Risk weighted bank capital requirements are anathema to neoliberalism

Sir, Rana Foroohar writes “we have spent decades of living in the old reality — the post-Bretton Woods, neoliberal one.” "Markets are adjusting to a turbulent world" August 19.

There are many definitions of neoliberal policies out there but they always include a large role for the hands of the free market and the reduction in government spending in order to increase the role of the private sector in the economy.

In 1988, for the banking sector, one of the most important economic agents, credit risk capital requirements were introduced by means of the Basel Accord. It gave incentives that distorted the allocation of bank credit to the real economy. For instance lower risk weights for the sovereign (0%) and for residential mortgages (35%) signifies subsidizing the sovereign and the safer present, by taxing the access to credit for the riskier future, like to entrepreneurs (100%). So I do not know what neoliberalism Ms. Foroohar refers to.

Ms. Foroohar, speculating on the possible “impact of an Elizabeth Warren or Bernie Sanders victory in the US primaries?” mentions a 13D Global Strategy and Research note that holds that such event would “fit perfectly into the cycle from wealth accumulation to wealth distribution”, something that Foroohar also believes “will be the biggest economic shift of our lifetimes.”

Sir, at the very moment income, through the purchase of assets, is transformed into accumulated wealth; there cannot be any significant redistribution of it, which means having to sell many of those same assets, without any significant destruction of wealth. If you’re scared of a deep recession, as we all should indeed be, then the last think you’d want to do is to deepen it with a wealth redistribution cycle.

So we cannot redistribute? Yes, we can, but that’s best done getting hold of the income before it is converted into assets, and then, preferably, sharing it out equally to all, by means of an unconditional universal basic income.

@PerKurowski

What produces more bread? An economy with all consumers being equal, or one with some being filthy rich?

Sir, David Redshaw quotes John Kenneth Galbraith from his 1929 book The Great Crashwith: “The rich cannot buy great quantities of bread.” “Excess wealth can lead to speculative froth” December 13.

True, but when the rich transfer their purchasing power by buying assets that would often otherwise not be demanded, might that not be causing others to have job opportunities that would allow them to buy greater quantities of bread, than would have been the case without the rich?

And Redshaw goes on to say “The economy is motored by the regular and reliable spending of a confident workforce rather than by the mega rich, whose erratic and luxury-end spending always seems to end in boom and bust.”

Really? When has an erratic and luxury-end spending by the mega rich ended in a boom and bust? Last time I looked it was poor buyers of homes in the subprime sector in the US, empowered by being packaged into AAA rated securities, these securities in its turn empowered by regulators who allowed European banks and US investment banks to leverage more than 60 times their capital with these only because they had an AAA to AA rating, which ended in boom and bust.

Sir, never forget that a paper is also measured by what it allows to be published.

@PerKurowski

When the “filthy rich” buy assets, they might do it good or bad, but they are de facto voluntarily redistributing money.

Sir, Tim Harford writes “Researchers concerned about the concentration of money in the hands of a small number of people tend to focus on the income or wealth share of high earners”, “All things are not equal in measuring inequality” August 18.

Indeed, all things are not equal, the income or wealth shares of high earners, c'est pas la même chose.

The debates on inequality, promoted mostly by redistribution profiteers, conveniently ignore that the moment money, meaning Main-street purchasing power, is exchanged for an asset, it has effectively been redistributed, to the vendors of those assets.

So yes, governments can redistribute money, but that does not mean it can redistribute wealth as easy, and without possibly serious unexpected consequences.

Not long ago, someone really wealthy, by means of a sort of voluntary tax, froze US$ 450 million of his real purchasing power on a wall, by acquiring Leonardo da Vinci’s Salvator Mundi. How do you redistribute that painting? One way is to get another filthy rich to redistribute his money buying it, most probably for less. Another way might be cutting it in thousands of small-certified pieces and thereby allow many much less wealthy to buy these, and thereby perhaps redistribute much more than US$ 450 million. Should we proceed to hack up Salvator Mundi?

Sir, at the end of the day, the one question that always lingers is, who redistributes money the best? The usual answer “Me!” or “Us!”

@PerKurowski

What does “stored wealth” mean? Is it really redistributable, just like that, without any consequences?

Sir, Edward Luce writes: “America’s elites have stored more wealth than they can consume. This creates three problems for everyone else” “The discreet terror of the American bourgeoisie”. February 8.

What does “stored wealth” really mean? You do not hide your main-street purchase capacity in cash under a mattress; you hand it over to someone else in exchange for an asset or a service.

