What if prejudices in India had caused banks having to hold more capital when lending to women than when lending to men?

Sir, Martin Wolf, discussing India’s prospects mentions the “striking structural feature of India, whose significance goes far beyond economics, is social preference for sons.”, “Modi’s India is on course for rapid growth” February 7.

But the western world, by means of their bank regulators, also imposed on India that nutty preference for what is perceived as safe over what is perceived as risky. And that, for a developing country, given as risk taking is the oxygen of any development, is bloody murderous; as I have insisted on during the last two decades, in statements at the World Bank, in statements at the UN republished by an Indian university, in hundreds of Op-Ed and articles, and in innumerable letters to FT and to Martin Wolf.

Before these distorting regulations, banks invested in assets based on their risk adjusted yields; after, they now also adjust for the allowed leverages in order to maximize their returns on equity. That means overpopulating “safe”-havens and under exploring those “risky” bays, like entrepreneurs and SMEs, which all countries need to be explored if they are going to develop, or keep their development from regressing.

To think that what is perceived as safe (cars) is more dangerous to our bank systems than what is perceived as risky (motorcycles), only reminds me of that mutual admiration club of besserwisser experts that defended geocentricity… and of Martin Wolf as one of the inquisitors.

https://subprimeregulations.blogspot.com/2007/10/are-bank-regulations-coming-from-basle.html

@PerKurowski

The real winners of President Trump’s animosity towards cars built in Mexico could be robot manufacturers.

Sir, Peter Campbell and Jude Webber refer to “Mr Trump’s ire on Tuesday, when he tweeted that GM should face a “big border tax” for importing cars from Mexico.” “Trump to give Mexican cartrade a bumpy ride”, January 5.

I have no idea of President Trump’s financial holdings, but should he own shares in robot manufacturers he should be careful about a conflict of interest, as leashing out against Mexican car jobs is a great and direct way to increase the demand for robots in the USA.

PS. Anyone who argues in favor of minimum wages should, for the same reason, also be required to disclose any personal interest in the robot industry.

PS. Off the cuff formula: Jobs lost in Mexico minus jobs gained in USA equals new sale of robots.

PS. Let robots make us an offer we can't refuse

Will we humans end up banning ourselves from driving because we’re too risky?

Sir, John Gapper concludes, “in a world of cheap, convenient self-driving vehicles, only the wealthy and fussy will bother to buy a car” “Why would you want to buy a self-driving car?” December 8.

Wait a second. Is Gapper saying that only the wealthy, buying cars, might save some jobs? That does not sound like too politically incorrect in these get rid of inequality Piketty days.

But, jest aside, what I most fear, is the day we humans ban ourselves from driving altogether, because we are not safe enough, because we are too risky.

With automation substituting us humans in so much, what mutations will that provoke? What capabilities will we lose?

PS. Beware though of a Basel Committee for Transit Supervision. If it interferes, like the Basel Committee in the process of allocating bank credit to the real economy, then the human race might disappear in the mother of all massive car crashes.

@PerKurowski

Compared to the misallocation of bank credit in Europe, Brobdingnagian inflation concerns sounds truly Lilliputian

Sir, Wolfgang Münchau writes: “Central bankers are conservative types. But they should have a rational interest in preventing a loss of their credibility.” I ask, should not Wolfgang Münchau also have a rational interest in that? “Draghi must be more unconventional to boost the euro” October 26.

This data is found on the web:

The fatality rate per 100 million vehicle miles traveled in motorcycles is 21.45

The fatality rate per 100 million vehicle miles traveled in cars is 1.14

In 2011 in the US, 4,612 persons died in motorcycle accidents

In 2011 in the US, 32,479 persons died in vehicle accidents

And so, even though travelling by motorcycle is about 20 times riskier than cars, cars cause about 7 times more deaths than motorcyclists. That is of course because the riskier something is perceived, the more care is taken to avoid the risk.

And yet Wolfgang Münchau, finds nothing wrong with bank regulators having decided on higher capital requirements for banks when lending “the risky” motorcyclist of the economy, SMEs and entrepreneurs, than when lending to “the safe” car drivers, sovereigns and corporations with high ratings… even though clearly dangerous excessive lending to the latter is much more likely to occur.

