If I’d given Trump’s speech in Warsaw about the Western civilization, I would have given it a totally different spin.

Sir, Martin Wolf writes: “Development is a moral cause” “A clash of civilisations or community?” July 12.

Absolutely! And so it is immoral to promote risk aversion when knowing, as we should know, that risk-taking is the oxygen of development. If I were Trump the following would be my speech with relation to Western civilization:

“The fundamental question of our time is whether the west has the will to survive. Do we have the confidence in our values to defend them at any cost?” Do we have the willpower to stop regulators who tell our banks not to finance our young’s future, as that’s too risky, and instead earn their returns on equity by refinancing their parents’ past and present as that’s safer? Where did we lose that which made us sang in our churches “God make us willing”? And when did we give up on the citizen, risk weighting them 100%, so as to place all our trusts in governments, risk weighing our sovereigns 0%?”

Sir, Martin Wolf once told me I had an obsession against the risk weighted bank capital requirements of the Basel Committee. I confess. I do. But he himself now displays having fallen victim to that obsession a la mode that is to be against Donald Trump, as if getting rid of Trump would normalize our world.

It is so much an obsession that he like many argues that Trump’s abandonment of the wishy-washy, photo-ops, green profiteering lobbied Paris agreements, will de facto be what causes the extinction of our planet, as we know it. Its crazy!

Wolf explains “plutopopulism”, the possible source of a “clash of civilisations”, as the natural consequence of high inequality. There I agree! But the recent high inequality that is registered, for instance in the USA, is the direct consequence of QEs and alike kicking the crisis can down the road, while maintaining regulatory distortions that favor the Sovereign, the AAA-risktocracy and the ownership of houses. And on that Wolf keeps mum!

And clashes of civilization, worse than global, domestic ones, will be the result if we do not prepare in time to hinder that breakdown of social cohesion that will result from a growing structural unemployment. Sir, we need, urgently, worthy and decent unemployments. How? A Universal Basic Income seems to be a logical start.

At the end of last decade I shared much the concerns of Martin Wolf, seemingly not any longer. Why? When Wolf writes: “the west contains far too small a proportion of humanity to lay any moral claim to global management”, I am saddened. Our morality is not to be dictated by majorities.

I am born in Venezuela, educated in Sweden, worked in Venezuela, live in Washington and have Canadian grandchildren. I feel globalized and sure I cannot be defined either as a reactionary or as a chauvinist by my way or life. But, to hold as Wolf does, that “Terrorism is just a nuisance” that “could poison relations with 1.6bn Muslims worldwide”, makes it absolutely clear to me that, for better or for worse, I will never be as globalized as Martin Wolf. When and why did he so completely jump off the Western Judean-Christian civilization?

Yes, “Nazism was an existential threat”, within the Western Judean-Christian civilization. Thank God it was defeated, with the Western Judean-Christian civilization’s forces and convictions. 

@PerKurowski

Martin Wolf and I have three fundamental differences in opinions. Sir, dare decide, without favour, should I shut up?

Week after week I read Martin Wolf articles, and week after week, though I have clearly been blacklisted, I write letters to you commenting on these. Most of these letters refer to three issues on which I am obsessive, I confess, but on which Martin Wolf is equally obsessed, ignoring these, though he has not confessed. 

I insist in doing so because I truly believe these are issues of utter importance to the well being of my children and grandchildren, and indeed for the whole western society with its Judeo-Christian traditions to which I belong.

First: I know that, allowing banks to leverage equity differently with different assets depending on perceived credit risk, does seriously distort the allocation of bank credit to the real economy. As it permits banks to obtain higher expected risk adjusted returns on what is perceived safe than on what is perceived risky, it introduces a dangerous credit risk aversion that will do no one any good. Risk taking is the oxygen of any development.

Martin Wolf does not think so. In fact he has told me that even if, hypothetically, there were distortions, it is the responsibility of bankers to ignore these, to forget about maximizing shareholder’s returns and to do what is right for the society. Sir, sincerely, I truly doubt any banks and bankers doing so would survive for long in a competitive environment.

Second, Martin Wolf believes, like current bank regulators do, that those perceived as risky are far more dangerous to the banking system than those perceived as safe; and hence Basel II’s 150% risk weight for those rated below BB- and meager 20% risk weight for those rated AAA to AA, do seem logical to them. 

I on the contrary, having walked a lot on Main Street, know that what is perceived as safe, poses intrinsically a much larger threat to the banking system, than what is perceived as risky. To me the regulators are behaving like nannies telling the children to beware of those ugly and foul smelling who approaches them, but to embrace the nice looking gentleman who offers them candy.