When some very wealthy recently bought Leonardo da Vinci’s “Salvator Mundi”, he froze, with a sort of voluntary tax, US$450 million on a wall or in a storage room. Those US$450 millions were received and used by some other wealthy or not that wealthy. Should that not have happened? Should he have used his money better? What if those who now have his money know how to put it to much better use?

The war against wealth is raging. Whenever wealth has been obtain by criminal, or by unjustified means, like monopolies or excessive intellectual property rights exploitation, that war makes sense. But, those who preach that all will be well and dandy, if only wealth is redistributed, like from the 1% to the 99%, never explain how one now converts a Salvator Mundi, into fresh main-street purchase power, and the consequences of doing so.

We could assume that much of that lack of explanation is because many of the wealth redistribution fighters are in fact redistribution profiteers interested in increasing the value of their franchise.

PS. Not long ago, visiting the Museum of Louvre, it dawned on me that most of what was exhibited there would not have come into being, were it not for the existence of the filthy rich. Can we really afford, do we really want, to live without them?

@PerKurowski

Many children incapable of helping their parents during their old days will one day rightly blame our bank regulators’ insane risk aversion for that

Sir, Bronwen Maddox writes about the possible need to “force more people to use the equity in their houses to pay for care” and that “In these discussions, how to tax inheritance has attracted more political attention, not least because the prescriptions are simpler and chime with the debate about inequality”, “An ageing population and the end of inheritance” December 23.

Are the prescriptions for taxing inheritance really simpler than using your assets to pay for some of your own services? I don’t think so. To pay for your own social care services with assets of your own, fits perfectly with the standard norms and realities of our economy and our society. But, eroding the right to bequeath wealth to your children constitutes a direct attack on one of the most important drivers of the economy that could have dangerous consequences for all.

One of the least studied, or clearer yet conveniently ignored topics, is what could happen if you redistribute wealth, be it by wealth or inheritance taxes; not only in terms of what I consider is its very limited potential to provide temporal relief to poverty or inequality, but also in terms of how it could negatively affect the future economy. The lack of such discussions on this has possibly to do with not fitting the agenda of those creating envy and hate in order to achieve their own particular small and temporary goals.

Let me briefly hint at the following:

If a $450 million Leonardo Da Vinci “Salvator Mundi” had to be sold at the death of his owner to pay for all inheritance taxes it will not fetch $450 million. This because who would feel stimulated to pay a sort of voluntary tax, freezing that amount of purchase power on a wall or in a storage room, if that painting cannot be bequeathed to heirs, and just be taken away upon death?

And what would happen to all private owned houses and apartments, if upon the death of their owners who made sacrifices paying for these, they would just fall into a government pool of houses, with their users to be nominated by some few house redistributionists? What would happen to the incentives to save in order to buy, maintain and make homes beautiful?

And, if all shares and bonds were taxed to be placed in a mutual government pot… would that not signify heaven for statism fanatics and redistribution profiteers, and hell for all the rest of our children and grandchildren?

Sir, of course “the dream of bequeathing assets to the next generation is fading in the face of social care costs” that results from having more elder and fewer younger. But the lesser earnings of the young also cause that fading. Those regulators who with their insane capital requirements had banks abandoning financing the “risky” future, in favor of refinancing the “safer” past and present, will not be kindly remembered by the too many children incapable to take care of their parents’ old days.

PS. What is a reverse mortgage but a way to squeeze the most out of the present for the present? Whether it is done to satisfy an urgent need or only in order to anticipate some unnecessary consumption is not something irrelevant.

@PerKurowski

Leonardo da Vinci, smiling, must be harboring great gratitude to the Fed and ECB for helping his Salvator Mundi to become so highly valued.

Sir, I refer to Josh Spero’s and Lauren Leatherby’s “Record price sparks hunt for Da Vinci painting buyer” November 17.

Surely Leonardo da Vinci wherever he find himself must be smiling and extending his deepest gratitude to Fed’s Janet Yellen and ECB’s Mario Draghi for their QEs and ultra low interest rates. That has allowed him see his Salvator Mundi valued at US$ 450 million much earlier than he could have expected.

And Janet Yellen and Mario Draghi and their colleagues must surely be smiling too. Since Dmitry Rybolovlev bought that painting in 2011 for $127.5m, its current price hints at being successful at reaching an inflation rate target they never dared dream of.

