How can we get rid of really bad ideas, e.g., risk weighted bank capital/equity requirements?

Sir, reading “African Union-backed ini­ti­at­ive aims to chal­lenge ‘big three’ rat­ing agencies” by Simon Mundy I was reminded of when in an Op-Ed in Venezuela, concerned with that when markets expressed too much trust it doomed my nation to have too large capital/debt inflows setting it up to later be judged as too much distrustful.

I ended that Op-Ed with: The day our governments pay more attention to the opinions of us, their humble subjects, than to those of the glamorous international credit rating agencies, we will finally stand a chance of making it out of our standard “poor and moody” situation. 

When reading “Why bad ideas are always with us” by Janan Ganesh I cannot help to remind you of awful ideas that still remain with us, most certainly because it is in the interest of some few.

January 2003, over two decades ago, you published a letter in which I wrote: 

“Except for regulations relative to money-laundering, the developing countries have been told to keep their capital markets open and to give free access to all investors, no matter what their intentions are and no matter for how long they intend to stay. Simultaneously, the developed countries have, through the use of credit-rating agencies, imposed restrictions as to which developing countries are allowed to be visited.

This Janus syndrome – ‘you must trust the market while we must distrust it’ – has created serious problems, not the least by leveraging the rate differentials between those liked and those rejected by our modern-day financial censors. Today, whenever a country loses its investment grade rating, many investors are prohibited from investing in its debt, effectively curtailing the demand for it just when that country might need it the most.

Everyone knows that, sooner or later, the ratings issued by the credit agencies are just a new breed of systemic error to be propagated at modern speeds. Friends, please consider that the world is tough enough as it is.”

Today, Basel’s risk weighted bank capital requirements’ procyclicality is still fully alive and well. Precisely as Mark Twain (supposedly) said: “A banker is a fellow who wants to lend you the umbrella when the sun shines and wants it back when it rains”.

Should we not expect the wider society to get some help eliminating truly bad ideas by e.g., the Academia… and the Financial Times?

Artistic inheritance does not cause excessive centralized powers, as too often natural resources do...though intellectual inheritance could

Sir, Janan Ganesh discussing the possible effect on Europe of its “intellectual and artistic inheritance” refers to the natural“resource curse” in terms of retarding development, as “The temptation is to coast on the proceeds from the natural assets.” Clive James and Europe’s culture curse” November 29,

Indeed, that could play a role but the by far worst part or the “resource curse”, is the fact that its revenues are way too often way too much centralized in way too few hands. 

Take my homeland Venezuela. Had its (geographical) liberator Simon Bolivar not accepted to impose in Venezuela in 1829 Spain’s mining ordinances, which deemed all natural resources under earth to be the property of the King/state, our destiny would have been quite different. As is, as someone from another oil cursed nation mentioned to me years ago, “we do not live in a nation, we live in somebody else’s business”, the redistribution profiteers’.

And this does not apply to the artistic inheritance’s culture curse. The Museum of Louvre might centralize a lot of cultural treasures, but it does not remotely benefit as much from it, as do the citizens of Paris.

Of course, when it comes to an “intellectual culture curse”, which could result from handing over too much influence to too few intellectuals, like to Ph.D.’s and opinion makers, that can contain all the inheritance in a silo, in a mutual admiration club, all bets are off, in Europe and everywhere.

https://theoilcurse.blogspot.com/2016/05/the-last-thing-venezuela-needs-is-to.html

@PerKurowski

The “having just enough” opens the door for a discussion on relevant and irrelevant inequalities

Sir, I refer to Janan Ganesh’s “The holy grail of having just enough” April 6.

It is a great article, though because of its honest shadings, those who want to see all in black or white will criticize it. But its real importance could be in helping to put the finger on the need to redefine all discussions and measuring of inequality, by allowing these to focus much more on the relevant existing inequalities, and much less on the irrelevant inequalities.

That some “filthy rich” has decided to use his purchase power to buy a yacht, something which makes yacht builders happy, or to contract a yacht crew, something that gives those crew members a job, or freeze $450m of it in a painting, such as Leonardo da Vinci’s Salvator Mundi, which should make the one who sold him that painting very happy, does not make me feel one iota unequal to him. But, I can perfectly understand that the fact I own a house, a car and a reasonable amount of money, can make many owning much less feel unequal to me, and many who have nothing feel unequal to all.

