Instead of looking out for fake news, which is a mission impossible, go after what motivates and facilitates it.

Pilita Clark writes that “Britain’s health secretary, Matt Hancock, later warned social media companies could be banned if they failed to remove harmful content [and] ministers were looking at new laws to force social media companies to take down false information about vaccines spread by ‘anti-vaxxers’”. “Facebook is not our friend, no matter what their adverts say” March 29.

Ok, they identified one fake-news. Congratulations! 

But let me assure you that for each one of these you are able to track down, at least one hundred new ones will be spreading like wildfire.

To stop fake news, as well as to stop that odious messaging of hate and envy by polarization and redistribution profiteers, you have to be able to identify who is making money on it, and make it harder for them to make money on it.

Two things are needed for that. First to set up a parallel social media in which only duly identified individuals can participate, so that they could be individually shamed; and then place a minimum minimorum access fee on each social media message, so that they can not operate with a zero marginal cost.

Where should that access fee go? Clearly to us citizens whose data is being exploited and not to some other redistribution profiteers, and much less to some on the web-ambulance-chasers.

Pilita Clark also refers to George Orwell’s “Nineteen Eighty-Four”. Rightly so, we need to read and reread it so as to fully understand that the worst that could happen to us citizens, would be these mega social media enterprises teaming up with Big Brothers here and there.

@PerKurowski

Keep bank regulators like FSB’s Mark Carney out of global warming or we’re all toast

Sir I refer to Pilita Clark’s “Carney urges ‘net zero’ company strategies” December 5.

In Basel II a corporate asset that is rated AAA to AA carries a 20% risk weight, while a similar asset rated below BB- is risk weighted 150%. That means that the capital a bank has to hold against a corporate asset rated AAA to AA is 1.6% (8%x20%), while against an asset rated below BB- it needs to hold 12% in capital… 7.5 times more.

Anyone who believes that assets rated below BB- are more dangerous to the banks than assets rated AAA to AA, even a mind-blowing 7.5 times more dangerous, has not the foggiest idea about risk-management.

The safer an asset is perceived, the larger is its potential to deliver unexpected losses, those losses that bank capital is to help cover.

And that is why Mark Carney, the chair of the Financial Stability Board, instead of appointing “Michael Bloomberg, media billionaire… to head a task force aimed at helping investors judge how companies are managing the risks that global warming poses to business”, should better see that himself and all his colleagues take a Risk Management 101 course.

Sir, as I have said many times before... if climate change/global warming regulations is to be handled by a task force in any way similar to how the Basel Committee and the Financial Stability Board handle banks… then we're all toast.

PS. If bank regulators want to help out then they should scrap the capital requirements based on credit risks that are anyhow cleared for, and make these based on sustainability (and job creation) ratings

@PerKurowski ©

Why did not Mark Carney warn long ago entrepreneurs and SMEs, they would no longer have fair access to bank credit?

Sir, Pilita Clark reports on how Mark Carney, the current chairman of the Financial Stability Board “warns investors of ‘huge’ hit as climate action ‘strands’ fossil fuel assets” September 30.

Because nervous regulators thought bankers did not see or responded sufficiently to the credit risks that were perceived, they forced banks to hold more capital when lending to the risky, than when lending to the supposedly safe, like to Sovereigns and members of the AAArisktocracy.

And so why then did not Carney long ago warn all aspiring “risky” entrepreneurs to forget their plans, since they could not any longer count on fair access to bank credit?

And is not Carney Canadian? Should he really be talking down the value of “stranded fossil fuel assets” just like that? It sounds a bit irresponsible to me.

And if Carney is so concerned, why does he then not require banks to hold capital based on the risk of the sustainability of planet earth?

For instance, if banks when financing something that supposedly helped sustainability were allowed to hold less capital, and could thereby earn higher risk adjusted returns on equity, that would at least induce them to serve a purpose. Basing it like now solely on perceived credit risk does not. It is both useless and dangerous… dangerous because big bank crisis never result from excessive financing of what is perceived risky, but from excessive financing to what is erroneously perceived as very safe.

Disclosure: My granddaughters are Canadian.

@PerKurowski

FT, can you help me understand the practical significance of different internal carbon prices?