The art curious still do not know who the buyer is, but be sure the redistribution profiteers are also looking after these US$ 450 million to find out how that money escaped their franchise.

Since the latter will surely soon again be talking about inequality I take the opportunity to advance my usual question of: How do you morph such a valuable piece of art into street purchasing power again; that can be used for food and medicines, without the assistance of another extremely wealthy?

@PerKurowski

Edward Luce, what do you mean, is Mark Zuckerberg not paying the taxes he should pay, or is he just no taxed enough?

Sir, I come from a nation, Venezuela, where those in power have wasted hundreds of times more fiscal revenues than the amount of taxes citizens might have evaded. So I am no fan of the redistribution profiteers.

Edward Luce writes: “America’s new economy elites tend to cloak their self-interest in righteous language. Talking about values has the collateral benefit of avoiding talking about wealth. If the rich are giving their money away to good causes, such as inner city schools and research into diseases, we should not dwell on taxes. Mr Zuckerberg is not funding any private wars in Africa. He is a good person. The fact that his company pays barely any tax is therefore irrelevant.” “The Zuckerberg delusion” November 16.

What does Luce mean? Is Zuckerberg not paying the taxes he should pay or is he not taxed sufficiently. If the first Zuckerberg should be fined or even go to jail, if the second Luce is close to being defamatory and should suffer some consequences. 

And Luce also holds “The next time Mr Zuckerberg wants to showcase Facebook, he should invest some of his money in an actual place.”

What on earth does Luce mean? That Zuckerberg does not have his money invested in an actual place? That Zuckerberg keeps his wealth all in cash stashed away under his mattress?

I am clearly against how much rents are derived from monopolistic positions, and would of course like to see that kind of rent capturing to be diminished. But I also believe that once wealth has been created, and that wealth has been allocated to different assets, one should not come to the conclusion that redistributing these would actually result in something better.

It is so typical for wealth-redistributors to suggest, like Luce does, that Zuckerberg would do better funding “a newspaper to make up for social media’s destruction of local journalism” without given a single thought to what would then have to be defunded.

What is most conspicuously absent in the aggressive let’s redistribute the wealthiest wealth proposals, is an explanation of how that is done and of what that implies.

For instance, let us assume Mr Zuckerberg has a $200 million dollar Picasso hanging on the wall. How do you convert that painting into food, health services, education or money for the poor, without having to find another wealthy buyer of that Picasso?

And, if you did cash in the $200 million, how much would reach the less wealthy and how much would just enrich the redistribution profiteers… perhaps making them the neo-wealthy?

The fact is that if Zuckerberg had a $200 million dollar Picasso he has, in a sort of voluntary tax, frozen alternative purchasing capacity on his wall. In this case leading for art to be seen as a good investment, and most probably down the line causing some artists down to get some more income for their art. 

But Sir you would also probably agree with Luce in that journalists are worthier than painters. And I don’t hold that against you… because that’s life. Let anyone not wanting to redistribute something more to himself, cash if you are poor and goodwill if you are Zuckerberg, throw the first stone.

PS. I am an ardent defender of a Universal Basic Income because I find that to be the most efficient way to finance, among others, the creation of decent and worthy unemployments. But that redistribution method also needs to be clear on the implications of what is being redistributed. How much would exist in the Frenchman Thomas Piketty’s Paris’ Museum of Louvre, had it not had been for the existence of the odiously wealthy?

@PerKurowski

Now, ten years after, have not all quantitative easing and low interest rates just kicked the crisis can down the road?

Sir, Martin Wolf writes: “A… criticism is that easy money policies have worsened inequality, especially of wealth. But keeping the post-crisis economy in recession in order to reduce wealth inequality would have been insane. In any case, wealth inequality matters less than inequality of incomes, where the effect of raising asset prices is to lower returns for prospective owners, so improving inequality in the longer term. Above all, the worst form of inequality is to leave millions of people stuck unnecessarily in prolonged unemployment.” "Unusual times call for unusual strategies from central banks" November 13.

We are now into ten years of post-crisis. How can Mr. Wolf be so sure that if painkillers like Tarp and quantitative easing had not been prescribed, that we would now be in a worse position in terms of unemployment and in terms of inequality? Perhaps that all just kicked the can down the road, a can that could begin to violently roll back on us.

