Free market capitalism with regulatory controls on the free flow of bank credit, is an oxymoron

Sir, I am not discussing here Margrethe Vestager’s, the European Commission’s competition chief decision to order Apple to pay €13bn in back taxes to the Irish government. But, titling as Philip Stephens does his September 16 article, “How to save capitalism from capitalists” seems to me topsy-turvy.

What now most hinders free-market capitalism from delivering its full potential, is not capitalists, but inept and statist bank regulators.

Currently, for the purposes of the risk weighted capital requirements for banks, “The Risky”, like SMEs and entrepreneurs, those who cannot even afford a credit rating, are given a risk weight of 100%, while the government bureaucrats who are going to spend the tax revenues, or the public indebtedness, are risk weighted at 0%.

That translates into that government borrowings are subsidized, a fiscal revenue, with the subsidies, the taxes, paid by those “risky” that as a result have less access to bank credit.

So the real question should be: how to save free-market capitalism from state capitalists.

As is we really need a Robin Hood to come and rescue us from Sheriffs of Nottingham disguised as expert bank regulators.

But it is even worse, because those yet unpaid €13bn of Apple are not allowed to flow freely as bank credit even within the private sector; and that is because “The Safe”, the AAArisktocracy, have also been given a much lower risk weight, one of only 20%.

Sir, and if only those who rightly pressure taxpayers to correctly pay up, would also try to pressure with the same vehemence, the tax revenue spenders to correctly spend.

@PerKurowski ©

Nowadays they are much more sophisticated

PS.Basel Committee’s risk weighted bank capital requirements with decreed risk weights of 0% governments - 100% citizens have, since 1988, empowered a Bureaucracy Autocracy.

For access to confidential private Swiss banks accounts, why not “wealth asylum”, something like political asylum?

Sir, John Gapper writes “there are decent reasons apart from tax evasion, or even legal tax avoidance, for the wealthy to put money in Swiss banks”, yet he with reason asks “the rich”, whether that is “any way to behave”, since doing so they will “resemble money launderers”, “Private banks must be more than laundries” February 12.

But Sir, why should a rich have to give up his private Swiss bank account if his reasons are decent?

It seems that what could be needed is something like a Swiss government office where a person can go and request “wealth asylum”. He would there of course have to present reasonable evidence of his source of wealth not being illegal.

If granted, such asylum would offer special confidentiality rights, which would be guaranteed for as long as the Swiss government does not receive substantial proof that shows the application contained major falsehoods.

If Robin Hood could hide in Sherwood Forest why can’t wealthy hide in private banks? I mean let us be frank; there are many bad Sheriffs of Nottingham out there.

If persons are allowed to carry guns against bandits, why not, in these Piketty days, can the wealthy carry private Swiss bank accounts against some overly greedy government bureaucrats?

And sometimes even if its not all "legal": If a poor North Korean managed to evade paying taxes and escape with some money, should not his capital have right to anonymous asylum?

But why on earth should you think about putting the burden to decide about what’s decent and what’s is not, on a small bank clerk who might rarely been out of his country?

PS. Am I wealthy? No! But just like for instance a shoe-artisan in Milan knows it, I know that the higher the number of wealthy around me, the more likely I am to be better off… and so, sometimes, though not too frequently, I also have to think a bit about how to keep the wealthy wealthy. If you have to be a servant, then most often, though not always, you are better served having to serve a wealthy master.

I am very suspicious of those who seem wanting to promote shared poverty… because quite often it sounds like their populist business plan for trying to become very wealthy themselves. And I do oppose the redistribution profiteers

PS. But then, now and again, I get hit by the thought: "If the wealthy could not safeguard their wealth in other countries, then perhaps they would make a stronger stance and defend their wealth more in their own country". And that sometimes could be what is really most needed.

FT if this is the way European banks “derisk”, there is no doubt that Europe is getting to be much riskier.

Sir, Patrick Jenkins writes “banks have derisked since the crisis, cutting loans to companies and individuals…amplified their investment in sovereign bonds” “Time to force banks to kick their easy money habit” November 28.

To me anyone calling a reduction in loans to citizens and private sector and an increase in loans to the sovereign as a process of “derisking”, is either a communist or has no idea what he is speaking about.

