Should financing human rights’ violators help fund US pensions?

Sir, I refer to Colby Smith’s “Year began with ‘hardcore fear of missing out’ but now holders of Caracas debt have lost hope” December 21

I wonder how one can discuss the chances of creditors collecting on Venezuela’s debts, ignoring that their funds have all gone to finance a notoriously corrupt and inept government that has and is evidently committing crimes against human rights?

Odious debts is mostly the direct result of odious credits…

With respect to the sanctions of Venezuela by the US Treasury’s Office of Foreign Assets Control, an international bondholder is quoted. “These sanctions were just a disaster, and all this has done is damage holders of the bonds, many of which manage money for US pensioners.” Really in these days when financing of good social purposes is promoted, like to finance the sustainable development goals, SDG’s, should financing human rights’ violators really help fund pensions?

Frankly, “Fidelity, T. Rowe Price, BlackRock and Pimco” as well as Goldman Sachs should all be shamed; and tell us the name of that “one bondholder group holding $8bn of Venezuela’s debt”, because such exposures do not happen without very close and incestuous contacts with the government.

@PerKurowski

Any regulator that would call what is currently happening an unexpected consequence is clearly not fit to regulate.

Sir, I refer to Stephen Foley’s “BlackRock chief warns ripple effect of strong dollar threatens US growth” April 7.

It states that Larry Fink, CEO of BlackRock “highlights the risk that monetary easing has inflated asset bubbles as investors such as pension funds searching for yield in a low interest environment are pushed into riskier classes”. And it quotes Mr Fink with: “This mix of growing assets and shrinking yields is creating a dangerous imbalance”. I am left wondering whether Mr. Fink really knows what is going on.

Does he know that one reason for why pension funds “are pushed into riskier classes”, is that they are pushed out from the perceived safe havens by bankers pushed into safer classes by their regulators with their silly and dangerous credit risk weighted equity requirements for banks? And that is just going to get worse the tighter bank equity gets to be, and when insurance companies also regulated with Solvency II in a similar way?

Indeed, “monetary policy seem insufficiently attuned to the conundrums their actions are creating for investors” But regulators are equally attuned to the conundrums their actions are creating for the fair access to bank credit of “the risky”, like for all the SMEs and entrepreneurs we need to get going when the going is tough.

And regulators please do not call all this an unexpected consequence. If you do it just evidences even more that you are definitely not fit to regulate.

@PerKurowski

Could a “Vanguard FTSE Social Index Fund” purchase debt of a sovereign like Venezuela, which violates human rights?

Sir I refer to Madison Marriage report in FTfm “Funds in cluster bomb ‘hall of shame’” December 1.

Therein “a spokesperson for Vanguard, which oversees $3tn of assets said:

“For US investors who wish to choose investments based on social and personal beliefs, we offer the Vanguard FTSE Social Index Fund, which excludes companies involved with firearms, tobacco, alcohol, adult entertainment, gambling, nuclear power, or those that violate fair labour practices and equal opportunity standards”.

Holy moly, what a mixture of issues! Questions:

How were for instance adult entertainment and gambling thrown into the same bag as nuclear power and equal opportunity standards?

Have strippers and croupiers not the right to an equal opportunity of seeing their jobs financed?

Considering the Equal Credit Opportunity Act (Regulation B) in the US, are these types of funds really legal?

Has not planet earth right to nuclear power in order to avoid having to more coal that is more dangerous for the environment?

Is there a fund that excludes countries, like Germany, which now are dismantling the use of nuclear power?

In general are there any sovereigns excluded? What about for instance the purchase of Venezuelan debt when the UN Human Rights Chief urges it to release arbitrarily detained protestors and politicians?

As a citizen, more than credit ratings, I would perhaps want to see more use of ethic and good governance ratings.

The genie in the Basel Committee’s Aladdin lamp… is as dumb as genies can come

Sir, I had no idea of the existence of the “state of the art risk and order management system” described interestingly by Tracy Alloway in “Genie not included in BlackRock´s Aladdin” July 12.

Of course “none of these tools are meant to supplant the basic human intelligence required to make informed investment decisions”… but they do. Perhaps, in order to avoid unnecessary introduction of systemic risk, there should be fairly low limit to how much of the market can be served by the same risk modeling tool.

But again it surprises me how Alloway can write such an insightful article, and still not comprehend that the Basel risk-weights which determine the capital banks need to hold, amounts to an Aladdin lamp with a residing genie as inept as they can come. Imagine, just for a starter that genie believes that what is risky for banks and bankers is what is perceived as risky… how dumb is not that?

And distorting the allocation of bank credit following the advice of that genie is as dangerous as it comes for the real economy.

PS. Tracy Alloway on Wall Street, how many shares are traded in the Dow Jones index? Could the increase in its value be a function of shrinkage of its base?

And when are investors to sue Blackrock and Pimco because of these experts lack of due diligence?

Sir, I read Camilla Hall and Luc Cohen reporting “Six banks sued over trustee roles” June 19.

What­? If Pimco or Blackrock had had any of those executives really deserving huge bonuses they hold they have, they should have know that if regulators authorized banks to hold securities rated as AAA, against a so meager 1.6 percent in capital, meaning they could leverage their own capital 62.5 times to 1, something very bad was going to happen, and so they needed to be very alert.

And so in this respect I ask, when are the Pimco and the Blackrock investors going to sue Pimco and Blackrock for the lack of due diligence?

If expert companies can try to get out of their buyer’s beware responsibility, why should not the small investors try?