German Bishops have over the Vatican, can be derived from the information of contributions made pursuant to Canon 1271 of the Code of Canon Law. This amount appears to be a relatively minor income stream to the Holy See, i.e. only €21 million. Therefore, if the entire contribution of all the bishops made to the Holy See (Vatican) only amounts to €21m, than the contribution made by Germany must be a fraction of this amount. We know that the US is the largest contributor to in this source of funds, therefore, if the Germans contribute is 10% (and I am guessing here), it is a relatively large portion. But by contrast, 10% of €21m is €2.1 which is peanuts compared to the German bishops revenues. Please keep in mind that the Germans collected approximately €6 billion 2014. (see here) Therefore, €2.1m of €6.0 billion is roughly 0.0003 or 0.03% of the Kirchensteuer collection. Just to put this figure in perspective, Card. Reinhard “Bling” Marx, the Archbishop of “Swank” spends €13m on a typical excursion to Rome. (see here and here)
e) One other interesting aspect of the €21m Canon 1271 funds is that they decreased from 22m for the previous year. One explanation of this decrease could be the attrition in Church attendance worldwide. If we just treat these two data points as representing a linear progression, we see that this figure represents a 4.54% decrease in Canon 1271 collections at source. And since we know that it is the Western world that the decrease in church attendance is taking place, we can infer that at least this 4.54% was lost in these churches. i.e. Euroland and the US.
f) As to the expense side of the Income statement, we see this interesting fact. It appears that the major expense of the Holy See is personnel. The Holy See has 2880 employed and the expense amounts to 126.6 million euros. This would mean that the salaries and wages expense amounts to €43,958 per head. Now this is what I call a “LIVING WAGE”. The other reason that I mention this fact is that it would be very easy to balance the Holy See’s budget by just reducing the salaries and wages expense by €25.6 million or €8,888 per head. In other words, by reducing the average wage from €43,958 to €35,070, the Holy See is in the black.
And one final observation, the above looks pretty straight forward. Wonder why Francis hired all those outside consultants, like this young lady (see here) to advise him. Any diocesan priest could have done the trick let alone a cleric who managed a diocese, even a South American one.
4) Comments about the Vatican City State financials:
The Vatican City State ended 2014 with €63.5m in profits which was twice that from the previous year (€33m for 2013). One observation that comes right off the top of one’s head is that this doubling of profits most likely came from “better internal controls”.
Here is the thinking. Since the Vatican City State manages the physical (tangible) assets of the sovereign, and the primary source of revenue is from the income-generating Vatican Museums and Vatican stamp and coin office, a doubling of profits from one year to the next can only come via three routes.
One is that the prices charged at the museums and stamp and coin office were doubled, which is highly unlikely.
The second explanation could be that the number of visitors doubled, given a constant rate of purchases of those visitors. We also know that this is most certainly not the case. (see here) Actually, we know this in fact is not the case and have been chronicling that the number of visitors to the papal general audiences and to St. Peter’s Square have been dropping off dramatically in 2014.
Therefore, if the doubling of profits cannot be explained from the income side, (more visitors and doubling of prices), and we know for a fact that there were no cost cutting measures implemented in 2014, i.e. no massive layoffss, so it can’t be explained from the expense side, the only explanation would be that the “controls” over the operations at the Vatican City State that generate that income, have been “tightened”.
And on an aside, speaking of “tightened” controls, I recall a post about a LukeWarm Nuncio who is in exile in Washington DC, who just so happened to have held an executive position in the Vatican City State administration. (see here) No wonder he was so anxious to get back to his old post.
Concluding, I would just like to re-emphasize the two main observations, i.e. the fall in the bishops contributions to the Holy See and the objective observation that while the Vatican City State, a proxy for Eternal Rome is doing very well , the Holy See, a proxy for Modernist Rome, has a revenue problem. Furthermore, a secondary observation is the German Catholic Church makes a relatively minor contribution to the Holy See, compared to the income that it generates through the Kirchensteuer.
I will leave off here, but please reflect on these two issues, since I will return to them in a follow-up post. Please further reflect on the REALITY that the VATICAN from a financial perspective, is in a very solid position.