The S-word “spread” goes from financial pages to papal speeches
The ubiquitous term “spread” – a staple of financial news bulletins and one of the main measures of investor sentiment – has now penetrated even the elevated lexicon of the papacy.
In his speech to diplomats from around the world, Pope Benedict chastised those who only think of a “spread” in financial terms. He said there should be a simultaneous concern for a social “spread” – the gap between the rich and poor.
“If the differential index between financial taxes represents a source of concern, the increasing differences between those few who grow ever richer and the many who grow hopelessly poorer, should be a cause for dismay,” the pope told the diplomats in his speech at the Vatican on Monday.
“In a word, it is a question of refusing to be resigned to a ‘spread’ in social well-being, while at the same time fighting one in the financial sector,” he said.
During the financial crisis facing Italy for more than a year, hardly a week has passed without a news report about the see-sawing spread – the risk premium investors demand to hold Italian bonds rather than their safer German equivalents.
The higher the spread, the greater interest payments are for Italy to finance its public debt. The spread was at 574 basis points about 14 months ago when Prime Minister Mario Monti took office, and is now at about 279 basis points.
But in the part of his speech that centred on financial issues – most of the address was dedicated to hot spots such as Syria – the pope said politicians had to consider people as well as numbers.
“Certainly, if justice is to be achieved, good economic models, however necessary, are not sufficient. Justice is achieved only when people are just,” he said.
As far as the spread is concerned, Benedict, a world-class theologian who by his own admission is not good with numbers, is only the latest person to be unexpectedly touched by the S-word.
Last month Monti told a television interviewer that talk of bond spreads had filtered down from the power lunches of bankers and brokers all the way to his grandson’s kindergarten.
“The youngest of my daughter’s three children was home and saw a news programme on television and they were talking about the spread,” Monti said. “And he said ‘Mamma, but I’m Spread'”.
It seems the word has become so much a part of the common lexicon that his schoolmates gave him the nickname “Spread”.