And clearly those without a job must feel unequal to those with a job… and in that case unequal to the yacht crew, not unequal to the yacht owner.

In these days when redistribution and polarization profiteers seeding so much hate and envy, at zero marginal costs, create so much odious societal divisions, it behooves us to, as a minimum minimorum, make sure those divisions are in reference to something real and relevant, and not just fake divisions that can lead to absolutely nothing good.

PS. My generous feelings towards what the “filthy rich” own, are of course based on that they have obtained all that wealth in legal and decent ways.

The US 2008 financial crisis was born April 28, 2004

Sir, Janan Ganesh writes: “A financial crisis that was experienced as a fragmented chain of events is being commemorated as just one: the fall of Lehman Brothers, 10 years ago next month",” “Political distemper preceded the financial crisis” August 30.

That is only because the truth shall not be named. In the case of the United States, that crisis started on April 28, 2004 when the SEC decided that the supervised investment bank holding company ("SIBHC"), like Lehman Brothers, “would be required periodically to provide the Commission with consolidated computations of allowable capital and risk allowances (or other capital assessment) consistent with the Basel Standards." 

When the Basel standards approved in June 2004 included allowing banks to leverage a mind-boggling 62.5 times with any asset that have been assigned by human fallible credit rating agencies an AAA to AA rating, or had been guaranteed by an AAA rated corporation like AIG, the crisis began its construction. That in the European Union the authorities also included allowing banks to lend to sovereigns like Greece against no capital at all would only worsen the explosion.

Populism? What’s more populist than, “We will make your bank systems safer with our risk-weighted capital requirements for banks”? 

PS. Here is somewhat more extensive aide memoire on the mistakes in the risk weighted capital requirements for banks.

@PerKurowski

The US 2008 financial crisis was born April 28, 2004 – and different bank capital for different assets are worse than too little or too much bank capital.

Sir, I must refer to Janan Ganesh’s “Political distemper preceded the financial crisis” August 30, in order to make the following two comments:

1. “A financial crisis that was experienced as a fragmented chain of events is being commemorated as just one: the fall of Lehman Brothers, 10 years ago next month.”

That is only because the truth shall not be named. In the case of the United States, that crisis started on April 28, 2004 when the SEC decided that the supervised investment bank holding company ("SIBHC"), like Lehman Brothers, “would be required periodically to provide the Commission with consolidated computations of allowable capital and risk allowances (or other capital assessment) consistent with the Basel Standards." 

When the Basel standards approved in June 2004 included allowing banks to leverage a mind-boggling 62.5 times with any asset that have been assigned by human fallible credit rating agencies an AAA to AA rating, or had been guaranteed by an AAA rated corporation like AIG, the crisis began its construction. That in the European Union the authorities also included allowing banks to lend to sovereigns like Greece against no capital at all would only worsen the explosion.

Oops! The following part had nothing to do with Janan Ganesh, but all with Lex's "Bank capital: silly old buffer"

2. “Debates over bank capital resemble tennis rallies… On one side of the net you have the big global banks. They say they have plenty of capital and that forcing them to operate with more is a restraint on trade. Pow! On the other side are the regulators, who say more capital is better because you never know what losses you may have to absorb. Thwack!”

But there are some few, like me, who argue that much worse than there being much or little capital, is that there are different capital requirements for banks, based on the perceived risk of assets. Riskier, more capital – safer, less capital. In tennis terms it would be like judges allowing those highest ranked to be able to play with the best tennis rackets, and the last ranked to play with ping-pong rackets. And of course that distorted the allocation of bank credit.

Populism? What’s more populist than, “We will make your bank systems safer with our risk-weighted capital requirements for banks”? 

PS. Here is somewhat more extensive aide memoire on the mistakes in the risk weighted capital requirements for banks.

@PerKurowski

A Universal Basic Income is a prime free market oriented “instrument of national togetherness”

Sir, Janan Ganesh writes about how the fact that “America has a large, complex and redistributive state…with some public assent”, has moved the floor for many traditional republicans, and has favored Trump”, “The end of the Republican free-market ticket”, August 2.

If you are a democrat or a republican who do not belong to the establishment, and who do not like the idea of having to court bureaucrats for any assistance that might be needed more and more, how do you deal with that?

As a Venezuelan, nauseated from seeing how its government has handled centralized oil revenues, I pray for all citizens to be in their own hands, using the free markets to decide what to do, than for them to be in the hands of odious redistribution profiteers. And so I do favor a Universal Basic Income.

