The risk premiums for a suspect of human rights violating nation will increase, which, sadly, will also attract investors

Sir, Gillian Tett, with respect to how business should or could behave in cases of human rights violations, like that of Khashoggi, if confirmed, writes: “since western businesses are scrambling to maintain their investments there at a time of rising Sino-American tensions. “What will we do the next time that the Chinese toss dissidents in jail or clamp down on local journalists?” asks one chief executive. The answer is not clear.” “The Khashoggi case puts US businesses in a moral bind”, October 19.

How much has the risk premiums required by anyone wanting to invest in Saudi Arabia gone up after the Khashoggi incident, and after how Saudi Arabia reacted against Canada when its Foreign Affairs Minister Chrystia Freeland tweeted concerns about the news that several social activists had been arrested in Saudi Arabia? These must have increased a lot, and an initial public offering of the Saudi oil giant Aramco is rumored cancelled.

That costs of course the human rights violating nation a lot… but those higher risk premiums also attract… as we can notice when a Goldman Sachs finances a notorious human rights violating regime like Venezuela’s Maduro’s.

The answer to the chief executive’s what to do question, should have to include “what our shareholders have mandated us”. Unfortunately too many shareholders also turn a blind eye to ugly realities, when for instance a Goldman Sachs announces record returns on equity.

What do we lack? Perhaps the will of a responsible elite that is willing to shame those who behave in a disgraceful manner, in a completely apolitical way. We need a society whose members would not invite Goldman Sachs’ Lloyd Blankfein to have tea at their homes. 

Sir, I have not been able to find the reference to it on the web but, some years ago, in Swedish television, I remember having heard something about a Swedish king who said he feared more the opinions of Stockholm’s high societies ladies than Russia. 

@PerKurowski

“Don’t worry we have a great pool of ‘names’ to be born that will help pay Harvey’s insurance claims” Will they?

Sir, John Dizard writes: “NFIP, the federal flood insurance programme, has been risked and priced so unrealistically that it … encouraged construction in flood-prone locations…[and] already has incurred a cumulative debt to the Treasury of more than $26bn, despite its failure to cover many homes and businesses.” And now it will be facing Harvey’s claims. “Flood Harvey inundates the insurance market” September 4.

If those approving NFIP writing insurances were Lloyd’s of London “names”, they would be liable until their very last cent. But no US congressman that approved NFIP in 1968 faced even remotely the same consequences. In fact it would seem they, without any consultation, designated their children and grandchildren as responsible “names”. Will these names be able to pay?

Also, how many homes have been built and destroyed by the fact these had access to NFIP?

Should this be allowed to happen without any sort of consequence? As a minimum minimorum I believe there should be a site for the greatest failed legislations that spells out the names of those responsible for it. The threat of ending up there might help stop a lot of irresponsible acts of legislation.

We do society a favour when our fallen in wars are honored in cemeteries like Arlington. We might do society an even larger favour by duly shaming those who help push our nations earlier into cemeteries; like those responsible for the risk weighted capital requirements for banks… that which has introduced a regulatory risk aversion that will condemn our economies to weaken and our banks to afixtiate in overpopulated safe havens.

@PerKurowski

What is most appropriate, cones of shame or tarring and feathering?

Sir, in “Banks at risk” February 7, notwithstanding that you, at long last, write about the incestuous relations of banks with national government and admit that many countries see banking as an extension of the state, you mention only the taxpayers subsidies to banks, but ignore the immense subsidies governments collect, in terms of more public debt and at lower interest rates that what a free market would allow, as a result of being able to borrow from banks without generating, when compared to other borrowers, as much capital requirement. 

Current bank regulations, produced by our banking central planners, decided that the only thing that matters is that banks do not default, and this set our banks on the course of creating huge excessive exposures to what is officially deemed not risky, and to equally dangerous underexposures to what is deemed as risky. 

That our banks are now at risk? Ha! The whole Western world is at risk 

How are these regulators now best shamed, having them parade down Trafalgar Square wearing cones of shame, or would tarring and feathering be more appropriate.