Should the Louvre, a homage to inequality, have to be culturally cancelled?

Sir, I refer to Ruchir Sharma’s “The billionaire boom” FT Weekend, May 15.

In this case, as so often happens in articles about the wealthy, it is illustrated with yachts.

As likewise always happens, the fact that the wealthy froze their earned in “good or bad industries” money, or their outright ill-gotten money, by handing it over to those building or selling the yachts, and most probably committing to employing a yacht crew, is an issue of no interest. 

Just as with respect to taxes on wealth the question of what assets and to whom are the wealthy to sell these in order to raise the money to pay for the taxes on wealth it, is scrupulously avoided by the tax proponents.

Where the wealthy’s money flows, should be an integral part of the overall analysis. Then we would be more alert to the possibility that taxing it, and handing over the money to bureaucrats, for them to decide on its use, could lead to the most unproductive use of wealth.

Sir, a personal anecdote. Walking around the museum Louvre in Paris I suddenly saw an 1560 by Pierre Reddon for King Charles IX. I then asked myself who in his sane mind would request this type of absolutely useless shield? Clearly it had to be someone extremely wealthy and powerful, someone who did not care one iota about his own security being threatened on a close range, or about its enormous costs.

https://collections.louvre.fr/en/ark:/53355/cl010117233

In that moment it suddenly dawned on me that basically nothing of what I was seeing at the museum would exist, if it had to be produced by a society where income and wealth was equally distributed. In other words, all this art around me, to have become a reality, has actually required a very unequal society. 

In other words, Shhh... just between you and me Sir... since the museum of Louvre is, unwittingly, a homage to inequality, should it be cancelled?

PS. Sharma writes “Sweden has long abandoned central elements of the social democratic agenda, including wealth and inheritance taxes, as impractical.” There might indeed have been certain policy intermezzos, but legend holds that when Otelo Saraiva de Carvalho, chief strategist of the 1974’s Carnation Revolution in Lisbon, told Sweden’s social democrat leader Olof Palme: “In Portugal we want to get rid of the rich”, Palme replied, “how curious, in Sweden we only aspire to get rid of the poor”

PS. And, as I have written to you soon 3.000 times, those “subprime banking regulations”, with their risk weighted capital requirements, impede that much of that money the wealthy are sloshing around, is efficiently allocated to the real economy. Now, whose fault is that?

@PerKurowski

The most dangerous underlying condition of the US, is that like so many other nations, it has been hit by the Polarization Pandemic.

Hannah Kuchler writing about her FT lunch with Atul Gawande on the battle to beat Covid-19, writes: “The US is polarised over its priorities, between those arguing in favour of putting the economy first, and those who want to concentrate on saving lives.”. It also states “People are more at risk of Covid-19 if they have underlying conditions such as diabetes and hypertension.” 

Sir, when compared to age, diabetes and hypertension read like truly insignificant underlying conditions. In USA, as of October 14, those older than 70 years comprise 89% of all those dead from Covid-19 in USA, those under 45 years, 3%. Yet, in terms of who will have to pay the economic/ mental health/ societal costs of any top down imposed responses to the virus that favors saving lives, the reverse percentage is to be expected. 

Sir, with those kinds of figures, don’t you think one could develop a response to Covid-19 that could better consider both priorities?

Of course, one could. Just look at Sweden keeping schools up to 9th year open while asking grandfathers to refrain from hugging their grandchildren.

Why has that not happened in the US? The answer to Hannah Kuchler’s “Is the US as a country more at risk because of the underlying condition of its healthcare system?” Is YES! It also suffers the polarization virus, and way too many polarization profiteers just don’t want harmony vaccines to appear.

Communications in a polarized world

@PerKurowski

Sweden sadly forgot risk-taking was the oxygen of its development.

Sir, Martin Sandbu, when discussing Scandinavian countries, the Nordic mixed model begins with: “Ten years ago, the global crisis laid bare the failures of financial capitalism.” “Nordic lessons for today’s socialists” August 29

That most still believe the crisis “laid bare the failures of financial capitalism”, is just the result of what seems to be one of the greatest cover up stories in mankind, promoted by those who want the regulatory mistake of the risk weighted capital requirements for banks to remain forever as something that shall not be named.