And I believe an UBI could also signify a very important unifying bridge sorely needed in a world with so much polarization.

Of course since redistribution profiteering or the exploitation of crony statism exist in all political camps, we should expect all its enemies to circle their wagons and do what they can to stop UBI from reducing the value of their franchise. One of their first lines of defense, is helping to push an UBI into promising way too much, so that it clearly become fiscally unsustainable. Another one is arguing that would exacerbate social laziness.

I have no idea where long-term a UBI would lead us, but I wish we could start with one small enough to help everyone to get out of bed, but not so large so as to allow anyone to stay in bed. Around the corner, or probably in many ways even here, we will need decent and worthy unemployments, and UBI must surely be part of the toolbox for that. 

As a UBI does in fact represent a Societal Dividend, it should appeal to both those who want more free markets and those who focus more on social responsibilities. That sounds very much like an instrument for the centre-left-right to embrace the free market and “the state as an instrument of national togetherness”.

http://myubi.blogspot.com/2017/01/my-universal-basic-income.html

@PerKurowski

If regulators, or even FT, do not questions the 0% risk weight of sovereigns, why should ordinary citizens care about public sector deficits?

Sir, Janan Ganesh writes“Americans no longer care about deficits, or at least no longer care enough. Their concern about them has waned since the mid-nineties” "How America learnt to love the budget deficit” June 28.

In 1988, with the Basel Accord, regulators introduced risk weighted capital requirements for banks and for that purpose assign risk weights to sovereigns of 0%. And European central banks assigned such 0% even to Greece, and Greece drowned in public debt, and yet no one, not even FT questions that 0% risk weight.

So Sir, why should ordinary Americans care about fiscal deficits when supposedly these can be financed with a 0% risk… because the government controls the money-printing machine?

Ganesh should not worry solely about America, with these statist bank regulators we are all being set up for a horrible crash. 

@PerKurowski

For Britain’s and EU’s sake, Brexit negotiations should not be left exclusively in hands of Leavers and Brusselites.

Sir, most of the opinions on Brexit I have read in FT over the last year, seem to me have more to do with Remainers wanting it to turn out so bad so they can gorge on the “we told you so”, than with making the best out of something difficult.

In the same vein, on EU’s side, it seems to me that the Brusselites want to negotiate more in order to satisfy their by Brexit vote hurt egos, than with making the best out of something difficult.

Janan Ganesh writes in “The real saboteurs of Brexit are its own amateur leaders” November 14. So, if Leavers do not have what’s needed to negotiate Brexit well, as, that does not exculpate the Remainers from helping out in any which way they can… (or move out of Britain)

Gideon Rachman writes in namely: “Imposing a humiliating settlement on Britain might even seem economically advantageous. But the long term political and strategic consequences of a bitter Brexit are much harder to calculate.” “Britain is at the mercy of Brussels” November 14. And so, in a similar vein, the Brusselites need to be continuously reminded of that they could also be hold accountable for a bad Brexit.

If I were a British national and a Remainer, the first thing I would do is to launch a campaign messaging the following:

“Europeans since Britain will remain close to you… and since you could be next, it behooves you to keep an eye on your Brusselites so that Brexit goes well for all of us. The last thing we need in Europe at this moment is a neo-Versailles treaty.”

PS. As a Polish citizen, I would argue: “Brusselites, remember that many of us in EU have more in common with Britain than with some of our other Europeans”

@PerKurowski

If you cannot lose yourself, how on earth will you learn about finding yourself?

Sir, Janan Ganesh writing about needed freedom asks: “Where can you lose yourself, either in crowds or in isolation from them? Where can you meander for hours? Where do you have to watch your words and manners the least? Where lets you get to and from other places on a whim?” “Citizen of nowhere” Prize for freest city goes to . . .” October 14.

Yes, where? And if today you can, where will you go tomorrow when facial recognizers follow you around?

Frightening. I have always held that all young (and perhaps old too) need to be able to lose themselves in order to gain the insights that allow them to find themselves. And that discovery journey must of course not be carried out with the assistance of a GPS.

Modern technology, including of course social media, seems to dramatically be changing the way young (and old too) position themselves in life and society.

