Does Martin Wolf’s “The tragedy of two failing superpowers” conform with FT’s beautiful motto of “without favour”?

Wolf opines about Donald Trump in terms of “a malevolent incompetent” and for this looks for the support of that totally unbiased Jeffrey Sachs who writes about “devastatingly of the ill will and ineffectiveness on display”. “The tragedy of two failing superpowers” April 1.

Sir, if this is what it comes down to, let me be clear that I much prefer the support of a highly incompetent but more principled Donald Trump, against our evidently thousand times more malevolent incompetents, like Hugo Chavez and Nicolas Maduro, than the support given to them by “extremely competent” Barack Obama and Jeffrey Sachs.

Wolf then writes: “For those of us who believe in liberal democracy” Really? Are we to believe that anyone who, for purposes of bank capital requirements, agrees with assigning a risk weight of 0% to his sovereign’s debt and 100% to fellow citizen’s debts, something which de facto implies that bureaucrats knows better what to do with credits for which’s repayment they're not personally responsible for than for example entrepreneurs, could be defined as a believer in a liberal democracy? I don’t think so, to me he would just be a disguised communist.

@PerKurowski

My Industrial Policy would be to try having the best robots, and the most intelligent artificial intelligence

Sir, I refer to Rana Foroohar’s “Wanted: an industrial policy for America” May 8.

The 2007/08 financial crisis resulted from excessive exposures to what had been perceived, decreed or concocted as safe, those assets which therefore regulators allowed banks to hold against very little capital. Examples: the AAA rated securities backed with mortgages to the subprime sector and loans to sovereigns like Greece.

That should have been more than enough proof that, distorting the allocation of bank credit to the real economy with risk weighted capital requirements for banks, was not the way to go. But they all left it at that. As a consequence, only because they were as “risky” discriminated against by bank regulators, perhaps hundred of thousands SMEs and entrepreneurs have since then gotten their requests for bank credit rejected, or priced much higher. So Foroohar’s referencing an “Obama administration playbook” as especially favorable to job creation, sounds way out of place.

Yes, it is great that any government focuses its interest on job creation, but sometimes it must also give considerable thought to what to do if those jobs are nowhere to be found. That is why some years ago I wrote: “We need worthy and decent unemployments”.

I am against protectionism but, at this particular moment, if it were up to me, I would protect all learning and developing opportunities that could help my grandchildren to have access to the absolutely best robots and absolutely most intelligent artificial intelligence.

That is because if they don’t have it, they will benefit less or, in order to compete, have to work much harder for less than others.

That is because the Chinese curse “May your children live in interesting times”, might soon be upgraded to “May your grandchildren live surrounded by 3rd class robots, and dumb artificial intelligence”. 

PS. Sir, my granddaughters are Canadian so this message is in fact directed more to Mr. Trudeau than to Mr Trump.

PS. Again, please FT you who are so without fear, dare to ask regulators the questions below and dare learn the truth.

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

PS. Then in 2023 I discovered OpenAI – ChatGPT. And boy could artificial intelligence help empower a citizens’ democracy. That is if, of course, if #AI regulators allow it. It could endanger their current Bureaucracy Autocracy.

 

@PerKurowski

More important than air traffic control is to place bank regulation in a public/private non-profit entity

Sir, Gillian Tett discusses the head of the US Council of Economic Advisers’, Gary Cohn, plan to take the air traffic control system away from the Federal Aviation Administration and place it in a non-profit entity, funded by public and private finance. “Canada inspires US reform plans to take off”, April 7.

Sounds like a good idea but, much more important for both America and Canada, would be to place bank regulations in the hands of such an entity… like a BankReg.org!

I mean would BankReg.org have gotten away, like current bank regulators have, with regulating banks without defining the purpose of banks? No way Jose!

I mean would BankReg.org have gotten away, like current bank regulators have, to regulate banks without empirical analysis of what has caused the bank crises in the past? No way Jose!

I mean would BankReg.org have gotten away, like current bank regulators have, with making it harder than it always has been for “risky” SMEs and entrepreneurs to access bank credit? No way Jose!