And it has absolutely to do with the subject discussed here because, one of the reason little Sweden, the Nordic country I best know, became such huge success, was the willingness of many Swedes to take extraordinary risks. In the Swedish Church psalm book we find a psalm that begs, “God make us daring”.

I find it outright shameful that a Swede, Stefan Ingves, could chair the Basel Committee and not enlighten his colleagues on risk-taking being the oxygen of development.

Of course, to top it up, that the risk weights are foolishly based on the risk of assets per se, and not on the risks of how bankers perceive and manage the assets, namely the conditional probabilities, makes it all so much worse. We will not have explosions fueled by risk-taking but much worse explosions fueled by excessive risk-aversion 

Today Swedish banks, as most of the world, are on route to build up extremely dangerous exposures to what is perceived as safe, like to sovereigns, residential mortgages or any other concocted security that manages to get hold of an AAA rating. 

Sir, today Swedes risk end up in their “safe” houses from which they have extracted all equity, and without the jobs needed to service their mortgages or to pay the utilities. Sad!

@PerKurowski

To integrate migrants in Sweden might have to begin with helping Swedes valuing their heritage (their Swedness) more.

Sir, Richard Milne’s reports Ulf Kristersson (Moderate party) told the Financial Times that integrating the hundreds of thousands of immigrants in Sweden was a “really tricky thing,”“Swedish poll favourite eyes welfare change to integrate migrants” May 28.

Over the weekend I was in Sweden visiting family. There I had a chance to sit down and chat with the priest of the parish where the cemetery in which my parents are buried. After hearing her lamenting, discreetly, I said: Indeed, if you do not teach your children about the historical importance of the Church for Sweden’s development, it is hard to see them take due interest of it. 

Two years ago, the only girl wearing a typical Swedish national dress in the “folkpark” where we danced around the Midsummer pole, was my Canadian granddaughter. It was sad. Of course, to integrate migrants to something not given sufficient importance is a tricky affair. In Sweden, when it comes to swearing, even the “fan” I knew has been pulverized by the “shit”. 

Perhaps Sweden needs to look at itself more in terms of a cultural profitable business franchise, and have its universities analyze how much Swedes and migrants would be losing if Sweden got rid of its originalities and went neutrally global. To start out they could try calculating what its Swedish heritage has meant to bring cohesion and strength to the marketing strategy of an IKEA.

But perhaps that’s not politically correct. I wonder if a university in UK has dared estimating the added value in pounds to Britain, of the recent Meghan and Harry wedding. Surely many billions! Instead you have a Bank of England giving you the cost of Brexit, £900 per family.

PS. https://subprimeregulations.blogspot.com/2010/10/god-make-us-daring.html

@PerKurowski

Sweden got to be an economic powerhouse with its banks financing “risky” entrepreneurs, not by these financing “safer” houses.

Sir, Patrick Jenkins reports: “Nordea has a core equity capital ratio of close to 20 per cent, double that of some European rivals. It can expect lesser capital demands from the ECB” “Nordic noir: the outlook darkens for Sweden’s banks” May 1.

Let us suppose that Nordea has only Basel II’s 35% risk weighted residential mortgages on its books. Then, a 20 percent capital ratio, would translate as having Nordea 7% in equity against all its assets meaning it is leveraged 14.2 times to 1.

So when we then read that in Sweden “house prices have declined 10 per cent since last summer, although in prime Stockholm the slump has been closer to 20 per cent” of course that should be enough to besides giving “Jitters about the sustainability of property prices” causing jitters about its banking sector.

I have a close relation to Sweden in that not only was my mother Swedish but I also spend my most formative years, high school and university there. So it saddens me to see what is happening. Sweden that got to be so strong by its banks financing “risky” entrepreneurs is now getting weaker by its banks mostly financing “safer” assets, like mortgages.

“Sweden’s Financial Supervisory Authority, late last year, proposed Sweden’s Financial rules [that] would mean those taking out new home loans of more than 4.5 times their salary would have to pay off an extra 1 per cent of their mortgage annually.” Are we to be impressed with that?

Stefan Ingves the Governor of Sveriges Riksbank has since 2011 been the Chairman of the Basel Committee for Banking Supervision. Why has he not proposed to stop distorting the banks allocation of credit, by requiring these to hold the same capital when extracting value and placing a reverse mortgage on the “safer” present economy, than when financing the riskier future, that the young Swedes need and deserve is financed?