And the “Funding for Lending” schemes that Jenkins refers to as a way of solving the “weak supply of credit to smaller business”, will not make a dent to a problem which derives from those insane capital requirements for banks where these, in marginal terms, under Basel III, need to hold 7 percent in capital when lending to a European, but zero percent when lending to its sovereign.

No Sir, if European banks are “derisking” this way, there is no doubt that Europe is getting to be a much riskier place.

Don´t you find something to be very wrong when banks are given so many incentives by the Regulator of Nottingham to lend to King John and not to Robin Hood?

Professor David Camroux, referring to a Robin Hood tax, seems to be just another applicant to the position of a Sheriff of Nottingham.

Sir, here is David Camroux, an Associate Professor of Science Po, quoting Jean Baptiste Colbert in that “the art of taxation” is taxing so that it is least noticed; writing that the FTT proposed by the European Commission could raise about €30bn to €35bn annually; and indicating it as an amount “rather small in comparison to the revenue needs of the 11 European Governments concerned”, and still he has the gall to refer to it as a Robin Hood tax, “FTT a feather in the cap for the average taxpayer”. May 30.

Sincerely as far as I am concerned Mr. Camroux is clearly only showing credentials to apply for the position of a Sheriff of Nottingham.

Perhaps one day we will find FTT as uncontroversial as VAT Camroux writes. Indeed, but was that to happen, that would just mean another regressive feather plucked from the goose average-taxpayer and put in an average European Commission bureaucrat cap.

If Professor Camroux really wants to help the average taxpayer, then what he should do is to question the revenue needs of their respective governments.

PS. There was a time that the FTT could have been a Robin Hood tax. That was when it was seen as an instrument to obtain resources from rich countries so as to help poor countries. But that was, at least, a financial crisis ago.

EU, ECB, what “Robin Hood” taxes are you talking about? Sounds like mislabeling to me

Sir, Ralph Atkins writes “ECB offers to recast‘Robin Hood’ tax amid fears over market impact” May 27, and I just have to ask “What Robin Hood tax?” as in its current form it seems just to be another tax collected by a Sheriff of Nottingham to feed the coffers of Prince John. 

PS. Never forget, nothing as effective against tax-havens than tax-heavens

FTT is no longer a “Robin Hood tax”, now just another “King John tax”, to be collected by another Sheriff of Nottingham

Sir, Alex Barker and Philip Stafford report that “Brussels looks at incentives to ease collection of ‘Robin Hood’ levy” May 23, and I do think some clarification is in order. 

There was a time, many years ago, when some thought that the financial transaction tax was going to be used to redistribute wealth from the richest to the poorest countries. And so those days, branding FTT as a “Robin Hood” tax made some sense. Not any more, now it is a quite ordinary and traditional “King John” tax to be collected by a Sheriff of Nottingham. 

I do not mind the distribution from the rich to the poor… what I do mind is that in the collection and distribution process, most funds transferred end up in pockets other than those of the poor.

PS. Against tax-havens, nothing is as powerful as tax-heavens 

Has Robin Hood sold out and now been co-opted by King John as a neo-Sheriff of Nottingham?

Sir, Ralph Atkins and Alex Barker quote Simon Chouffot saying “You can draw parallels between the Sheriff of Nottingham and financial services, and Robin Hood redistributing gains back to those who needed it.”, “Robin Hood tax: A long shot”, May 21.

Sorry but I am utterly confused, I always saw the Sheriff of Nottingham as the tax collector for bad King John, and Robin Hood as providing good people a safe-haven in the Sherwood Forest.

Taxation through reverse mortgages?

Sir in “Adapting to mediocre prospects” July 17 Martin Wolf writes “Let the cash-poor but land rich borrow their tax payments from the government and demand repayment on death”. Is Martin Wolf trying out as a modern Sheriff of Nottingham proposing the taxation through reverse mortgages?

Why does Mr. Wolf not go after the cash-rich to begin with? What does Mr. Wolf have especially against landowners? Why does Mr. Wolf for instance not go after all those intellectual property owners who are granted monopoly rights and protection by the state without paying anything special for that?