I mean would BankReg.org have gotten away, like current bank regulators have, with risk-weighing the Sovereign with 0%, and We the People with 100%, and thereby through the Bathroom Window introducing runaway statism? No way Jose!

I mean would BankReg.org have gotten away, like current bank regulators have, with risk-weighing the dangerous corporate AAA rated with 20%, while assigning a 150% risk weight to the so innocuous below BB- rated? No way Jose!

I mean would BankReg.org have gotten away, like current bank regulators have, with giving banks incentives to finance the “safe” basements were our unemployed kids can live over those, who though riskier, could provide our kids with the jobs they need in order to also have kids and basements? No way Jose!

I mean would those working in BankReg.org have gotten away, like current bank regulators have, with not having some psychological tests made on them in order to guarantee their suitability? No way Jose!

I mean would BankReg.org have gotten away, like current bank regulators have, with causing the 2007-08 crisis without suffering any consequences for it… in some cases even being promoted? No way Jose! We would have sued and fined its technocrats for their last socks!

I mean would FT have treated BankReg.org as leniently as it has treated the Basel Committee for Banking Supervision, the Financial Stability Board, IMF and other clearly failed bank regulators? No way Jose!

PS. Here are some of my questions looking for answers

@PerKurowski

God, help my descendants live out of reach of high priests of complacency, like Basel Committee’s bank regulators

Sir, Martin Wolf writes: “China can help give Mr Trump what he wants. The US president wants greenfield industrial investments in parts of his country damaged by deindustrialisation. This can never be reversed. But Mr Xi can surely find Chinese businesses happy to invest in the US. Mr Trump likes such announcements. Mr Xi should help him.” “An odd couple doomed to co-operation” March 22.

What? Is the future wellbeing of America now beholden to China? Would Wolf really like this opinion of his to be quoted during a Trump rally?

If I were to give a recommendation of how to promote any type of greenfield investments in America, I would start with, of course, by telling America to get rid of those disastrous risk weighted capital requirements for banks that orders complacency with what we have, and de facto blocks bank lending to whatever smells as risky unknown future.

That regulatory risk aversion, which so odiously discriminates access to bank credit in favor of “the safe”, like the sovereign, the AAArisktocracy and residential housing; and so disfavoring the lending to risky SMEs and entrepreneurs… has no place in any country that wants to build future… much less in one that prides itself of being the Home of the Brave.

But there is much more to it.

On March 10, in “British business is starting to look more Italian” Martin Wolf drowned us in growth projections statistics that most probably are not based on an acceleration of any of those profound economic changes the world is going through. Sir, I wrote you a letter commenting on that.

On March 14, Wolf discussed the horrors of bilateralism and the blessings of multilateralism, trade agreements and globalization, reminding us of oldies like the Marshall Plan, “The folly of bilateralism in global trade”.

Today it is China and America, with Wolf referencing the “reform and opening up” proposed in 1978 by Mao Zedong’s successor, Deng Xiaoping.

Sir, about a month ago I had the chance to visit a wonderful small regional museum in Sweden, the Blekinge Museum. It lies very close to my recently deceased mother’s family house, in which I spent a lot of time in my youth. It was a shocking and a humbling experience. It was not a museum of very old times gone by; it was a museum of so much of my (1950), (and Wolfs) times gone by.

Images of heavy horses pulling carriages full of hay, Olivetti accounting machines, telephone exchanges with hundred of cables, old bicycles, wrinkled by rough seas rowing boats, and hundred similar items that I have lived with, but that mostly no longer exists, and are much less used, shouted out… “Per, what on earth do you know about tomorrow… what does anyone know?”

Coming out of the museum, more than ever, I felt like praying “God make us daring”; or at least God make my children, grandchildren and their descendants daring, so that they are not among the so many to be left behind… doomed (by automation and robots) to end up like the heavy horses of my time. God let them live free of that complacency Tyler Cowen writes about in “The Complacent Class”… faraway from the high priests of complacency.