In Swedish churches there was (is) a psalm (#288) that prays for: “God make us daring”. It would seem Mr Ingves never heard less sang it. 

If we are to avoid Nazi mentalities to take over, citizens need to be able to express their deeper inner concerns

Sir, I refer to Richard Milne’s “Rise of populists poses dilemma for Nordic mainstream” February 14.

As a son of a polish citizen who had to suffer concentration camps for almost five years, I am as far away as can be with sympathizing with Nazis. And of course I see with disgust anyone “pictured with Nazi memorabilia or uttering racist comments”. But Sir, that does not determined them to be, in any way, “uniquely awful”.

To argue so just opens the door to the exercise of dangerous political hypocrisy while closing the door on the possibilities of citizens to express their usually not at all bad meaning, deep concerns.

For a citizen, in a fairly small society like Sweden to be worrying about immigrants does not make him a bad citizen… it makes him just a citizen worrying about immigrants. Is that so hard to understand or is that what some do not want to be understood?

Sir, the repression of citizens’ feeling and worries, is precisely the best fertilizer for movements that can be taken over by Nazi type mentalities. Healthy societies need to be able to discuss, to ventilate, everything that bothers them, not only what’s political correct to discuss. 

A personal PS: My mother was Swedish. 93 years old, she passed away last Friday. On Thursday night, two not at all Swedish looking immigrants, vociferating in a totally foreign language, transported her home. I have rarely met a person more open to treat all without any kind of distinctions than my mother, but had she not the right not to feel totally at ease?

@PerKurowski

Holier than thou extreme political correctness causes incorrectness, and that is only human

Sir Gideon Rachman quotes Der Spiegel with “Germany these days is a place where people feel entirely uninhibited about expressing their hatred and xenophobia.” “The end of the Merkel era is within sight” October 27.

I do no know about Germany but, when I visited Sweden earlier this year, what I felt was a lot of inhibitions to express even the slightest indication of not being fully comfortable with many foreigners in their small cities, many of them in public places begging.

Clearly not being allowed to vent normal human reactions builds up pressures that, sooner or later, will make humans explode.

@PerKurowski ©

The Swedish “lagom”, ‘just about the right amount’, is sort of the handiest word there is.

Sir I refer to Emma de Vita’s “Import Sweden’s lagom philosophy into your office” August 24.

When my Swedish 92 year old mother was recently questioned about her alcohol intake, by a doctor that by looks and name she presumed to be a Muslim, and that she therefore presumed did not look too kindly upon any alcohol intake… she looked up at the ceiling…rolled her eyes… for a while… until her face lit up… and with a big smile and honest face she answered… “lagom”.

@PerKurowski

“The time it takes to react to a 'misdemeanor', will be in inverse proportion to its seriousness" Parkinson dixit

Sir, Matthew Vincent writes of the much speedier reactions to small time misbehaviors, like catching a ride on the corporate jet, compared to much more egregious behavior, like the manipulation of the Libor “Lessons from the Swedes on accountability" August 15.

It reminds us of Parkinson’s law that states: “The time spent on any item of the agenda will be in inverse proportion to the sum [of money] involved."

Look for instance at how fast the case against the Libor manipulators proceeded when compared to the immensely larger and more serious case with bank regulations. By means of risk weighted capital requirements, the regulators manipulated the allocation of bank credit on a global scale… and the experts have not yet given signs they have even detected their misbehavior… not even in Sweden, whose Stefan Ingves currently chairs the Basel Committee for Banking Supervision.

PS. 

http://subprimeregulations.blogspot.com/2014/02/mr-stefan-ingves-i-do-seriously.html

http://subprimeregulations.blogspot.com/2015/02/en-fraga-till-herr-stefan-ingves-som.html

@PerKurowski

Political correctness is a society-wide groupthink that can be very dangerous.

Sir, In the Shrink and the Sage’s “Can we get used to anything?” of May 16, the Sage mentions “society-wide groupthink”. And the best example of current society-wide groupthink I can think of is “political correctness”.

I just came back from a week in Sweden. There I heard many expressing to me, in sotto voce, sort of ashamed, sort of “don’t tell anyone about this”, some very ordinary and human concerns about there being too many migrants and about the risk they felt that could dilute their meaning of being a Swede.