Third: Basel I of 1988, by assigning a zero risk weight to sovereigns and a 100 percent risk weight to the citizens upon which the sovereign strength depends, introduced by means of bank regulations, through the back door, a for me unforgivable and hateful statism. Martin Wolf has not voiced any serious objection to the concept of an infallible monarch.

Sir, so what is your opinion, should I stop sending you letters commenting on Martin Wolf’s articles? Until now he has not given me one valid reason for me to believe I am wrong and he is right.

For instance this week Martin Wolf hits down (again) on Germany’s policies versus the Eurozone. “Germany is the eurozone’s biggest problem” May 11.

Had the regulatory distortions I complain about been removed, I might very well have agreed a lot with him. But while that has not happened, I feel sure that any German ECB or other Eurozone stimuli will be wasted, and might very well set Europe up to something worse. Frankly, when push comes to shove, it is always better to build solutions around at least someone being strong, and not based on a by all shared utter weakness. 

PS. Here the most recent aide memoire on what is wrong with Basel Committee’sregulations.

@PerKurowski ©

Jesus, though opposing the idle rich, clearly supported entrepreneurship, the heart and soul of good capitalism.

Sir, John Plender, when discussing the pro and cons of capitalism writes “Jesus… had no time for the rich”, “Morality and the money motive” July 18.

That is true but only with respect to the idle rich, and who in reality have also very little to do with capitalism. When it comes to entrepreneurs, as can be read in ‘The Parable of the Talents’, Jesus lends them his full support.

From Matthew 25:14-30 we extract the following: 

14 It will be like a man going on a journey, who called his servants and entrusted his wealth to them.

15 To one he gave five bags of gold, to another two bags, and to another one bag, each according to his ability. Then he went on his journey… 

24 Then the man who had received one bag of gold came. ‘Master,’ he said, ‘I knew that you are a hard man, harvesting where you have not sown and gathering where you have not scattered seed.

25 So I was afraid and went out and hid your gold in the ground. See, here is what belongs to you.’

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.

28 “‘So take the bag of gold from him and give it to the one who has ten bags.

29 For whoever has will be given more, and they will have an abundance. Whoever does not have, even what they have will be taken from them.

30 And throw that worthless servant outside, into the darkness, where there will be weeping and gnashing of teeth.’

Unfortunately the members of Basel Committee for Banking Supervision have clearly not understood the meaning of that parable. The risk aversion implied by their credit-risk-weighted capital requirements for banks, more-risk-more-capital and less-risk-less-capital, only promotes the immoral idleness of richness.

Plender also writes: “boom and bust, together with severe financial crises, are permanent features of the system”. Indeed, but Plender should never forget that busts, can be horrible or manageable, productive or useless, in much depending on whether it was risk-taking or risk aversion that ruled during the boom.

When true risk taking prevails, dangerous but possibly enormously productive bays will be explored. If instead risk aversion leads the way partner, then the safe havens will become dangerously populated… and, as Plender should know, the financial crisis of 2004 was a direct consequence of the latter.

Sir, the saddest part is that we ignore and still allow our bank regulators to apply unchristian immoral risk adverse principles. We should indeed throw out our worthless current bank regulating servants “outside, into the darkness, where there will be weeping and gnashing of teeth”

PS. Odious regulatory credit risk discrimination denies those perceived as risky fair access to bank credit, and is therefore also a great driver of inequality. 

@PerKurowski

Regulators, accept gallantly you messed it all up with the risk-weighted capital requirements for banks. And amend these... please!

Sir I refer to John Dizard’s “Brussels spends too little time on reforms that could help SMEs” April 19.

Decades ago someone, I do not remember who, commented on how a board would take much less time deciding on a several million dollar technically difficult investment, than on the amount to be spent on serving coffee during their meetings.

So when John Dizard writes that “so much time gets spent on minor issues, such as high speed trading, and so little on incremental reforms that could actually ease the credit crunch for SMEs” we might have to revise that theory. The lengthiest discussions would not seem to relate to issues that board members most know about, but on issues that collectively they least know about, and where no one has the guts to display ignorance.

The risk-weighted capital requirements for banks, of Basel II and Basel III discriminate directly against the access to bank credit, in risk adjusted competitive terms, of the SMEs. It is as easy as that. The regulators should dare to admit that and make amends for it… fast. The future of the western world, the Judeo-Christian civilization, much depends on it.