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For those who have not noticed, on this day, the Vigil of the Solemnity of Sts. Peter and Paul, the European continent is in the middle of a major existential crisis brought about by the successful BREXIT vote.
And while we are on the subject, the below is a video of Nigel Farage asking the TRANSRATIONAL European Parliament to act RATIONALLY. From the response, this is highly unlikely.
But back to the subject at hand: BREXIT
On the surface, the nature of the crisis appears to be of an economic and political nature. However, when reading through the analysis about what could have precipitated this crisis (ROOT CAUSES), one quickly begins to understand that the crisis is basically on a much deeper level.
One can correctly assume that the European crisis is of a philosophical nature. And by the term “philosophical nature”, I am referring to the definition of philosophy as: the study of acquiring knowledge. The antithesis of PHILOSOPHY in this case is IDEOLOGY. For a further treatment of this “binary opposite” to use a structuralist’s designation, please see here.
Today we start with a post that appears on the Zero Hedge website titled: The First Casualty Of Brexit: Italy Prepares €40 Billion Bank Bailout. (see here). In the post, we can read the following passage:
The new bail-in reform this year has brought matters to a head, catching EU authorities off guard. It was intended to protect taxpayers by ensuring that creditors suffer major losses first if a bank gets into trouble, but was badly designed and has led to a flight from bank shares. The Bank of Italy has called for a complete overhaul of the bail-in rules.
The reason why I bring this passage to your attention is to demonstrate the underlying IDEOLOGICAL nature of the “bail-in” reform. The reason why it can be inferred that the “bail-in reform” was based on IDEOLOGICAL considerations, as opposed to a PHILOSOPHICAL foundation is due to the “design flaw”. For any economist worth their proverbial salt, this glaring “design flaw” was blatantly apparent and commented upon widely. (see here and here)
If one wants to drill down into how such a fundamental mistake could have been made by seemingly rational and intelligent individuals, one of those involved in an advisory capacity was the Jesuit “trained President of the European Central Bank, one Mario Draghi, a good place to start is by examining how these people define the REALITY in which they function. In other words, the reason why the drafters created the regulatory mess is that they ran afoul of the LEX ARMATICUS, i.e. that which does not conform to the et Invisibilium, will be consigned to the trash heap of history.
But back to Mr. Draghi. As a individual with a background from the Jesuit run Massimiliano Massimo Institute (see here), Mr. Draghi no doubt would have been exposed to the philosophy of St. Thomas Aquinas. If he would have recalled that material, he would no doubt not have allowed his friends (employers) from making this sort of fatal mistake. And just to finish the story, the results of that fatal mistake just cost the Italian Treasury, i.e. the Italian taxpayers €40,000,000,000 (~$44,000,000,000).
But let’s get back to the philosophy of St. Thomas. What St. Thomas’ philosophy would have provided Mr. Draghi and his employers is the universality and scope of his insight into reality, an insight that has a perennial (lasting for an indefinitely long time; enduring )value. To be more precise, what Thomism would have provided Mr. Draghi is a better insight into what constitutes OBJECTIVE REALITY.
This might be a good point at which to explain the finer points of Thomist methodology. I will use the book titled THOMISM FOR THE NEW EVANGELIZATION, written by Fr. Thomas Joseph White, O.P. from the Thomistic Institute, Washington, D.C. (see here and here) At the beginning of the booklet, Fr. White gives the following example:
Consider a typical first semester: A class on anthropology; a class on Spanish literature; a class on calculus; a class on biology; and perhaps the philosophy of John Locke. And how is it all united? No one ever tells you. And at the end of four years, did anyone ever seek to tell you? Not usually! So you end up with an education of fragments. And it is extraordinarily expensive! And it leaves you existentially disoriented!
With respect to the situation with the “bail-in reforms”, we have a similar situation wherein the political IDEOLOGY does not conform to the OBJECTIVE REALITY that is represented by the economic knowledge that is known at present.
In helpful contrast to this disorientation, St. Thomas thinks that we have a differentiated and unified understanding of reality. The mind approaches reality, you might say, at different levels of being. This is a very technical idea.
In our “bail-in reforms” case, we have a situation where an alternative (VIRTUAL) REALITY has been created by the European political class. This VIRTUAL REALITY is not compatible with the OBJECTIVE REALITY which the economic science explains. In other words, the EU political class does not conform to OBJECTIVE REALITY on ANY LEVEL.
Or as Nigel Farage explains in the video, they are in a state of denial!
Back to St. Thomas…
St. Thomas thinks that we can selectively look at reality on deeper and deeper speculative levels. An initial level would entail studying quantity alone—abstracting from everything except the quantity of things. He says that that is where you get the science of mathematics and, from a use of mathematics applied to physical beings, the observational sciences.
It is at the initial level, or rather the level of applying the mathematics, i.e. the behavior sciences where the EU political class departs from OBJECTIVE REALITY. How do we know this?
Simple. Once again the pertinent passage:
It (“bail-in reform”) was intended to protect taxpayers by ensuring that creditors suffer major losses first if a bank gets into trouble, but was badly designed and has led to a flight from bank shares.
What this passage is saying is that the “creditors” (investors) did the mathematics of how they would be effected by the “bail-in reform” and then applied their knowledge of the economic science as the basis for their decision of whether to hold their Italian corporate bank debt/shares or dispose of their Italian corporate bank debt/shares. And according to the ariticle, the investors FLED. The flight of the investors from the Italian bank debt/shares in turn caused a situation where the government had to step in and subsidize the Italian banking sector. And finally, since the Italian government CANNOT create wealth, but only collect taxes from the citizenry, the final outcome of this badly designed “bail-in reform” was that the taxpayers ended up paying for the bank bail-out, those same tax-payers that the original “bail-in reform” was designed to protect.
From the above, we can observe that Mr. Draghi’s EU employers and the investors in the Italian bank sector had the OBJECTIVE information in terms of mathematics (DATA SETS) and applied knowldege (ECONOMICS) at their disposal, yet their decision making process was not compatible.
Now that is what I would call a stupid mistake.
Summa sumarum. What we see is a pathological situation where an individual with a Jesuit education and an advanced degree from a reputable university (MIT) in the economic science did not apply his knowledge when he was advising his European employers when they were designing the “bail-in reform”. On a higher level, what Mr. Draghi did, or rather didn’t do is apply that which he learned in his Thomist philosophy class, a subject matter to which he no doubt would have been exposed.
On the other hand, if Mr. Draghi would have applied that which he learned at the Massimiliano Massimo Institute, he would have been able to explain the his EU employers something along these lines:
For Aquinas, all learning is united by a common goal—the pursuit of the truth about reality, considered under various aspects. When people see the intellectual nuance of the Thomist tradition on this point, it becomes intellectually interesting and even liberating. It also becomes more dangerous to secular liberalism, which is increasingly trapped in a factional, fragmented view of education. If you come out of the modern university system, you know this is a problem on some visceral level. Thomism is a remedy.
But Mr. Draghi didn’t warn his EU employers or if he did, they just did not listen. Mr. Draghi’s EU employers in turn created a badly designed “bail-in reform”. The bad design in turn produced UNINTENDED CONSEQUENCES. And these UNINTENDED CONSEQUENCES come with a cost. In this case, that cost is another €40,000,000,000 (~$44,000,000,000) to the tax-payers of Italy. The same tax-payers that the original law intended to protect.
In the video at the top of this post, we see the victor of the BREXIT referendum explaining to the vanquished about how a RATIONAL plan going forward should be designed.
By the look on their faces, somehow I don’t think they learned their lesson.
The sad part though is that they will not be the ones paying for their mistakes.