And as for me, and as for Martin Wolf, as economists, as citizens, as parents and grandparents, if we only look back, and do not do our utmost to imagine what lies around the corners of tomorrow then, like old soldiers (and heavy horses) we might perhaps better fade away.

Does all what we older have lived not mean anything for the young? Of course it should signify a lot… but much more in terms of wisdom, than in terms of knowledge.

@PerKurowski

If a manufacturing trade deficit leads to deficits of skills, then that can be something truly serious.

Sir, Professor Robert H Wade when commenting on Martin Sandbu’s “Trump’s love of manufacturing is misguided” of February 15 writes: “manufacturing typically has strongly positive “externalities”, especially in innovation, and that the innovation intensity of manufacturing depends on close, physical links between production and innovation (“learning while doing”).” “Manufacturing has positive externalities” February 17.

Indeed, just think of where you, I and we all would have been, if America had not had that manufacturing capabilities and those skills that allowed it to build up what Franklin Roosevelt called “The Arsenal of Democracy”, and which allowed for the defeat of Germany’s impressive war machinery during World-War-II.

And currently, the possibility of some other nation ending up with 1st class robots, and your own with 2nd or even the 3rd class robots should clearly be a source of much concern to everyone.

My current pray is “God save my grandchildren from being surrounded by dumb artificial intelligence and 2nd class robots”. But that said perhaps intelligent artificial intelligence could be worse, since then we humans might turn into having to be its obedient servers. Who really knows?

​PS. Here is what I commented previously​ on Sandbu's article

PS. This is personal. Without “The Arsenal of Democracy” I would not be.

@PerKurowski

Are risk weights of: Sovereign 0%, We the People 100%, imposed arbitrarily by regulators, compatible with democracy?

Sir, David Pilling refers to a recent paper by Roberto Foa and Yascha Mounk, that cites findings in the World Values Survey, asking Americans whether they approve of the idea of “having the army ‘take over’. In 1995, one in 16 agreed. Since then, that number has risen steadily to one in six.”, “A continent where the democratic dream lives on” December 8.

I come from a country, Venezuela, in which each day more and more people are toying with the idea of calling in a “new” military, not to have less democracy, but to have more.

And so perhaps the American’s desilusion with democracy that the survey hints at might also reflect that democracy has failed being democracy.

For instance, is the decision process going on in Brussels really compatible with the European democracies? Those voting for Brexit seems to have answered NO!.

And in America, the regulators, for the purpose of setting the capital requirements for banks, surreptitiously set risk weights of 0$% for the Sovereign and 100% for We the People. And that, which is something that clearly reads like a slap in the face of its Founder Fathers, seems as big failure of democracy as they can come. 

So in America, supposedly the world’s prime capitalistic society, statism was imposed. Democratically? No way Jose! 

@PerKurowski

What’s wrong with deregulating lousy regulations? Get rid of risk-weighted capital requirements for banks… but gently

Sir, Patrick Jenkins speculates on what Trump will do to bank regulations and regulators and how the latter would respond in America and in Europe. “Trump’s agenda on deregulation is as vital as his Nato policy” November 15.

I just know that with statist and distorting regulations, like the current risk weighted capital requirements, deregulation and getting rid of regulators, would be a good thing. But of course, that needs to be done with utter care, since you could otherwise easily make the cure worse than the disease.

The basic principle with respect to any changes in the capital requirements should be grandfathering, so that these only operate on the margin of the new, without shaking up the average of the old. Of course grandfathering should not be a tradable feature. If a European bank carries a low capital requirements mortgage on its book, and holds it that way until it runs out that is ok, but it should not be able to profit by selling low capital requirement’s mortgages to other more "needy" banks.

@PerKurowski

Trump, though there’s reason for concern, shares some basic qualities that made the “Final Five” and America great.

Sir, Gillian Tett describing a clearly inspiring show by the US Olympic women’s gymnastics team, the “Final Five” asks: “Do they demonstrate discipline and ambition? Undoubtedly: if you want to teach a kid about triumph in the face of adversity Simone Biles’s life story is a good place to start: she overcame the challenges of a very tough childhood to win five Olympic medals” “What Trump can learn from the Final Five” November 12.