PS. Try the following experiment. When you are driving down a mountain and you have some young passengers in the car, mention that you are going south, and when you are driving up, mention that you are going north. You’ll be amazed how many young will think you are right, without giving the least consideration to the fact you are driving in the opposite direction

@PerKurowski

The risk-aversion in risk-weighted capital requirements for banks’ dooms our economies to a slow but certain decline

Janan Ganesh writes: “There is such a thing as bad stability. Gradual decline is its most insidious form… It is the toll paid in decades, not moments, that promises the worst”, “Britain faces a stable path of relative decline”, September 5.

Sir, what can I say? Except for… that does not apply exclusively to Britain.

I have sent you literally thousands of letters reminding you of that risk-taking is the oxygen of any development… and that we in the Western world progressed, among other, because we knew that in our churches we had to implore “God make us daring!”

As well as literally thousand of letters explaining how current risk weighted capital requirements stops banks from financing the riskier future, keeping these to only refinancing the safer present.

Just as an example, in Martin Wolf’s Economist Forum, on October 9, 2009, I published an article titled “Please free us from imprudent risk-aversion and give us some prudent risk-taking” It ended with:

“Dear baby-boomers, there is a world out there that needs a whole lot of risk-taking in order to stand a chance of a better future; a world which does not want to lay down and die in tranquility, just yet.”

Sir, when will you, without fear and without favor, dare to recognize this?

@PerKurowski

Hallmark; please launch an entrepreneurship channel where all, not just two, live ever after happy because of the successes

Sir, as one who has quite often tried on entrepreneurship adventures and not too often been successful at it, I cannot but say hear, hear to Janan Ganesh’s “Why must entrepreneurs get such a bad rap?” August 26.

The truth is that, except perhaps from some special inventions, nothing produces so much economic benefits we can all enjoy than what the successful entrepreneurs do.

And that is why I am so obsessed against those risk weighted capital requirements sissy regulators have imposed and that force banks to hold more capital against loans to SMEs and entrepreneurs, than they have to hold against the safe AAA rated, as the former had it not tough enough to access bank credit.

Ganesh writes: “The entertainment industry of the world’s most avowedly entrepreneurial nation tends to depict business only to pathologise it.” That’s absolutely right, and that’s why the title of my letter. 

Come on Hallmark, you who have been so good at those chick-flicks that keep my girls fascinated hour after hour; please step up to the plate. Not only we guys are in need of some of the real-tough-it-out flicks.

@PerKurowski

“Whut you goin' to do when a [lefty] gits starts to talk purty? I'm jist a [socialist] who cain't say no”

Sir, Janan Ganesh writes: “At some indistinct point in the recent past, the left lost its monopoly on rebellion. To rebel was to be conservative or libertarian. It was more transgressive to buck the sensitivities of the age on race, gender, sexual preference, climate change, civil liberties, mental health and religion than to walk on eggshells around them. This shift in what it meant to be a radical was the price of the left’s success in the culture wars. The more it policed language, the more it inadvertently glamorised anyone who gave voice to unreconstructed sentiments — even if… they almost never mean them.” “Counter-elite mentality” May 6.

The left also lost out when it was not able to resist the siren songs of false sirens like Venezuela’s Hugo Chavez and Nicolas Maduro. I am always reminded of Oklahoma’s Ado Annie singing “I Cain't Say No!”

“Whut you goin' to do when a [lefty] gits flirty

And starts to talk purty? whut you goin' to do?

Whut you goin' to do when he talks that way

Spit in his eye?

I'm jist a [socialist] who cain't say no”

Also, even though they understand that terms like “deplorable” do not serve any useful recruiting purpose, they just can’t resist going on and on, like with for instance their current “We and time will make you understand how truly dumb you were/are voting for Trump”, arguing every little minuscule happening into a Trump fault, losing perspective on things.

Frankly, a President who can drop an A-bomb basically at his will cannot fire an FBI director for whatever cause at his will?

@PerKurowski

Any party named Labour has a major difficulty deciding on its future in these days of robots and automation.

Sir, I know too little about British politics to venture myself into commenting on Janan Ganesh’s lamentations in “Labour saunters into history’s mausoleum” February 27.

But, that said, just like unions now face having to make their minds up about whether to try to unionize robots or not, a party named “Labour” must think about what to do if, some couple of years down the line, the non-workers represent a significant majority among voters. Could Labour call itself “The Not Working Workers Party” or “The Idle Labourers Party”? Anyway I am sure they could and will come up with something better.

What is clear though is that the fighting for raising the minimum wages, only to give robots a better chance to grab the jobs days are over, and does not constitute a viable political option for the future.

