President Trump, remember Einstein’s “No problem can be solved from the same level of consciousness that created it”

Sir, Martin Wolf, in these moments of so much radical uncertainty, recommends Donald Trump to follow one don’t-rock-the-boat strategy. “Janet Yellen, and the Fed’s inflation target, should both stay” June 19. I wish I could be such an optimist to believe that would do.

If I were Trump I would like the Fed to think about how it could help to create sustainable jobs, not some kicking-the-can-down-the-road financed jobs; and about what to do with the unemployed, if they fail to reach the previous goal.

The current risk adverse bank regulations risk banks building up too large exposures to what’s perceived as safe against too little capital; and hinders the efficient allocation of credit to the real economy. So that just must go… completely!

Why should not Janet Yellen be able to do this? Well as Einstein once said: “No problem can be solved from the same level of consciousness that created it”

http://subprimeregulations.blogspot.com/2016/12/must-one-go-on-hunger-strike-to-have.html

And the structural unemployment that threatens social cohesion must be forcefully attacked before social cohesion breaks down. After, it is quite too late, as we all can see has been happening in Venezuela.

What to do? A Universal Basic Income is one useful tool of many to handle that problem with; and the revenue neutral carbon tax, the carbon dividend, seems a good source to start feeding a UBI scheme that foremost must be financed with real money… that is of course unless you really want to go down the same road as Zimbabwe or Venezuela 

@PerKurowski

So now Brussels's technocrats want to issue AAA rated securities backed with European subprime sovereigns? When will they ever learn?

With “subprime sovereigns” I do not intent to classify any sovereign in a derogatory way. I use the term strictly with reference to the fact that for the sovereigns’ creditors being able to collect their credits, some sovereigns seem, are, safer than others.

Sir, Jim Brunsden a Guy Chazan write: “Brussels has called for sovereign debt from across the eurozone to be bundled into a financial instrument and sold to investors as part of a plan aimed at strengthening the single currency area… the move would require regulatory changes to make the securities attractive. One idea would be to grant the bonds the same “zero-risk weighting” that applies to government debt in the EU, which would exempt them [banks] from capital requirements.”... “We see this in the form of preferential regulatory treatment.” “Brussels seeks new asset class of eurozone sovereign debt” June 1.

Amazing! The European Commission has not woken up to the fact that “preferential regulatory treatment” distorts the allocation of bank credit to the real economy, which is one of the prime reasons Europe got into trouble and finds it so hard to grow out of it.

Had banks needed to hold as much capital when lending to sovereigns than when lending to for instance “risky” SMEs and entrepreneurs, Greece would never ever, no matter how much it might have cheated with information, have been able to accumulate such massive amount of sovereign debt.

Were banks required to hold as much capital when lending to sovereigns than when lending to for instance “risky” SMEs and entrepreneurs, then the latter would have found it easier to satisfy their credit needs, and European growth and employment would be higher and foremost much sturdier.

When will the hubris filled obviously statist technocrats in Brussels ever learn? Europe, get rid of them!

“No problem can be solved from the same level of consciousness that created it” Albert Einstein.

@PerKurowski