But at least in this respect Trump, though born with a silver teaspoon in his mouth, has certainly already demonstrated a willingness to take risks, to make mistakes, to try it again, and that go-get-it spirit that made the Five Final, and that helped make America what it is. If anything some could hold Trump has demonstrated a bit too much of those qualities.

Personally I pray Trump, as a President will want to reignite the building of America based on those qualities, and not just based on unproductive cronyism, which is a much too frequent reason for why some less deserving make it “Great” though not really the Final Five.

PS. Whether popular votes or electoral votes, no winning side has the right to ignore the other almost-half, though unfortunately it seems both sides would want to.

In order to revive the pioneering spirit of America, start by kicking out dangerous risk adverse bank regulators

Sir, Gillian Tett writes: “The US used to be renowned for having a more flexible and mobile workforce than Europe; in previous centuries millions of people travelled in search of land, riches and jobs. But mobility has declined… [and] if mobility keeps falling, the sense of political polarisation and rage in [some] places will rise”, “The pioneering spirit America would do well to revive” October 21.

Ms Tett argues that this is all a bit counterintuitive since “the internet is supposed to have created a hyperconnected world that makes it easier to connect workers with far-flung jobs”.

Not necessarily, for instance we do not know how many can thanks to Internet be working somewhere else, without having to move. Also, much the same way internet can inform about existing job opportunities, it can make it much harder to sell those illusions of other green valleys that stimulated much mobility in the past.

As a possible countermeasure Tett advances that “The next president may also need a 21st-century version of the 1862 Homestead Act — which offered land to settlers who went west — and find new ways to encourage workers to relocate.”

Ms Tett should not forget that “land” to settlers is just a resource, just like bank credit is; and that we live in a world where mindless risk adverse regulators, with their risk weighted capital requirements, have de facto hindered credit mobility; telling the banks to stay where it seems safe, and not to go where it could be risky.

For the umpteenth time I quote from John Kenneth Galbraith’s “Money: whence it came, where it went”,1975:

“For the new parts of the country [USA’s West]… there was the right to create banks at will and therewith the notes and deposits that resulted from their loans…[if] the bank failed…someone was left holding the worthless notes… but some borrowers from this bank were now in business...[jobs created] 

It was an arrangement which reputable bankers and merchants in the East viewed with extreme distaste… Men of economic wisdom, then as later expressing the views of the reputable business community, spoke of the anarchy of unstable banking… The men of wisdom missed the point. The anarchy served the frontier far better than a more orderly system that kept a tight hand on credit would have done…. what is called sound economics is very often what mirrors the needs of the respectfully affluent.”

Clearly, the Basel Committee and the Financial Stability Board represent Galbraith’s “men of economic wisdom… [who serve] the needs of the respectfully affluent”.

So, if Ms Tett really wants the pioneering spirit of America to revive, then she should start by wanting to also allow credit to move freely; condemning the dangerous mumbo-jumbo preaches of the Basel Committee and the Financial Stability Board. That would in essence mean using one single percentage capital requirement for all assets, no matter in which risk-land these assets reside.

Unfortunately Ms Tett (and you too Sir) has been steadfastly mum on the issue of the regulatory distortion of bank credit, no doubt defending (“without favor”) her choice of “wise men” with their affluent and mostly Davos settled constituency.

“Wise men”? To know that unrated SMEs are risky to banks, is of knowledgeable men; but to understand that AAA rated assets are dangerous to bank systems, is of wise men.

@PerKurowski ©

How many at FT wish one day for Englishmen to call Europe home, as Americans call America home?

Sir, I am just asking, in case I have missed a reason for your strong opposition to a Brexit.

I mean if Germans cannot think of Greeks and themselves as being Europeans, and Europe being their home; and Greek cannot think of Germans and themselves as being Europeans, and Europe being their home… is there not something fundamental lacking with a EU that, among other, is to “enact legislation in justice and home affairs”? 