Sir, in August 2006 you published a letter of mine titled “Long-term benefits of a hard landing”. In it I wrote: 

“Why not try to go for a big immediate adjustment and get it over with? Yes, a collapse would ensue and we have to help the sufferer, but the morning after perhaps we could all breathe more easily and perhaps all those who, in the current housing boom could not afford to jump on the bandwagon, would then be able to do so, and take us on a new ride, towards a new housing boom in a couple of decades.

This is what the circle of life is all about and all the recent dabbling in topics such as debt sustainability just ignores the value of pruning or even, when urgently needed, of a timely amputation.”

I agree with that “wealth inequality matters less than inequality of incomes” but when Wolf then holds that “the effect of raising asset prices is to lower returns for prospective owners, so improving inequality in the longer term”, it would seem he would also agree with the benefits of a hard landing… that is as long as it is not on his watch.

In my Venezuela we have seen how millions of citizens who had reasonable expectations for the future, are now in desperate conditions. They have learned the hard way that no matter how much they might hold in assets, this means little if at the time you want to convert your assets into actual street purchasing capacity, there is no one there to buy these. And, as we sure have learned, to move from very good to very bad can be lightning fast. 

And I will keep on arguing… if government and regulators prioritize the financing of the sovereigns and of houses so much more than the financing of SMEs and entrepreneurs, we will be heading to a future of much poverty, lived out in an abundance of less and less maintained houses.

Wolf ends with: “given the instability of finance, today’s low neutral interest rates and the unwillingness of governments to use fiscal policy, the willingness of central banks to adopt unconventional policies may be all we have to manage the next big downturn.

Yes we might be in dire need of “unconventional policies”, but not necessarily from the central banks.

For instance we should urgently think of creating decent and worthy unemployments, to face the possibility of a structural lack of jobs. For that I would begin studying how to tax robots and artificial intelligence, and or how to reduce the margins of the redistribution profiteers, in such a way that it permits us to design and fund a universal basic income.

The UBI could initially be small, perhaps just US$ 100 per month, something to help you get out of bed, not so large as to help you stay in the bed, but the system has to be in place before social fabric breaks down, or before populists make hay of our problems.

PS. Today’s low neutral interest rates are artificially set low neutral interest rates

@PerKurowski

An all out war against inequality would be extremely harmful to us all.

Sir, Tim O’Reilly writes: “Clayton Christensen’s, “law of conservation of attractive profits” holds that once one thing becomes commoditised, something else becomes valuable.” And that “Hal Varian, Google’s chief economist, noted that ‘if you want to understand the future, just look at what rich people do today’. “People power, not robots, will overcome our challenges” October 20.

But I ask, does that not require a strong supply of rich and unequally wealthy, in order to power that demand for the new, that which majorities never generate? And, if so, does that not put a dent on the argument of: “the fundamental question of our economy today is not how to incentivise productivity, but how to distribute its benefits”?

Sir from this perspective the current all out war against inequality could be extremely harmful for all. For instance, as I have, unanswered, often tweeted to Mr. Thomas Piketty “Visit the Museum of Louvre in your Paris and try to figure out how much of it would have existed, had it not been for extreme inequality.”

And O’Reilly, as a source of jobs refers to that “there is the looming spectre of climate change”. Indeed but who is going to pay for the fight against it? If government takes on debts to fight climate change, who will volunteer to repay those debts tomorrow, whether we are successful or not? No one!

That is why I have argued so much in favor of creating a whole new generation of social incentives, which could help get the world to work in the same direction on at least some important issues.

For instance, if there was a huge carbon tax, which revenues did not go to the redistribution profiteers but were shared out equally among all citizens, then we could link up the fight against climate change with the fight against inequality, without affecting the remaining societal incentive structure… that which helps to create the inequality we need.

PS. And please never forget, just in case there will not be enough jobs tomorrow, to think about how we can create decent and worthy unemployments.

@PerKurowski

You redistribution profiteers: There’s very little cash in “cash”; and wealth is mostly just frozen purchasing power

Sir, Eric Platt writes about “the lack of detail…typical of the 30 large US-domiciled companies analysed by the FT that hold more than $10bn of cash and other securities on their balance sheets”, “Patchy disclosure gives investors little to chew on” September 28.

The article should help to indicate to you how little real cash there really is in all that cash to which so many, time after time, including FT, have referred to in terms of that it should be repatriated, so as to put to better use.

As we can see, the fact is that most of the $262bn of cash and cash equivalent held by Apple has already been deployed, one way or another; which means that even if Apple does not use it for its own purposes, that does not mean it is not being used by others for other purposes.

