September 20, 2024
August 10, 2024
When will the history of the Basel Committee’s concoctions haunt us?
June 04, 2024
What the world needs is to introduce true diversity in its financial architecture.
http://subprimeregulations.blogspot.com/2004/11/some-of-my-early-public-opinions-on.html
@PerKurowski
April 03, 2024
How much transparency can democracy handle?
February 01, 2024
Human pilots and autopilots need to be trusting friends.
January 10, 2024
Mr. Martin Wolf, what do you mean, is liberalism not broken?
December 12, 2023
#AI ChatGPT - OpenAI: A question on behalf of FT and Martin Wolf.
In "Britain needs a growth strategy" Martin Wolf mentions the UK has for too long settled for managing stagnation.
November 11, 2023
An adequate response to a Covid pandemic needs more views than what epidemiologists and statisticians can provide.
July 17, 2023
How long will it take for bank regulators to ask AI regulators for a little favour?
June 25, 2023
A strong national spirit/character is what’s most needed for any preparedness, even against a pandemic.
April 17, 2023
To stand a chance, UK must refrain from imprudent risk-aversion and embrace some prudent risk-taking.
April 03, 2023
Are British authorities more aware of risks than those in the US? Martin Wolf, dare find out.
January 23, 2023
For our grandchildren sake we must recover the “democratic capitalism” we inherited and lost too much of.
January 11, 2023
Creditworthiness should be grounded on what’s worthy of credit.
October 03, 2022
Five comments on Patrick Jenkins “Failure to learn lessons of 2008 caused LDI pension blow-up”
September 21, 2022
Britannia, to have a chance to become its former self, needs to free its financial systems from its mis-regulators.
April 28, 2022
Why does the world ignore regulations that totally disrupt the allocation of bank credit?
March 11, 2022
Chile can also set a great example for the developed world.
March 05, 2022
FT, on banking and finance who are you to believe, Francis Fukuyama or Paul Volcker?
February 25, 2022
What if the State of Maryland USA, where I live, was treated by the Fed as Italy is by its EU bank regulators?
February 23, 2022
For inflation, where the money supply goes, matters a lot too
February 18, 2022
Compared to more than three decades ago, what is the current leverage ratio of our banks?
How can you hold governments accountable, while their borrowings are being non-transparently subsidized?
February 07, 2022
If we want public debt to protect citizens today and tomorrow, it behooves us to make sure it cannot be too easily contracted.
Sir, I refer to John Plender’s “The virtues of public debt to protect citizens” FT February 7, 2022.
Sir, as a grandfather I do fear debt burdens we might impose on future generations, but I’m absolutely not an austerity moralist. I know public debt is of great use if used right but also that the capacity to borrow it a reasonable interest rates (or the seigniorage when printing money), is a very valuable strategic sovereign asset, especially when dangers like war or a pandemic appear, and which should therefore not be irresponsibly squandered away.
In 2004, when I just finished my two-year term as an Executive Director of the World Bank, you published a letter in which I wrote “Our bank supervisors in Basel are unwittingly controlling the capital flows in the world. How many Basel propositions will it take before they start realizing the damage, they are doing by favoring so much bank lending to the public sector?”
1988 Basel I’s risk weighted bank capital requirements decreed weights of 0% the government and 100% citizens. It translates into banks being allowed to hold much less capital - being able to leverage much more, with loans to the government than with other assets.
Of course, governments, when their debts are denominated in the currency they issue, are, at least in the short-term and medium term, and in real terms before inflation might kick in, less risky credits. But de facto that also implies bureaucrats/ politicians/apparatchiks know better how to use taxpayer’s credit for which repayment they are not personally responsible for than e.g., small businesses and entrepreneurs. And Sir, that I do not believe, and I hope neither you nor John Plender do that.
Such pro-government biased bank regulations, especially when going hand in hand with generous central bank QE liquidity injections, subsidizes the “risk-free” rate, hiding the real costs of public debt. In crude-truth terms, the difference between the interest rates sovereigns would have to pay on their debts in absence of all above mentioned favors, and the current ultra-low or even negative interests they pay is, de facto, a well camouflaged tax, retained before the holders of those debts could earn it.
But of course, they are beneficiaries of all this distortion, and therefore many are enthusiastically hanging on to MMT’s type Love Potion Number Nine promises.
@PerKurowski