I have an inkling Rod Stewart would not share such sentiment https://youtu.be/7SAZXpRzwbA

PS. You know very well I am neutral on the whole Brexit issue... except for arguing that those favoring a Brexit should also be thinking about a Brentrance

Every Brexit needs its Brentrance.

Sir, Janan Ganesh writes: “Britons are being invited to exchange the lived reality of EU membership for a nebulous exit, envisaged by its most popular advocate as a way of gaining leverage over Brussels for a deeper revision of membership terms.” “Boris mania exposes an overexcited political class” February 23

And Gideon Rachman writes: “Mr Johnson’s decision to campaign for Brexit might put him on the right side of history, but only in the first and narrowest sense of foreseeing the direction of events... A modern Churchill, which is what Boris clearly aspires to be, would immediately understand that Britain’s decision about whether to stay in the EU has to be seen as part of a wider global picture.” “Johnson has failed the Churchill test".

This is so much reminds me of the problem in my homeland Venezuela. There too many are pointing towards an escape door, without indicating at all to what entrance that door leads.

If Britain wants to leave EU, something that indeed sounds a bit adventurous to say the least, then it should at least begin to think about the morning after.

And this reminds me that way back, in the last century, in 1999, I wrote an Op-Ed titled “A New English Language Empire” It might provide for a timely read

@PerKurowski ©

No President Obama. No country with bank regulations based on credit risk aversion can speak of having a bold voice

Sir, Barack Obama writes “the US is ready to lead a global effort on behalf of new jobs, stronger growth, and lasting prosperity for all our people well into the 21st century. “America’s bold voice cannot be the only one” November 13.

He mentions: 1. “fiscal policy that supports short-term demand and invests in our future”; 2. “boost demand by putting more money into the pockets of middle-class consumers who drive growth”; 3. “more inclusive growth by lowering barriers to entering the labour force.” 4. “high-standard trade agreements that actually benefit the middle class” 5. “greater public investment… through new private investment in clean energy.”

Nowhere does he make a reference to the need of getting rid of bank regulations that are blocking the risk-taking needed to achieve sustainable economic growth.

The pillar of current bank regulations is the credit-risk weighted capital requirements for banks; more risk, more capital -less risk, less capital. Since banks, when deciding on risk premiums and amounts of exposure, already clears for credit risk, this results in an excessive consideration of credit risk. Any risk, even though perfectly perceived leads to the wrong results if excessively considered.

And therefore, in words attributed to Mark Twain, we now have banks that lend you the umbrella, much faster than usual if the sun is out, and take it away, much faster than usual if it seems like it could rain. In other words our bank’s, by having been given permissions to leverage much more with what is perceived as safe, earn much higher risk-adjusted returns on equity when lending to the safe are, consequentially, behaving more risk-averse than ever.

If one wants banks to be constructively bold, then one should set the capital requirements based, not on pitiful credit risk weights, but on daring purpose weights, like for instance based on “clean energy” and job-creation ratings, and SDGs in general.

And this will not cause the banking sector to become unstable, just the opposite. Never ever are major bank crisis the result of excessive exposures to something perceived as risky when placed on the balance sheets of banks… only of something ex ante perceived as safe that ex post turns out risky.

PS. This is also a civil rights issue. These regulations that double down on credit risk, discriminate against the rights of the risky, like SMEs and entrepreneurs, to have fair access to bank credit.

@PerKurowski ©

What happens with the fighting spirit of humans, if you outsource soldiering to robot soldiers and drones?

Today FT-Magazine, published in England and not in the US, included an edited version of the following letter I sent them related to an article that did appear in the US. It is somewhat strange since my letter, as you will be able to see, was foremost directed to the US.

Like drones, robots also present challenges to the national psyche of their users (“Robot soldiers”, July 18/19) – the possibility of a diminishing human fighting spirit hiding behind drones and robots. 

