Is the “permissive consensus” that allowed dumb hubris-inflated elites to regulate banks over? Doesn’t look like it

Sir, Emmanuel Macron, a candidate for the French presidency writes “The permissive consensus that allowed Europe to be governed by the elite for the elite is over” “Europe holds its destiny in its own hands”.

Starting 1988 regulators introduced risk weighted capital requirements for banks, and in the process inexplicably decided on such outlandish risk weights as 0% for the Sovereign 20% for the AAA-risktocracy, 100% for We the People, and 150% for those poor bastards rated below BB-, those who of course already had their access to bank credit basically reduced to nothing.

With that the regulators introduced statism and a risk aversion that now have banks no longer financing the riskier future, only refinancing the safer past and present. And all that for nothing, since it is never what is perceived ex ante as risky that causes any bank crises. That dishonor belongs to unexpected events, to criminal behavior, or to something ex ante perceived as very safe turning out, ex post, as being very risky.

Macron writes: “The French people did not emancipate themselves from absolute monarchy in 1789 with the declaration that “the principle of any sovereignty lies primarily in the nation”. True emancipation arrived in 1792, when citizens across France rose up to defend the revolution against foreign kings.” Macron is probably not aware of that, thanks to experts, French banks can now hold much less capital when lending to many foreign sovereigns than when lending to French SMEs and entrepreneurs.

But those crazily failed bank regulators keep on regulating, as if nothing, and still captured by a monstrously large confirmation bias. For instance this week Mario Draghi, the former chair of the Financial Stability Board, the current chair of the Group of Governors and Head of Supervision in the Basel Committee for Banking Supervision, ranked in 2015 by Fortune as the as the world's second greatest leader; without the blinking of an eye gratefully received the (bit obscure) “Premio Camillo Cavour” 2016, for services to Italy and Europe.

Would Italy and Europe be in its current difficulties had their “safe” sovereigns and their “risky” SMEs and entrepreneurs have had the same risk-weight? Absolutely not!

PS. Sir, ponder on that perhaps your own permissiveness on these regulations, perhaps out of a wrong sense of solidarity or awe with experts, helped cause the 2007/08 crisis, and the slow economic growth thereafter; that which (much much more than Russians hackers) has led to Donald Trump becoming president. How do you feel about that?

@PerKurowski

The dangers posed by hackers are much too dangerous and merit much more serious responses than expelling diplomats

Sir, when you consider the potentially so much more dangerous threats hackers can pose than hacking some Democratic National Committee files, like for instance hitting nuclear energy facilities, how can you argue “expelling 35 Russian “spies”, closing two properties and imposing sanctions on Russian agencies” represents a smart and “A sharp US riposte to Moscow’s cyber breach” December 31.

Why does this type of hacking get so much front road attention? Could it be because I fact it has little to do with hacking and more with other issues?

Daily I get about 30 emails from all over the US political spectrum asking for contributions. Since I am not a US citizen, I have ignored them all. But perhaps the possibilities that behind any of these solicitations could be a Russian hacker might be even a stronger reason for me to not contribute to anyone. 

I trust, or at least I pray, that beneath the surface of this public discourse, much more important measures are taken to defend us from malevolent hackers, here, there and everywhere.

@PerKurowski

Are the systemic risks, derived from many or all cars being on autopilot, ignored by regulators? Like in banking?

Sir, Brooke Masters, with respect to the recent Tesla accident that caused a death, writes: “the more a car’s autopilot does, the less experience drivers will have — and the less watchful they will become. It is madness to expect them to seize the wheel and work a miracle in a moment of crisis” “Tesla tragedy raises safety issues that can’t be ignored”, July 2.

That sounds a lot like banking now becoming more and more automatically responsive to regulations, which could be faulty, and less and less reponsive to bankers’ diverse senses.

And Masters holds that “US regulators, who are in the midst of writing new guidelines for autonomous vehicles, need to take this into account before they give blanket approval to partially self-driving cars”. 

That sounds a lot like when our bank regulators are concerned with the risk of individual bank and not with the risks for the whole banking system. If those regulators are just evaluating how autonomous vehicles respond to traffic where humans drive all other vehicles, they will not cover the real systemic dangers. 

Masters informs: “Tesla noted that this was the first death to occur in 130m miles of driving on its autopilot system, versus an average of one death per 60m miles of ordinary driving.”

And to me that is a quite useless and dangerous information considering the possibilities of the mega chain reaction pile up car crash that could result when all or most cars are on autopilot, responding or trusting in similar ways… like when the very small capital requirement against what was AAA rated caused the mega bank crisis.

I can hear many arguing that if all cars are controlled then no accidents could occur. Yes that might be so but for it to occur, as a minimum minimorum, we would need to control all hackers to absolute perfection.

To survive we need to be smarter than smart products; like “Walking the Fitbits”

Sir, Lucy Kellaway writes about the ever increasing number of products supposed to help us manage intelligently many daily chores “We need more smart products because we are stupid” June 13. I think she has missed a very interesting point, namely our efforts to beat these products because we’re smarter.

For instance children who are concerned with their parents not walking enough have furnished many of us a Fitbit... for many of us a torture instrument. That represents a great market opportunity for hackers or app developers who find a way to surreptitiously multiply the number of daily steps taken. I am currently working on a more basic method I call “Walking the Fitbit”. It very simply consists in a group of neighbors organizing themselves to take turns walking each other’s Fitbits. I can already see before me seven Fitbits gladly sharing the same arm… while six happy walkers take a day off. 

We will survive!​

@PerKurowski ©