A Universal Basic Income scheme, one which could provide all non-workers with a stepladder to better reach up to the gig-economy, could still be an alternative; although that could mean tearing the party apart, as a UBI would significantly diminish the franchise value of the party’s redistribution profiteering members.

P.S. We sure need decent and worthy unemployments

@PerKurowski

A holier than thou alliance of hysterical extreme besserwisser progressives, is pushing too many into No No Land

Sir, Janan Ganesh opines that visceral/hysterical reaction against Trump no matter how correct it might be, might evidence to many voters that progressives do not share their deeply felt concerns about national security, crime, welfare dependency and similar. “Liberalism can only win if it holds a hawkish line” February 7.

Ganesh is absolutely correct. As a Venezuelan I can testify on that this type of reaction, by a similar holier than thou besserwisser group mostly correct in their opinions preaching to the choir, only made Chavez stronger.

For instance I utterly dislike walls, foremost because you can never be real sure you or your grandchildren end up on the right side of it. But, in the case of the Mexican Wall, much more constructive would a “Yes let’s build it” be. That followed up of course with “The USA puts up the land, the Mexicans the cheaper labor, perhaps the Canadians the materials needed, and the FED, by means of a wall-easing program, buys the 1%, 50 years bonds that are needed to finance it all”. I guess that would bring the emotionally laden discussions about that wall to a more sane level… better for all.

Sir, but Ganesh also writes: “Whenever the state imposes a counterterror measure, especially one as brute as the US president’s, statistics are dug out to show that fewer westerners perish in terror attacks than in everyday mishaps. Slipping in the bath is a tragicomic favourite. We chuckle, share the data and wait for voters and politicians to see sense.”

And that, as you might intuit, irresistibly provokes me to ask the following: When the state imposes a regulatory measure based on something so brutish as believing that what is perceived as very risky is riskier for the bank system than what is perceived as very safe… why does then so few chuckle, share the info, and wait for regulators to see sense?

@PerKurowski

If we want good governments, for all, we must lighten the politician’s redistribution profits… sorry I meant burdens

Sir, Janan Ganesh makes a very good case for a Universal Basic Income with his “Those who shout loudest are not always the worst-off” November 21.

At the end of it all, what Ganesh really discusses is the politicians’ efforts to maximize their own redistribution profiteering margins… something that skews it all.

Were there a UBI, then that would be an all citizen to all citizens affair, and governments would be elected, not based on who offers the most to some, but on the basis of who offers the best in what should be a governments primary responsibilities to all.

To diminish the redistribution role of governments will be no easy affair. That is not only because redistribution profiteers will naturally fight back; but also because after so many years of being brought up on the need to cry for a larger share of the redistribution pot, voters have become somewhat more genetically disposed to be beggars of favors.

Venezuela is a case in point, there its poor have received from the Chavez/Maduro governments, less than 15% of what should have been their per capita share of last 15 years of oil revenues. That is something probably true of most previous governments too.

But today, the most vociferous clamors against the government, come from a middle class that discovers having been placed on a road that’s heading in the wrong direction… its “the rage of dispossession” Ganesh writes about. The Venezuelan poor, well they have no time for anger, they have barely time to survive.

@PerKurowski

Are liberals willfully blind or just blind? The financial crisis was caused by a mismanaged managed economy

Sir, Janan Ganesh writes: “Maybe Mrs May has a genius plan for a more managed economy stored away but do not bet on it. The British state has no enthusiasm or competence for such a burden, even after the experience of the financial crash… liberalism carried the past 40 years” “Even a homeless liberalism remains the best idea” October 25. 

Questions: 

What kind of liberalism assigns a 0% risk weight to the sovereign and 100% to We the People?

What kind of liberalism tells banks “We will allow you to earn much higher expected risk adjusted returns on equity, as long as you keep to what’s safe, like to what has an AAA rating, and stay away from what’s risky, like unrated SMEs?

Does Ganesh really think the financial crisis was the result of liberalism and not of a highly mismanaged managed economy?

Clearly, too many with liberal instincts have been fooled into believing the statists’ version of history that assigns the cause of the banking crisis to “deregulation”. Wake up! What caused it was the mother of all silly regulatory overextensions.

The 2007-08 crisis would never have happened were it not for the distortions in the allocation of bank credit to the real economy the risk weighted capital requirements for banks produced. Name one single asset that did not generate a ridicule low capital requirement for banks that grew into a dangerous bubble.