I think it is hard to visualise the same type of national “good feeling”, with homecoming parades and memorials, when scientists and mechanical engineers have done the real fighting. And what will be more important for the advancement of a military career in the future: knowledge about robots or knowledge about your men? Will the traditional drill sergeant just become a figure featured in History channel documentaries? 

What keeps me coming back to these issues is that 70 years ago my father was freed from a concentration camp in Germany by courageous American boots on the ground… not by drones or robots. 

Per Kurowski 

Rockville, Maryland, US

Unbelievable that with so much history, Europe, instead of with a “Bang!”, could be going down with a whimper.

Sir, Robert D Kaplan, in “America is growing impatient with Europe’s appeasement”, April 7, states as a matter of fact “Gutsy is not a word one would use to describe Europe’s political class”. Sadly, very sadly, it is very hard to debate that.

And right below, giving credence to such an affirmation, we find Martin Wolf writing in “China will struggle to keep its momentum”, that “The world must pray the Chinese authorities manage this transition successfully. The alternative is not to be contemplated”; which basically reads like an anxious European convinced that his future is all-dependent on China’s.

Really, if Europe thinks it will be better off accommodating to Putin’s Russia; or if it thinks that its economy will be better off depending on China’s; (or if it feels that its bankers should earn their returns on equity solely with what is perceived as safe), then sadly it would seem that Europe is lost before the fight has even begun.

But hidden, somewhere in its gutters, there must be a reserve of European elites who can understand that it is time to stand firm… since it seems unbelievable that with so much history Europe, more than going out with a Bang! could be going down with a whimper.

Aren’t there any Bravehearts or Churchills in Europe anymore?

And, having observed the growing nanny mentality in America, its elite should be careful too. When drones are viewed as more convenient than boots on the ground, many strange things can happen.

@PerKurowski

More than the decline of individual countries, we are experiencing the decline of the world in general.

Sir, any country that signs up on the idea of allowing banks to hold less equity when lending to what is perceived as safe, than when ending to what is perceived as risky, has ordained a risk aversion that will cause it to decline. It will not longer finance sufficiently the more risky future, but will try to trot along for a while, by refinancing the safer past. Most of the world is currently implementing this type of Basel Committee regulations, China included.

And so any discussion on the decline of any country, like Gideon Rachman’s “Britain’s risky obsession with America’s wane” April 7, needs to be held against the perspective of a general decline.

For a starter no country with this type of regulations can aspire to reach world leadership based on its own efforts. Any increased leadership it could reach would only be based on someone else losing it faster.

Rachman refers to some having complained about Britain’s abandonment of “kith and kin” in the Commonwealth. Be that as it may it is much worse; like most of the world, it is abandoning its children, by refusing to take the risks needed for them to move forward, hiding in the very short-term safety of safe havens… soon to be dangerously overpopulated.

But again, of what importance can such minutia be to FT?

@PerKurowski

Fed’s Janet Yellen, as a leading equal opportunity killer, has no moral right to speak about inequality.

Sir, I refer to Robin Harding’s “Yellen risks backlash after remarks on inequality”, October 18.

There we read of “the high value Americans have traditionally placed on equality of opportunity”… that “Ms Yellen’s speech was about equality of opportunity”… about “the rise in inequality using recent Fed research and then laid out four “building blocks” for economic opportunity in the US: [among these] business ownership” … and that “owning a business [was an] important routes to economic mobility.

For over a decade I have argued that forcing those who are perceived as “risky”, and who therefore already have to pay higher interests and have lesser access to bank credit, to have to pay even higher interests and get even less access to bank credit, only because regulators think banks need to hold more capital when lending to them than when lending to the “absolutely safe”, is an odious discrimination and a great driver of inequality… a real killer of the equal opportunities the poor deserve in order to progress.

And of course, let us not even think of what the Fed’s QE’s have done in terms of un-leveling the playing fields. The fact is that had it not been for how the financial crisis management favored foremost those who had the most, Thomas Piketty’s "Capital in the Twenty-First Century”, would have remained a manuscript.

Sir, to hear someone who so favors regulatory risk-aversion, daring to speak about American values, in the “home of the brave”, in the land built up on the risk-taking of their daring immigrants… is just sad.