Sincerely, against the fact that Europe’s bank are not allocating credit efficiently, and this is murdering Europe’s chances for a strong economic revival; Münchau’s and Draghi’s 0.63 per cent, 0.88 percent, 0.9 per cent and 2 percent Brobdingnagian inflation worries, sounds as Lilliputian as it comes.

@PerKurowski ©

Shrink & Sage, here is the latest key I am trying to open that lock that stops Financial Times from understanding.

Sir, The Shrink &The Sage’s ask: “Must we get to the bottom of things?” October 24. Of course we must… especially when it really matters.

The Shrink refers to “Steve de Shazer [recommending that instead of looking] more and more effort into finding out why the lock is as it is or why it doesn’t open… we should be looking at keys” Indeed that is what I have done in my TeaWithFT.

I have for a long time, by means of over 2.000 letters to the editor, been looking for the key with which make the Financial Times understand the true horrors of current bank regulations. Seemingly I have not found on yet, but in words of The Sage, I will keep on looking for what is under the turtle.

The latest key I have been trying out is the following:

Data found on the web:

The fatality rate per 100 million vehicle miles traveled in motorcycles is 21.45

The fatality rate per 100 million vehicle miles traveled in cars is 1.14

In 2011 in the US, 4,612 persons died in motorcycle accidents

In 2011 in the US, 32,479 persons died in vehicle accidents

And so, even though travelling by motorcycle is about 20 times riskier than cars, cars cause about 7 times more deaths than motorcyclists. That is of course because the riskier something is perceived, the more care is taken to avoid the risk.

And yet no one at The Financial Times seem to find something wrong with bank regulators having decided on higher capital requirements for banks when lending “the risky” motorcyclist of the economy, SMEs and entrepreneurs, than when lending to “the safe” car drivers, sovereigns and corporations with high ratings… even though clearly dangerous excessive lending to the latter is much more likely to occur… and even though that clearly must lead to a dangerous misallocation of bank credit to the real economy.

What are my chances this key will work? I guess slim, I guess I will just be told I am being boringly monotonous again.

@PerKurowski ©

In this cynical age why do some, like Gillian Tett, trust so much the bank regulators to know what they are doing?

This is data found on the web:

The fatality rate per 100 million vehicle miles traveled in motorcycles is 21.45

The fatality rate per 100 million vehicle miles traveled in cars is 1.14

In 2011 in the US, 4,612 persons died in motorcycle accidents

In 2011 in the US, 32,479 persons died in vehicle accidents

And so, even though travelling by motorcycle is about 20 times riskier than cars, cars cause about 7 times more deaths than motorcyclists. That is of course because the riskier something is perceived the more care is taken to avoid that risk.

Sir, Gillian Tett after informing “that some online reviews by Amazon were fake or, more accurately, that authors could pay for a positive review” ends with “What is really interesting is that faith in the cyber crowd seems so resilient to scandals… online reviews will continue exerting a spell and act as a reminder of how we blindly trust things — even in a cynical age.” “Why we trust the cybercrowd” October 25.

Bank regulators have decided on higher capital requirements for banks when lending “the risky” motorcyclist of the economy, SMEs and entrepreneurs, than when lending to “the safe” car drivers, sovereigns and corporations with high ratings… even though clearly dangerous excessive lending to the latter is much more likely to occur.

Ms. Tett: In this cynical age, and even after the financial crisis, produced exclusively by excessive lending to what was perceived as safe, how come you still put so much trust in regulators, so as to ignore all my letters explaining their horrendous mistake?

@PerKurowski ©

Bernanke, what bank risks? Motorcycles are riskier than cars but yet more die in cars than in motorcycle accidents.

Sir, I refer to Martin Wolf’s FT lunch with Ben Bernanke “Hostility and hyperinflation” October 24. Bernanke states that “the Federal Reserve was originally set up primarily to address financial panics, not do monetary policy”.

And so Martin Wolf asks: The late Hyman Minsky, I point out, argued that “stability destabilises”. So did the very notion of a “great moderation” cause the imprudent behaviour?

