April 17, 2023
April 03, 2023
Are British authorities more aware of risks than those in the US? Martin Wolf, dare find out.
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
November 02, 2021
The Basel Committee blocks development
October 18, 2021
Martin Wolf, again, any good economic plan needs, sine qua non, to get rid of bank credit distorting regulations.
October 01, 2021
The history I’ll tell my grandchildren has little to do with Philip Stephens’ history.
July 01, 2021
Do we know of a display of hubris greater than “risk weighted bank capital requirements”?
June 28, 2021
The main ingredient of any safe pension system is a healthy and sturdy economy.
June 16, 2021
Spurn bank regulators' false promises.
June 12, 2021
Central banks and regulators cancelled the creative part of destruction.
June 10, 2021
Bank regulators never considered the unexpected, like a pandemic
May 25, 2021
It’s sad when we need to remind regulators to prepare for the unexpected
May 16, 2021
Should the Louvre, a homage to inequality, have to be culturally cancelled?
May 11, 2021
The “Parable of talents” is currently quite inapplicable to any wealth tax.
May 08, 2021
Will this tweet be ignored by FT?
April 22, 2021
About Italy, there are serious questions that FT, and others, should not silence.
No remittances without representation!
Sir, you write “Poor government plagues Central America”, “Central America needs a bold gesture from the US”, FT April 22.Those migrants who often see no choice in life than to depart, with their family remittances produced their efforts far away from home, too often only help to keep in power those who caused them to depart.
An ambitious process such as that one referred to by FT, requires time to acquire political feasibility, and moments of sharp internal divisions might not be the best moment to find it.
In this respect I argue that to help the migrants acquire much more political representation in their homelands, would be a better place to start.
And the migrants sure have economic ammunition they could use. For some of these countries the GDP they help generate in e.g., USA, is larger than the whole GDP registered in their respective homeland.
March 24, 2021
If our pied-à-terre falls into the hands of a Climate Stability Board, we’re toast.
March 23, 2021
A new monetary order requires the old regulatory order.