PS. To me it is amazing how bank regulators in America can so blitehly ignore the Equal Credit Opportunity Act (Regulation B)

Yes, America, the Land of the Free and the Home of the Brave, is suffering some serious mutations.

Sir, Edward Luce is absolutely right writing about “America’s compulsive urge to regulate” April 28. It would suffice with reading all those mindboggling, never less than two dozen, of safety instructions stapled around those American swimming pools from which you are extracted, every half hour, for a water quality check.

And when it comes to incongruities with “The Land of the Free and the Home of the Brave” it suffices to know that in America too… by means of risk-weighted capital requirements banks are allowed to earn much higher risk-adjusted returns on shareholders capital, when lending to the “absolutely safe” than when lending to the “risky”

Democracy goes way beyond the 1% vs. the 99% debate.

Sir, I agree in much with what Edward Luce puts forward in his “America’s democracy is fit for the 1 percent” March 31 but, the issue of undue influence in a democracy, goes much further than the simplistic 1% vs. the 99% debate.

For instance I hold the view that corporate taxes should be zero, since only citizens should be able to wield the influence of paying government bureaucrats their salaries.

And also that 1% too often seems to imply that all those in the 1%, like in the 99%, are alike which we know they aren’t. For instance you would not want to tax the wealthy in order to further benefit the oligarchy, or do you?

Discrimination against “The Risky”, in America, “the Home of the Brave”, is pure tragedy.

Gillian Tett quotes Peter Thiel concerns about that American innovation is slowing, sapped by the financial boom and a risk-averse culture. “There might be a great deal to gain in sharing the pain” November 24. To that Kenneth Rogoff had retorted that it was the implosion of the debt bubble – not lack of innovation that hurt American growth. 

Ms Tett finds Mr. Thiel’s comment fascinating in how it reflects America as “a country founded with an optimism that anything could be done, and had little sense of resource constraint” 

Yes, that might have been true but currently the US, like Europe, have introduced severe constraints on one of the most important elements of innovation and development, namely that of risk-taking. 

The debt bomb-that imploded has absolutely nothing to do with credits given to entrepreneurs or other risk-taking innovation ventures, but exclusively with credits given to what was officially considered to be absolutely safe. 

It was the direct result of extremely confused and risk-averse bank regulators who by allowing the banks to leverage their equity many times more for exposures considered as part of “The Infallibles” effectively locked out “The Risky” from access to bank credit, as these could not provide the banks with similar returns on equity. 

The Risky” are already sufficiently discriminated against by Mark Twain’s banker, he who lends you the umbrella when the sun is out and wants it back, fast, when it looks like it is going to rain. That the regulators has layered on additional discrimination against “The Risky” in a land that prides itself being called “the land of the brave”, is pure tragedy. 

A nation that worries more about history, what it has got, “The Infallible”, the old, than about the future, what it can get, “The Risky”, the young, is a nation that is stalling and falling.

A “can-do spirit” is not based on dumb risk-avoidance but on a smart, even audacious, embracement of risk

Sir, Lionel Barber, from Washington writes “Wanted: a president to put can-do spirit back in the US” November 7. Absolutely, and that I believe is something the whole Europe also needs. 

Again, for the umpteenth time, few things can be so anathema to a “can-do spirit” than bank regulations which discriminates in favor of what the nation has got, the past, “The Infallible”, and against what the nation can get, the future, “The Risky” 

Currently banks are allowed to obtain much higher risk adjusted returns on equity when engaging with was is officially perceived as “not risky”, because that requires from them to hold much less capital than when lending to what is officially ex ante perceived as risky. That, basically instructs the banks, to stay away from what is risky, no matter what the risky, like small businesses and entrepreneurs can do. And if that is a spirit it can only be the “let’s enjoy what we did” 

America, Europe, a “can-do spirit” is not based on dumb risk-avoidance, but on a smart, even audacious, embracement of risk.

First step… Get rid of Fraulein Basel!