And to which Bernanke replies: “individually rational behaviour can be collectively irrational. And that’s why the regulators have to do what they can to constrain individual behaviour, so that it doesn’t lead to collectively irrational outcomes.”

At which point, had I been invited to the lunch, I would have observed and asked the following:

Banks respond to the credit risk in a risk-adverse way. More risk higher interest rates and lower exposures – lower risk lower interest rates and larger exposures.

Bank regulators also use their credit risk weighted capital requirements for banks in a risk adverse way, namely more risk more capital less risk less capital.

So Mr. Bernanke, and you too Mr. Wolf, is it not so that by reacting to credit risk in the same way banks do the regulators, instead of constraining individual behavior, potentiate individual behaviour? What they would have answered to that is anyone’s guess.

And when Bernanke states: “the amount of [bank] capital you should hold depends on the kind of assets and the kind of businesses you have. And if it’s a fixed leverage ratio, then you’re going to have every incentive to load up on risk.” I would again have impolitely interrupted to ask: Mr. to load up on what risks? Driving motorcycles is by far more risky than going by cars… but those who go by car and suffer mortal accidents still surpass by far those who die riding motorcycles.

Mr. Bernanke, if you happen to read this, may I invite you to a debate, perhaps moderated by Mr. Wolf? In that debate you would defend the current portfolio invariant only-on-expected-credit-risk weighted capital requirements for banks; and I would defend an 8 to 10 percent capital requirements against all assets, to cover for unexpected losses, solely based on the risk of regulators not knowing what they are doing.

@PerKurowski ©

Support the real world and not to the virtual world.

Not long ago web-navigators were buying real estate in virtual cities. Great fun, but of course no one would dare to plea for a bail-out in order to cover for any losses sustained there. But, down here, on the earth, there are currently many investors in securities with very similar virtual characteristics that shamelessly ask for help. We must learn to ignore their pleas not because we do not want to help them but because we cannot afford to help them.

Sir Joseph Stiglitz comment “Chapter 11 is the right road for America’s carmakers” December 12 is correct and timely. The US has enough resources to retool and sustain its automobile industry, after a much needed restructuring, but not enough to maintain what currently exists and, if they tried to do so that could provoke a significant loss of confidence in the dollar. In this horrendous crisis the US, like all others, is better off playing on its real strengths than trying to maintain vivid the illusions of so many virtual realities.

Since Stiglitz also reminds us of the many widows and orphans that will need real and concrete assistance and not just the illusions of a trickle down on them somehow-somewhere I would similarly like to remind all pf the sobering fact that our current was not caused by speculative investments but by pure triple-A widows and orphan stuff.

I guess it is time for your reporter to change location

Sir I am sorry but Benedict Mander completely misses the angle when in “Red tape congests Venezuela’s roaring car trade”, July 11, he describes the governments “new rules that 30 per cent of cars sold from next April must have dual natural gas and petrol tanks” as something extraordinary. I just need to ask what extraordinary measures he believes the Crown would have to take to reign in car sales if it sold petrol at 4 cents of a dollar per litre and if it subsidized the import of new cars by means of an exchange control system.

When a foreign reporter does not see the absolute grotesque in the state giving away petrol at prices below distribution costs, I guess that reporter has been to long in the country and has become blind to its realities. There is supposedly a study that shows that people after having lived long enough close to a railway station do not even hear the trains, because of natural anatomic process of adjustment.

But the Venezuelans will not get their gasoline.

Sir, in your editorial “Chávez gets his oil” June 28 you mention that with current oil prices “it scarcely matter that the amount of oil produced has declined in Venezuela” and I would suggest you read Najmeh Bozorgmehr’s report in FT the same day on how “Fuel crisis increases pressure on Tehran” where Iran’s fuel rationing crisis is described.

For your information, according to projections based on the current sales of vehicles, Venezuela a country with only 26 million inhabitants and a GNI per capita of less than US$ 5.0000, will in the years of 2006 and 2007 have placed a total of 750.000 new gas guzzlers on its roads, partly thanks to the craziness of a domestic gasoline price of under 3 US cents per liter. Can you imagine what will happen when you have to start to adjust gasoline prices? One of the first symptoms of the existence of a purely populist government is that all planning gets thrown out the window and you live day by day.