Sir, the whole very valid debate about offshore wealth and growing inequality, would be greatly sanitized by the acceptance of the facts that there is very little cash in “cash”; and that wealth is mostly just frozen purchasing power.

Perhaps then we would also be allowed to discuss such political incorrect issues such as what assets would not exist but because of great wealth and great inequalities.

Then perhaps we could at last focus more on the much more important cause of fighting unproductive unequal wealth creation, than about how to getting our hands on wealth after it has been created.

Unfortunately the redistribution profiteers, those who need to instigate hate against wealth and inequality in order to maximize the value of their franchise, will fight tooth and nails in order to stop such debate taking place.

https://perkurowski.blogspot.com/2016/10/i-tweeted-how-do-you-morph-200-million.html

https://perkurowski.blogspot.com/2015/08/if-we-are-going-to-squeeze-rich-let-us.html

@PerKurowski

When frozen in other types of “cash”, it is hard to free up cash to spend on good causes without losing much value

Sir, I refer to “Debt Collectors” September 16, in which Eric Platt, Alexandra Scaggs and Nicole Bullock search to explain what could happen to the “portfolio of cash, securities and investments worth roughly $840bn, held outside the US by just 30 US companies, because of tax reform designed to … encourage American companies to bring back jobs and profits trapped overseas”.

The article, though it refers to difficulties such as the “repatriation process itself could involve selling bonds” and the impact of that on interest rates, fails to illustrate the whole truth.

The reality is that all that “cash”, as well as all that “cash” held by other wealthy (for instance in Panama) except for the less than 1% that could be in real cash, is in other assets like securities investments, perhaps even in art collections.

So, in order to convert all that “cash” into real cash, those other assets have to be sold to others who are then required to give up their real cash for these. And, in that process, clearly a lot of the value of the “cash” would just change hands or disappear.

Why are these difficulties of converting “cash” into cash not more discussed? Because doing so would be sort of inconvenient for those redistribution profiteers who try to sell their politically beneficial envy, for instance that present in the “one percenters being against all us 99 percenters” theme.

What is a £20 million flat in London or a US$200 million Picasso hanging on a wall but the voluntary freezing of millions in alternative purchase power that could be out there in the economy competing for consumer goods… and generating inflation? Is a lowering of the value of hard-assets the inflation driver central banks want?

PS. Of course the above does not take away one iota of the need to relentlessly pursue those who have accumulated “cash” assets illegally, and might hold these in places like in Panama.

https://teawithft.blogspot.com/2016/04/tett-get-it-whats-stashed-away-in.html

https://perkurowski.blogspot.com/2016/10/i-tweeted-how-do-you-morph-200-million.html

http://perkurowski.blogspot.com/2016/01/the-wealth-of-62-richest-equals-that-of.html

With respect to inequality it behooves us all to stop demagogues from opening appetites that cannot be satisfied

Sir, Tim Harford adds valuable elements to Piketty’s r>g inequality discussions, those that have so many redistribution profiteers drooling in anticipation. “Capital ideas in a time of inequality” March 19.

To Harford’s initial discussions on rates of returns we must keep in mind that the ownership of the capital measured, might be constantly changing. And it is very hard to statistically reflect the continuity value after discontinuities like wars, and other potential wipeouts and resets. And the effect of the survivorships bias on returns, though very hard to measure, might be huge over time.

When it comes to this issue of growing inequality, which is serious indeed, I have always been more for analyzing what could be distorting the allocation of wealth, and in how we can open up opportunities for all to participate in its creation.

And since from the evidence it seems we do need a pro-equality tax on wealth, it is also important to make certain that the redistribution is done in a cost effective way. In my country, Venezuela, I always propose that our net oil revenue should be shared out to all citizens, instead of being concentrated in some political besserwissers’ hands. In this respect it is with a lot of enthusiasm I now follow the idea of universal basic income being studied in Finland and lately in Canada.

But, in all this debate, instead of referring to measured balance sheet wealth, should we not better always think in terms of realizable and transferable wealth? For instance, what about all that wealth stored in art hanging on private, or stored away in the cellars of public museums? If we want to transfer part of that value to the poorer in any significant way, how do we proceed? I mean this is very important, because to open up appetites, ignoring these cannot be satisfied, is precisely what dangerous demagogues do.

Friends, if we had managed to keep the profiteers out of the redistribution, would not the current inequalities be lower? Should not redistributing income and wealth max cost 2 percent?

