Ms. Gillian Tett, what is that we really have, capitalism or statism?

Sir, Gillian Tett lectures us interestingly with “If you want to understand what is at stake in this debate, it pays to consider the original meaning of the word ‘company’”... “a society, friendship, intimacy; body of soldiers”, “one who eats bread with you” “in other words initially synonymous with social ties”. “Capitalism — a new dawn?” September 7.

Yet, over the years I cannot rememer Ms. Tett saying a word about that our banks are regulated exclusively so as to be safe mattresses in which to put away our savings, without one single consideration given to their vital social purpose of allocating bank credit efficiently to the real economy. “A ship in harbor is safe, but that is not what ships are for”, John A Shedd.

And Ms. Tett also writes “the 2008 financial crisis had undermined faith in unfettered free markets.” What? Like those “unfettered free markets” with Basel II regulations that when in order to borrow from banks, borrowers would have to remunerate an amount of bank capital of 0% if sovereigns, 1.6% if AAA rated, 2.8% if residential mortgages and 8% if unrated entrepreneurs?

http://subprimeregulations.blogspot.com/2019/07/risk-weights-are-to-access-to-credit.html

@PerKurowski

How to get someone else’s grandson to take care of you when you are old?

Sir, Michiyo Nakamoto reports “Japan requires age-old wisdom on problems of productivity” April 23, on how a country of saver “who have long been happy to keep the bulk of their wealth in bank deposits” now have to start looking for improved returns on their money in order to make ends meet in an ageing society with declining workforce.

This is just the beginning of some truly important intra-generational transfer challenges that have been surprisingly little studied, and planned for, and simply accepting more risks in order to get better returns does not really cut it as a sustainable solution to this problem. For instance the Japanese society might need to take an urgent look at issues such as the saving propensity of the coming generations in Japan and the rest of the world, since if those generations do not want to save as much as theirs, then with whom are they in the future to barter with their investments and savings against the cash they need. Could it even be that they could be better off by simply cashing in their investments today and holding the cash?

Needless to say this is a question that affects many countries and I can already see a young generation of nurses in developed countries asking and getting six figure incomes… or even much more if they restrict the competition with foreign nurses.