The “Parable of talents” is currently quite inapplicable to any wealth tax.

Sir, I refer to “Why the toughest capitalists should root for a wealth tax” Martin Sandbu, FT, May 10.

Much of the current wealth is the direct result of huge liquidity injections, and which are distorted by risk weighted bank capital requirements that, among other, so much favors the debts of the government over debts to the citizens… all as if bureaucrats/politicians know better what to do with credit for which repayment they are not personally responsible for, than e.g., small businesses and entrepreneurs.

To favor such wealth tax, besides removing such distortions, I would also like to know what assets, and to whom, the wealthy should sell in order to raise the money to pay such taxes… and what would be the resulting overall productivity of such resource transfer. I believe a full review of the current productivity of all government spending is long overdue.

So, in this respect, taxing wealth with its revenues seemingly not being sufficiently productive, an understatement, sort of reminds me of a Harry Belafonte & Odetta song titled A hole in the Bucket

Sandbu also writes that “a net wealth tax…is the tax version of the New Testament’s parable of the talents” I’m not at all sure that’s currently really so.

I extract the following from Matthew 25: 24-27: 24 “Master,’ 25 I was afraid and went out and hid your gold in the ground. 26 “His master replied, ‘You wicked, lazy servant! So, you knew that I harvest where I have not sown and gather where I have not scattered seed? 27 Well then, you should have put my money on deposit with the bankers, so that when I returned, I would have received it back with interest.”

First, we now have regulators who, with bank capital requirements, tell banks that when they scatter and sow, they should be risk averse, guarding it all in safe gold, e.g., loans to governments and residential mortgages; staying away from what’s risky, e.g., entrepreneurs and small businesses.

Second, to top that up, with QEs central banks are injecting money thereby keeping interest rates ultra-low.

So, are we allowing bankers to exploit their talents? No! 

Will that produce good interest rates for the depositors? No! 

And if inflation takes off, will they receive their real money back? No!

Sir, with respect to risk taking, and even though I am a protestant, let me finally quote Pope John Paul II: Our hearts ring out with the words of Jesus when one day, after speaking to the crowds from Simon's boat, he invited the Apostle to "put out into the deep" for a catch: "Duc in altum" (Lk 5:4). Peter and his first companions trusted Christ's words, and cast the nets. "When they had done this, they caught a great number of fish" (Lk 5:6).

Jesus said, “Put out in the deep”. Regulators tell banks “Fish in shallow waters… preferably from the shore”

Sir, Martin Wolf writes, “Mr Trump’s narrowly transactional approach, driven by ignorance and resentment, risks disaster” “Donald Trump’s war on the liberal world order” July 3.

I agree there is room for serious concern with respect to what President Trump might do but, for the time being, for the umpteenth time, much more than what he might be sabotaging the liberal world order, bank regulators already did.

This Sunday, in the Swedish church in New York, they read us how Jesus invited the Apostles to "put out into the deep" for a catch: "Duc in altum" (Lk 5:4). "When they had done this, they caught a great number of fish" (Lk 5:6).

With their risk weighted capital requirements for banks, more perceived risk, more capital – less perceived risk, less capital, the regulators de facto told our banks to fish in shallow waters… preferably from the shore.

To assign a 20% risk weight to a corporation rated AAA to AA, and 100% to an unrated corporation 100%, and "generously" permitting the possibility of risk weighing small entrepreneurs with only 75%, has absolutely nothing to do with a liberal world order.

Moreover to assign a 0% risk weight to sovereigns and one of 100% to citizens, reads just like a communist world order.

“Armoured by ignorance”? Indeed, those regulations guarantee excessive exposures to what is especially dangerous as it is perceived, decreed or concocted as safe; against especially little capital… in other words it dooms our banks to especially severe crises.

Good job Basel Committee!

@PerKurowski