@PerKurowski ©

Redistribution profiteers who committed economic crimes against humanity sequestered Venezuela

Sir, I refer to Ricardo Hausmann’s sadly true “It could be too late to avoid catastrophe in Venezuela” February 4.

These days when so much is said about fighting inequality, Venezuela is a tragic example of what happens when a country falls into the hands of shameless redistribution profiteers. All countries need to develop more transparent government accounts that allows us them to measure the real costs of redistributing wealth.

For instance in the case of Venezuela the fact that the prices of petrol (gas) have not increased once since Chavez came to power 17 years ago has signified that just in free petrol the country has over the last years given away more than in all their other social programs put together… if that is not an economic crime against humanity (and environment) what is. I have tried to denounce it to the Organization of American States but they are more interested in conventional and traditional crimes against humanities.

Over the last 15 years the poor of Venezuela might not have received even 10 percent of the oil wealth that was redistributed… which would indicate a redistribution commission of 90 percent.

Clearly if other methods like direct oil revenue sharing with citizens had been used, the 10-90% figures here could have been 98-2%. And of course, had the oil revenues belonged to the citizens, the government could not have “used it to quadruple the foreign debt.”

Set into this context it is obvious that all should closely study experiments like Finland’s substituting with a basic monthly income for all the bureaucrats’ management of benefits.

PS. One of the most sad events in my lifetime has been when the US did not follow through on the idea of promoting oil revenue sharing in Iraq. Had it done so the whole middle east, and of course Venezuela, if following the example, could have been facing much better realities.

@PerKurowski ©

Former Executive Director at the World Bank, for Venezuela, 2002-04

In these globalized times, would you not want your flag to be a flag of convenience, flagged by many?

Sir, what extraordinary interesting questions and suggestion of answers those of Janan Ganesh in “Fly the flag for the liberal values that define Britain” June 17.

I have often proposed that in these days of social media with circles of friends and known and unknown acquaintances, we should always be able have a fast reference to where on earth we all find ourselves, what flags we feel we live under, and perhaps what flags we would like to live under… because, just as ships can carry a convenience flag, why should not a Venezuelan-Polish citizen, in Sweden educated and in Washington living individual like me not be able to carry a British flag if that was the flag I best liked.

And in this respect I do not think that asking what is the flag Britain should flag to rouse the nationalistic sentiments of the locals, is half as good as asking what flag should Britain flag to rouse the globals to want to align behind “the liberal values that define Britain”. In these days we must never forget that you do not need an Armada to conquer, nor do others need an Armada to conquer you.

Or, as Violet Crawley might have admonished, “Do not be so parochial. It is so middle class”.

And with respect to flagging and signalization let us never forget that the order is vital. For instance if you flag the ex-ante maximization of opportunities flag long before the ex-post redistribution of wealth flag, I am certain you will get much better results than flagging in the order that Thomas Piketty sort of seems to imply.

After taxing the social capital wealth represented by Facebook followers, do we then tax FT’s social capital?

Sir, I am pleasantly surprised you dared to publish Hans Byström’s creative and provocative proposal of taxing the social capital wealth represented by the followers on Facebook, “Tax the socially wealthy too!” April 5. I mean from that there is very little distance to taxing the immense social capital wealth of the Financial Times, with its influential editor and columnists, and its many readers.

If that tax on FT could be used, for instance to increase the voice of a smalltime blogger like me, that would definitely help to combat what at least I perceive to be a monumental unjust inequity. 

That said, and even if he comes from my own Alma Mater, Lund University in Sweden, I must argue with Professor Byström. What he holds to be social capital, number of followers, is just sort of gross earnings. Since all followers at Facebook do not necessarily have an equity interest in your well being, they might just as well represent liabilities, the final net social capital from being followed in Facebook can in fact also be enormously negative. A tax credit?

Come on what about that stiff upper lip?

Sir your “How to deal with sovereign wealth” January 28 reads like you are being very nervous about the sovereign wealth funds; asking for a code of conduct that would put order and limits on what these monsters could do to you. Come on what about that stiff uper lip?

Suppose these funds do not behave? Do you really think there would not be a market response to that? Would a Saudi Citibank or a Chinese Microsoft be able to keep the value of these companies in your markets if they are seen as having bad intentions?

This is a moment when the world really needs these capitals to recycle and help out and, if there is really anyone who would like to see a code-of-conduct it might very well be the investors who could want an assurance that your nationals will give them the most favoured investors status. By the way your editorial might very well have reduced in some billions the price they would be willing to pay for those assets they are thinking of buying.