October 10, 2017

The costs of political statements and of regulatory decisions, should as much as is possible be transparently measured

Sir, your “The hard questions of fossil fuel divestment” of October 9, daringly raises some very timely questions that might not be so political correct, at least not for the high-priests of environmental protection. Hear, Hear!

If there is one detail I miss, that is perhaps about the need to set up a small procedure by which anyone could at least measure the on-going financial opportunity cost of that fossil fuel divestment. That could be quite easily done by keeping track on what those fossil fuel investments would have produced, and then compare these to the returns on the current portfolio.

Of course, as you end up writing, “It is a political statement”, but the costs of these should also be measured, as transparently as possible, which goes for regulatory decisions too.

The Basel Committee for Banking Supervision decided initially on a basic capital requirement of 8 percent. What has been the cost of then adjusting that capital requirement based on what is ex ante perceived or decreed as safe? Will we ever know? Will ever someone try to find out? Or will the cover-it-up forces prove to be overwhelming?