Thursday, April 28, 2016

Here are 18 reasons for why I believe the bank regulators in the Basel Committee are complete idiots… or something worse.

A brief comment. Do you think it is disrespectful of me to call the the Basel Committee's regulators “idiots”? If you had tried for more than a decade to get some answers in all politely thinkable ways, and you have only been met by silence… and if you were as convinced as me that their regulations are utterly disrespectful of the future world of my children and grandchildren… then you might call them something much worse. So here are the reasons:

Undefined purpose: The regulators never defined the purpose of our banks before regulating these. That’s why they only cared about banks’ safety, as mattresses into which stuck away cash, and cared not one iota about the vital social purpose of banks of allocating credit efficiently to the real economy. “A ship in harbor is safe, but that is not what ships are for.” John A Shedd, 1850-1926

Boundless hubris: To think that they could from their desk, with some standard risk weights, make the banks of the world allocate credit better and safer, is pure mind-boggling hubris.

Confusion about the relevant risks: The regulators looked at the risks of the clients of the banks, while they should have looked at the risks of the clients of the bank for the banks. They never studied empirically what has caused bank crises. That is why for instance in Basel II of 2004 they assigned a risk weight of 150 percent to clients rated below BB-, those clients that banks would never ever build up dangerous exposures to, and of only a 20 percent to those rated AAA to AA.

Using the expected as a proxy for the unexpected: Capital requirements are there to cover for un-expected events. Credit risk is part of the expected and so using this as a proxy for the unexpected is senseless. In fact, the safer something is perceived, the bigger its potential for delivering the unexpected.

Excessive consideration of credit risk: Credit risks were already cleared on the asset side by banks, by means of risk premiums and size of exposures. To use the same risks to also clear for it in the capital signifies giving too much consideration to credit risk. Let us never forget that a risk, even if perfectly perceived, leads to the wrong actions if excessively considered.

Ignoring how vital true risk taking is: For banks to take risks, albeit in small amounts, on “The Risky”, like with SMEs and entrepreneurs, is absolutely vital for the economy to move forward, in order not to stall and fall. Instead regulators gave banks incentives for building up excessive exposures to “The Safe”, a quite useless and very dangerous kind of risk-taking.

When stress testing banks, they reveal ignorance: A banks’ balance sheets need to be tested not only for what is on these, but also for what is lacking. Have they done that? Of course not; again they never defined the purpose of banks.

They have no idea how they distort on the margin. When now, playing tough, regulators increase capital requirements, they evidence they have no understanding of how their distortions distort on the margin. The scarcer a bank finds its regulatory capital to be, the more it has to stay away from what causes high capital requirements, namely “The Risky”

Runaway statism: In 1988 with Basel I they assigned a risk weight of zero percent to their friendly sovereigns, and of 100 percent to the citizens. That in effect meant that they believed government bureaucrats to be able to use bank credit more efficiently than the citizens. That in effect ignored that the strength of a sovereign is mostly defined by the strength of its citizens.

No financial acumen whatsoever: They never understood that with risk weighted capital requirements, the banks would be able to leverage differently different assets, and that would produce different risk-adjusted returns on equity for different assets, than would have been the case in the absence of the risk-weighting. The result was of course favoring more than usual those perceived decreed or concocted as safe, and disfavoring more than usual the access of bank credit of those perceived as risky.

No understanding of systemic risks: In January 2003 I wrote in Financial Times: “Everyone knows that, sooner or later, the ratings issued by the credit agencies are just a new breed of systemic errors, about to be propagated at modern speeds. Friends, as it is, the world is tough enough.” What more can I say?

No understanding of fragility: In April 2003, as an Executive Director of the World Bank I stated: “A mixture of thousand solutions, many of them inadequate, may lead to a flexible world that can bend with the storms. A world obsessed with Best Practices may calcify its structure and break with any small wind.” What more can I say?

No understanding of pro-cyclicality: When times are good, credit-risks seem low, so the risk-weighted capital requirements allow banks to expand more than they should; and when times are bad, the credit risk are naturally perceived higher, and so the capital requirements force banks to contract credit, precisely when less bank credit austerity is needed. What more can I say?

Macro-imprudence: Prudential regulation helps failed banks to fail expediently. Macro-imprudent regulation impedes failed banks from failing… which builds up huge mountains of combustible materials waiting for a Big Bang.

