The risk weighted capital requirements doomed our banks to impotence, and our economies to obesity.

Sir, I would like to make some of my own observations on two terms of those exposed by Robert Shrimsley in “Menopause, impotence and other useful economic terms” May 18.

Shrimsley writes: “Impotence: An underperforming economy is distressing for all parties. This kind of dysfunction can be either structural or cyclical or psychological”. 

Indeed but it can also be physiological. When the Basel Committee introduced risk weighted capital requirements for banks they impeded banks from feeling any attraction to what’s perceived as risky, like the entrepreneurs. That has our banks only masturbating by lending to what’s “safe”, like houses and sovereigns… and all the Viagra in the world won’t help. Our only salvation lies in a delicate intervention that removes this regulatory object that causes this ED; so that banks can, little by little, throwing out the equity minimizers and reincorporating some savvy loan officers, learn again to perform their societal duties.

Shrimsley writes: “Obesity: This is an economy…which has given up going to the gym and is too heavily dependent on house price inflation and junk commodities like lightly regulated financial products” 

When regulators told banks that if they only stayed away from what is perceived as risky, what bankers don’t like, like risky entrepreneurs and broccoli; and went for what’s safe, what bankers love, like residential mortgages and ice cream, then they would be rewarded with the chocolate cake of higher expected risk adjusted returns on equity…they guaranteed the economy to become obese.

@PerKurowski

Brexit should be an affair between Europeans, not between some EU technocrats resenting a love spat.

Sir, I refer to Robert Shrimsley’s ironizing “Your country needs you: Brexit’s patriot act” July 15. There he writes: “Fox has said some journalists would rather see Britain fail than Brexit succeed”.

Well so do I! When I read so many opinions in FT stating categorically that Britain EU has much more to lose from Brexit than EU without acknowledging EU’s huge and delicate Brexit problems; when I see no one trying to capture the support of Britain that undoubtedly exists among Europeans; when I see no one wanting to go out and ask what kind of punishment they want the not so popular, the not elected by vote executioner Barnier to enforce on Britain, I do feel that most of you have an existential necessity of the Brexit affair turning out real bad for your country… or a shameful lack of willingness to defend what is yours, meaning not only Britain but also Britain’s future relation with Europe.

Can you imagine Britain during World War II communicating solely with the Vichy government of France and not reaching out to La Résistance?

The Brexit morning after do you think Europeans want to see Britain gone for good? I doubt that, Britain is much more part of the glue that holds EU together than you seem to want to know.

PS. Just yesterday https://teawithft.blogspot.com/2017/07/european-citizens-must-solve-brexit.html

Per Kurowski

A Venezuelan but also a Polish citizen, and therefore a European who is strongly in favor of Britain… though I admit the last could just be the result of not being up to date.

@PerKurowski

Trump should make certain that “risky” Main-Street borrowers, like he, are invited to Basel, Davos or a Dagenham.

Sir, Robert Shrimsley writes: “the Financial Times has learnt the sensational and entirely fictional news that next year’s pilgrimage has been moved from Davos to the rather more earthy and economically deprived location of Dagenham in east London. The move was the brainchild of Sir Nigel Farage, who said it would help the global liberal elite get back in touch with the real world” “A Davos for the Donald — do it in Dagenham, mate” December 2. 

That’s not so farfetched: We have regulators who for the purpose of setting the capital requirements for banks, use risk weights such as: 0% the Sovereign, 20% what is AAA rated, 35% house financing, and 100% for We the People, like SMEs and entrepreneurs. 

Those regulations make it much harder for those who, precisely because they are perceived as riskier, already face great difficulties accessing bank credit. 

Around the world, over the last decade, those discriminatory regulations against have impeded many millions of SMEs or entrepreneurs to have access to bank credit, and if they got it, they have had to pay much more for it, in order to compensate for this unfair regulatory tax. 