The ensuing slowness in economic growth is caused by those same distortions; which for instance have banks preferring to finance the basements where (homeless) kids can live with their parents, to the SMEs that stand a better chance of generating the jobs that could allow the kids to become parents too.

We had about 600 years of banking that served us fairly well. But then daft bank regulators, thru the bathroom window, in 1988, with the Basel Accord, introduced statist and foolishly risk adverse regulations. In 2004, with Basel II, they thickened the layer of risk aversion, by also imposing discrimination within the private sector, depending on credit ratings.

Next to Ganesh, Margaret Heffernan, the author of “Willful Blindness” writes “Making a fetish of overwork is bad for productivity”.

For me it begs the question: Were the loony bank regulations caused by overworked stressed technocrats in the Basel Committee?

“Death by overwork — karoshi” Might there be a Japanese word for death by technocratic stupidity?

Are liberals guilty of willful blindness too?

PS. Here a more extensive aide memoire on some of the monstrosities of such non-liberal bank regulations.

@PerKurowski ©

With respect to realizing bank regulators do not know what they’re doing, FT has clearly not reached maturity.

Sir, Janan Ganesh writes: “Maturity is the realisation that adults do not know what they are doing. Grown-ups are not omniscient, just fallible humans trying their best in a difficult world.” “The markets hold more sway than May” October 18.

Indeed that is why in a letter you published in January 2003, before I became de facto censored by FT, I wrote: “Everyone knows that, sooner or later, the ratings issued by the [human fallible] credit agencies are just a new breed of systemic errors, about to be propagated at modern speeds.”

Here is the shorter version of the generally unknown lunacy of the current risk weighted capital requirements for banks:

1. If you allow banks to leverage their equity, or the support they receive from society, more with some assets than with other, then you will dengerously distort the allocation of credit to the real economy.

2. And all that distortion for nothing. What is dangerous for bank systems, is never what is ex ante perceived as risky, but always either some unexpected event, or the build-up of dangerous excessive exposures to something that ex ante was perceived as safe but that ex post turned out not to be.

You all in FT, grow up, mature, understand that current bank regulators haven’t the faintest on what they’re doing.

PS. Here again is a somewhat more extensive aide memoire on the monstrous mistakes of the current capital requirements for banks.

@PerKurowski Janan

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 ©

When the products of groupthink do not stay in Vegas, and are applied elsewhere, that can be truly sinister.

Sir, Janan Ganesh writes: People that work in the same field develop their own codes and slang. They sleep and socialize with each other. Without intending it, they seal off the world from uncomprehending outsiders. It is a byproduct of specialization and there is nothing sinister about it”. “The average voter is immune to romance and fevered rhetoric” April 7.

Hold it! That depends on whether what the specialists do in their intimacy stays in Vegas or not. For instance, when bank regulators got cozy in their little Basel Committee mutual admiration club, and through an incestuous groupthink came up with their portfolio invariant credit-risk equity requirements for banks, well that turned into something extremely sinister that completely distorts the allocation of bank credit worldwide.

@PerKurowski

In these globalized times, would you not want your flag to be a flag of convenience, flagged by many?

Sir, what extraordinary interesting questions and suggestion of answers those of Janan Ganesh in “Fly the flag for the liberal values that define Britain” June 17.

I have often proposed that in these days of social media with circles of friends and known and unknown acquaintances, we should always be able have a fast reference to where on earth we all find ourselves, what flags we feel we live under, and perhaps what flags we would like to live under… because, just as ships can carry a convenience flag, why should not a Venezuelan-Polish citizen, in Sweden educated and in Washington living individual like me not be able to carry a British flag if that was the flag I best liked.

And in this respect I do not think that asking what is the flag Britain should flag to rouse the nationalistic sentiments of the locals, is half as good as asking what flag should Britain flag to rouse the globals to want to align behind “the liberal values that define Britain”. In these days we must never forget that you do not need an Armada to conquer, nor do others need an Armada to conquer you.

Or, as Violet Crawley might have admonished, “Do not be so parochial. It is so middle class”.

And with respect to flagging and signalization let us never forget that the order is vital. For instance if you flag the ex-ante maximization of opportunities flag long before the ex-post redistribution of wealth flag, I am certain you will get much better results than flagging in the order that Thomas Piketty sort of seems to imply.