My immediate thought was that political correctness, if it blocks this way citizens from venting their concerns, then it must be a dangerous powerful growth hormone for extremism.

In other words, if you use a “That’s like Hitler” in response to too many of people concerns, then too many might end up thinking “That Hitler guy sound’s quite right for me”.

Let us never forget that the emotions involved in the not liking something for the wrong reasons, are just as strong as that of the not liking something for "the right reasons".

PS. My father suffered years of concentration camp because of Hitler. I don’t remember him saying, “That’s like Hitler” about anything or anyone… perhaps because he would never want to diminish Hitler’s evilness to something being sharable.

@PerKurowski

The problem with the Nordic model is that bank regulators have tampered with it

I refer to Richard Milne’s “Nordic model starts to creak under pressure” November 21.

Sir, suppose you were a development minister of a country like Sweden that has thrived on entrepreneurship, much of it financed by banks.

And then your bank regulator, Stefan Ingves, tells you that, in order to make the Swedish banks safer, he and his colleagues in the Basel Committee, is now going to allow banks to earn much higher risk-adjusted returns on equity when lending to those perceived as “absolutely safe”, than when lending to those perceived as “risky”.

What would you do? What should you do?

You should of course shout: “No! Over my dead body! Favoring in such a way what seems ex ante to be very safe, means that medium and small businesses, entrepreneurs and start-ups, “the risky”, will no longer have fair access to bank credit… and that is too dangerous… even for the banks.”

Unfortunately, those responsible for the economic development of most countries have not yet understood the consequences of the credit risk weighted capital (meaning equity) requirements for banks.

And so before Sweden remembers that risk-taking is the spark that ignites all development and keeps the economy moving forward, it will be stalling and falling.

And that goes of course for all countries that find themselves under the thumb of senseless bank regulators.

God make us daring!

FT, what Sweden most needs is to throw out its current bank regulatory Pharisees.

Sir, you write “Tactic of ‘lean against the wind’ has failed Sweden” October 30.

Sincerely, it reads like you are trying to convince yourself about feeling some schadenfreuden, with  weak arguments… and even sounding a bit besserwisser reminding us of the importance of looking at real more than at nominal interest rates.

And you even dare to speak of some have “been handed a clear defeat” when you must know that the real economy, the real jury, is still deliberating all around the world, without reaching any kind of clear consensus on what is to be done.

But it is when you argue: “The trade-off between safer debt levels and lost growth was not worth it” that, for the umpteenth time, I need to ask you… is the trade-off between (the illusion of) safer banks and lost growth really worth it?

Sweden is a small country blessed with immense entrepreneurial spirit, so much that even socialists regimes have been wise enough to nurture it. And, in this respect, it is one of those most hurt by that silly risk aversion that has been introduced in its banking system, by means of Basel Committees’ risk-weighted capital/equity requirements… which precisely discriminates against the fair access to bank credit of SMEs and entrepreneurs.

In Swedish churches, psalms pray for “God make us daring”, while some un-elected bureaucrats dedicate themselves to castrate and de-testosterone its banks.

And that is why Sweden also needs, urgently, a psalm that prays for its current bank regulatory Pharisees to be thrown out!

Now is not the right time for European banks to make payouts to their shareholders.

Sir, Richard Milne reports “Shareholders press Swedish banks for payouts”, October 25.

According to recent indications from the Basel Committee, banks will have to publish their leverage ratios in January 2015, which means that their un-weighted assets to capital ratios will be seen.

If European bank shareholders only knew how important, for the competitive strength of their banks, it will be to then be able show up strong ratios, in the midst of that market panic that could result from unveiling the scary truths, they would not be asking for any payouts now.

Two thoughts about Finland going the neo-markka route

Sir, Gillian Tett describes the very interesting possibility of Finland going its way with a neo-markka “Euro woes make a Finnish parallel currency thinkable” October 26. My mind drifted in two directions.

First, after offering to convert the Euros of their own citizens into neo-markkas at a 1:1 rate, perhaps up to a certain amount per citizen, they should auction out a conversion amount to the rest of the eurozone, to the highest bidders, and deposit all euros obtained over the 1:1 rate into the European Stability Mechanism, as a sort of friendly goodbye gesture.

Second… why would they go alone… why not take the ferry over to Stockholm and chat about a mutual currency project? Finland and Sweden have so many similarities.