Whoever thinks banks are now better regulated for sure, must surely be too easily impressed by complexity

Sir, Martin Wolf “argues against premature monetary tightening. Let us establish strong forward momentum first”, “Risks remain amid the global recovery” July 5. 

I would heartily agree, if only all that easy money was flowing more towards investments in the future. It is not! The current risk weighted capital requirements give great incentives for that not to happen.

And when Wolf opines “the core western financial system is far better regulated and capitalised than it was in 2007”, how on earth does he know that?

When regulators regulate based on the same risks bankers perceive, and not based on the possibility that those risk are badly perceived or badly managed, or on unexpected events, we have no firm basis for opining something like that. That is unless we are in awe, like Martin Wolf must be, of any increased regulatory sophistication and complexity; like that reflected in Basel Committee’s “Minimum capital requirements for market risk” of January 2016, and that are now, June 2017, the subject of consultative document titled “Simplified alternative to the standardised approach to market risk capital requirements”.

Sir, the world urgently needs bank regulators who are not solely fixated on avoiding crisis but who also understand the vital importance of good banking between the crises.

As is, the time bankers should allocate to ask that all-important question of “What do you intend to do with the money if we lend it to you?”, will be taken up more and more with trying to understand and fill out regulatory material.

And what has easy money done to equity markets? Corporations engaged in short termism have taken on debt in order to pay out dividends and repurchase shares. Is that something good?

Wolf writes: “The BIS talks, sensibly, of building resilience. A part of this lies in ensuring that growth becomes less dependent on debt.” Yet by treating it only as one task of many, Wolf sort of diminishes its relative importance. Debt finances much anticipation of demand, when that debt hits the wall of having to be repaid, future demand will fall.

Sir, as I see it, never ever has a generation used up so much public and private borrowing capacity for its own short-term benefits. Social security and pension plans, sold by governments on the basis of an expected 7% real return, are by the minute taking on more characteristics of Ponzi schemes, using fresh money from future retirees to pay out benefits of the current.

http://subprimeregulations.blogspot.com/2016/08/statist-baby-boomers-want-us-to-extract.html

@PerKurowski

Money from heaven can be real or fake and it can be dropped by trusted helicopter pilots or as Universal Basic Income

Sir, Robert Skidelsky writes: Because “there is no assurance that a lot of such helicopter money would not be hoarded…contemporary advocates of helicopter money like Willem Buiter and Adair Turner see it mainly in terms of monetary financing of additional government spending. The government should pay for, say, an investment programme not by issuing debt to the public but by borrowing from the central bank. This will increase the government’s deficit, but not the national debt, since a loan by the central bank to the government is not intended to be repaid. Thus the government acquires an asset but no corresponding liability.” “A tweak to helicopter money will help the economy take off” August 5.

Have these statists gone raving mad? “The government acquires an asset but no corresponding liability?” Is this a Ponzi fiscal revenue scheme?

Have these statists gone raving mad? In this world of cash-strapped citizens would they not know better what to do with their helicopter money than some bureaucrats with other people’s helicopter money?

And besides, helicopter money could be real money and it could be fake money… and only fiscal revenues Ponzi schemers would be thinking of dropping what’s fake.

And besides, helicopter pilots could be trusted, or only doing the drops on their favorite neighborhoods.

So, if you introduce a Pro-Equality tax, and drop all those revenues by means of a Universal Basic Income scheme equally to everyone, both the hoarding and the redistribution profiteering will be small.

Sir, if we are not expecting to profit on the redistribution, is that not what we, poor and rich, all want and need? 

@PerKurowski ©