Sir, Pilita Clark reports that Spain’s Inditex fashion group, owner of the Zara brand, says it has a US$30 a ton internal carbon price even though EU benchmark carbon process are around $US9. “Companies accelerate carbon pricing” September 21.

I have no idea whether those prices are high or low so it would be interesting reading what Zara will not be doing with a price of US$30 compared to what it would be doing if the price was $US9.

I ask, because when I announced to my family we will from now on be using an internal carbon price of $US60, twice that of Zara’s, my kids were properly impressed, “Way to go dad!" But then they came back and asked me what that meant for them… and I don’t have a clue… and I hope I don’t have to scrap my outdoor grill now either. 

@PerKurowski

In Paris Conference we will hear many echoing Neville Chamberlain: There will be splendid planet earth for our time

Pilita Clark and Stefan Wagstyl report on “G7 in historic accord to phase out fossil fuel emissions this century”, June 9. Hurrah!

But when Stephen Harper, the Canadian premier, brings it down to reality mentioning that: “doing so would require “serious technological transformation…I don’t think we should fool ourselves, nobody’s going to start to shut down their industries or turn off the lights” it makes it all look much more that a historic hullaballoo… in preparation for all to come out of the Paris conference in December declaring, like any Neville Chamberlain: There will be splendid planet earth for our time.

As I have held for many years, any planet earth environmental agreement, if disconnected from the people will not work… and in that respect Governments, NGOs and Greens are not the people.

Also for me, to read about phasing out fossil fuel without phasing in nuclear power, which for the time being is the only available bridge between now and that “serious technological transformation”, shows this is not a real serious effort.

What do little me currently propose we do for our pied-a-terre?

For a starter… instead of allowing banks to earn especially high risk adjusted returns on equity on anything perceived as safe from a credit risk point of view, something which has no purpose and is dumb, we should give banks the incentives to earn those extra high returns on everything that seems to help sustainability (and job creation).

Put one and the same capital (equity) requirements for banks on all assets, for instance 8 percent, and then reduce these with up to 50 percent depending on planet earth sustainability ratings (or job creation ratings).

And please, please, please… stop talking about differences between rich and poor with respect to their responsibility to planet earth… we are all indigenous to our planet, and we all have the same human right to feel responsible for it. The “I am rich so I can take care of it better” has to stop.

PS. And forget about selling carbon emission indulgences for some fairly undefined sins in order to use the proceeds for some even less defined good deeds.

@PerKurowski

Britain, get the busybody besserwissers out of your Bank of England… fast!

Sir, I am shocked, and utterly concerned about my very dear Britain’s future. How on earth have you allowed yourself to be trapped by such besserwisser-busybodies hands, as is reflected in Pilita Clark’s by the “Bank of England seeks answers from insurers over climate change” October 28.

Truly mindboggling. If BoE is so concerned about climate change, then why does it not suggest that capital requirements for banks should be based on our planet-earth’s-sustainability ratings, instead of silly, purposeless, credit-risk ratings, those which are already being cleared for by banks with risk premiums and size of exposures?

Current bank regulators evidence a truly unpardonable lack of vision. Après nous, le water and jobs dry-spell.

Sir, our young do not find jobs and could easily turn into a lost generation, and we are all facing “A world without water” and all our bank regulators think of is having our banks exclusively financing what is perceived in the short term as absolutely safe. Because that is precisely the consequence of their risk weighted capital requirements for banks. They should be ashamed of themselves.

Yes, Pilita Clark in her Analysis on water of July 15, does quote a 2013 report for Moody where Andrew Metcalf states “It´s plainly true that water scarcity is finally to bite financially”, but we all know that long before that gets to be actually reflected in credit ratings, it might already be too late.

Worse yet, if credit ratings go down because of water scarcity, banks would be required to hold more capital, and therefore the cost of credit for those so affected when combating water scarcity would go up.

What is safe and stable banks worth to us if they cannot help to deliver jobs and solutions to our other urgent problems? Could banks even survive if jobs and solutions to our other urgent problems are not found?

What about capital requirements based on potential of job creating ratings, or sustainability ratings, or getting us water ratings?

How shortsighted can we allow our bank regulators to be? It is clear that for them an “après nous, le Déluge”…or in this case a severe dry-spell reigns.