I have no specific information about Trump or his enterprises own bank borrowings, but I am absolutely sure that, over the years, he has had to pay millions and millions more in interests to banks, than what he would have had to pay in the absence of these regulations. 

De facto the Basel Committee’s bank regulations represents a wall which impedes all fiscal and monetary stimulus to reach were it should, in order to create a new generation of jobs and move our economies forward, so as these do not stall and fall. 

Obviously “the risky” SMEs and entrepreneurs, have never been truly consulted about their needs, by for instance regulators in the Basel Committee or the Financial Stability Board, much less have they been invited to places like Davos. 

So, if anyone would want to make a reality of moving “Davos to the rather more earthy and economically deprived location of Dagenham”, the guest list should be much revised, and Dagenham marketed as “The best access to Main Street and the real economy” 

If Trump would then appear in a Dagenham, to speak out on behalf of “the risky”, then perhaps the whole world would learn to appreciate the fact that there are conflicts of interests that can be truly helpful… and should perhaps even be nurtured. 

Sir, I can almost already hear Trump shouting out: “Basel… tear down that wall!” 

@PerKurowski

We should be grateful for the chance of experience boredom. It is much more valuable than we think.

Sir, Robert Shrimsley tackling the issue of boredom writes: “denial of boredom is a serious societal issue. One day, many of these kids will have to sit through a strategy meeting, watch a 24-page PowerPoint presentation or feign interest in the deep thoughts of a senior colleague. How will they cope? As concerned parents, it falls to us to put some boredom back into our kids’ lives”, “Bring back boredom in family life”, September 19.

Though learning the social skill of feigning interest while bored is indeed important and useful, boredom is so much more important than that. In this respect let me translate here some few sentences from an extraordinary book in Swedish titled “In the Shadow of a crime” written in 2004 by Helena Henschen, who passed away in 2011. 

“Sometimes it feels necessary to expose oneself to lonely boredom… It is as if the psyche must have silence and time at being activated and trigger a creative process. I must get away from everyday life with the constant incoming data occupying the space, a stream of impressions that gushes from the outside and requires sorting, valuation and action. It is only when the clatter from the outer life stops as they arise a conversion. Current switches direction. From boredom grow a movement from the opposite direction, from the inside out. It seems that boredom and creation have to do with each, as well as the listening to nothing.”

In other words Henschen is saying that boredom represents that free space in our mind that allows us to digest and put some order to our impressions, as well as to hopefully add something of our own making to it. I agree, from this perspective boredom is indeed something of which our children and we should all be grateful to experience. Sir, think of that next time you get bored.

@PerKurowski

The more you trust someone to be telling you the truth, the more you might come to believe something not true.

Sir, Robert Shrimsley writes on the always incredibly interesting and incredibly difficult issue of finding who are to be trusted for telling the truth… for instance on the web, “Google searches go beyond #Thedress to a bigger truth” March 6.

And Shrimsley refers to a Google research paper proposal to “move away from the wisdom of crowds and back to established authority”.

With respect to “wisdom of crowds”, I fully agree with that as a minimum a major revision is in order since those “crowds” on the web cannot be taken as being real crowds in the traditional sense.

But, on the use of “established authority”, these might neither have much to do with what we think (or hope) they used to be... These now represent more something like network authorities or ideological affinity authorities.

So how would I proceed if Google?

For a starter, and since I know gaming is always a possibility, I would leave the door open for at least 25 percent of pretending Truth-Sayers to be ushered in by Lady Luck, meaning presenting varied opinions from those who have done no merits at all to be telling the truth, picked out by means of a lottery.

Second I would use an algorithm that takes away qualifying points from any established authority that uses incestuous cross-references… meaning the “you quote me and I quote you” kind of affairs.

Third, I would use an algorithm that equally takes away qualifying points from any established authority that conforms excessively with political or ideological point of views held by anyone side of the big divide.

And finally I would end all publishing of possible truths with the following: Warning: the more trusted someone can be to be telling you the truth, the greater the possibility that you fall for something that is not true.