Disdain for the fair distribution of opportunities: John Kenneth Galbraith wrote in “Money: Whence it came where it went” “The function of credit in a simple society is, in fact, remarkably egalitarian. It allows the man with energy and no money to participate in the economy more or less on a par with the man who has capital of his own. And the more casual the conditions under which credit is granted and hence the more impecunious those accommodated, the more egalitarian credit is” And so, with their discrimination against “The Risky”, you could say the regulators decreed inequality.

No capacity to make amends: Here we are soon a decade after the 2007-08 crisis and the regulators have yet not been able to connect the dots between what caused it; real estate, AAA rated securities and sovereigns like Greece with the very low risk weights and therefore very low capital requirements for these assets.

And they only dig us deeper in the hole: Basel I has only 30 pages, Basel II grew into 347 pages and Basel III is growing into a more than a thousand pages monster. It seems they want to solve the shortage of jobs by creating bank regulation consultancy jobs. Every day that goes our banks finance less and less of the riskier future only to refinance more and mote the, for the time being, safer past.

And you wont believe this: The standard risk weighted capital requirements for banks were deciding on using a portfolio invariant model “so the capital required for any given loan does only depend on the risk of that loan and must not depend on the portfolio it is added to.” And the explanation for that horrible simplification was because that “would have been a too complex task for most banks and supervisor”. What more can I say... they did not find it too complex to distort.

PS. Why do I mention the possibility of “something worse”? Because for me it would be hard to think of a more efficient and devious way to destroy capitalism, and the Western Society, than infusing it with an extraordinary silly risk aversion. The AAA-bomb

PS. I am sure there is a lot of other good examples and explanations of the Basel Committee's idiocy here and here.

PS. Deregulation? Hah! Had banks not been regulated at all, the Crash 2007-08 would never have happened. Markets would knowingly never allowed banks to leverage their equity 30-50 times to 1, no matter how secure their assets seemed… as did happen. The regulators, with their “risk-weighing of assets” confounded the markets into thinking that, one way or another all risks had been taken cared of. They even confounded their own. Too often we read “experts” like Alan Greenspan discussing the evolution of bank capital, comparing capital to asset ratios with capital to risk-weighted assets ratios… something as oranges-and-apples as can be.

PS. And what to say about those who keep the failed Basel Committee regulators regulating?  Perhaps another John Kenneth Galbraith quote applies: If one is pretending to knowledge one does not have, one cannot ask for explanations to support possible objections.

Wednesday, April 27, 2016

There’s a great way to fight climate change and inequality, but since it leaves profiteers out, it will be opposed

I proposed a new $2 per gallon of gas tax. That, by helping to lower the consumption of gas, and thereby of carbon emissions, should be great in the fight against climate change.

And I also proposed that all revenues from that gas tax, should be paid out equally to all citizens, in a sort of first step of a Universal Basic Income scheme, which should be very good in a fight against inequality.

But, if so good, why are the chances that become a reality so slim? The simple answer is that it would not provide profit opportunities for the climate change and redistribution profiteers.

Friends, if we are serious about fighting climate change and inequality, we must be serious about keeping the profiteers at bay. 

Fighting against climate change and inequality takes a lot of money and, if we also have to satisfy profiteers while fighting, we simply might not have enough money.

Saturday, April 23, 2016

A SDRM must begin by defining “odious” credits and borrowings. Also, when should capital receive anonymous asylum?

The world no doubt needs a Sovereign Debt Restructuring Mechanism but, if that is going to help the citizens of the world, which it primarily should do, that must begin by making very clear the difference between bona-fide normal credits and borrowings, and odious credits and borrowings.

And at what moment should somebody's capital classify to receive anonymous asylum? For instance would someone escaping from North Korea be able to do so?

Friday, April 22, 2016

Must we respect central bank’s independency even if they go crazy and statist?

What is this with QEs injecting huge amounts of money buying government debt because that is supposedly safer? Who on earth can believe government bureaucrats know better what to do with other peoples’ money than citizens with their own? 

What is this with negative interest? Just months ago the elderly were to retire later, in order for their sacked by the government pension or social security funds to be able to pay them something… and now they are to retire as fast as possible to get at least something? 

What on earth is this with the risk weights that determine the capital requirements for banks? 100 percent for the citizens, and zero percent for the government? They’ve got to be kidding.

What on earth is this with the risk weights that determine the capital requirements for banks? Higher when financing the riskier future than when refinancing the safer past? Just wait till our kids find out! 

Are we sure we have not packed our central banks with Chauncey Gardiners?

PS. Since I now do not even trust the pilots, I don’t want Helicopter money any more, just a Universal Basic Income.

PS. 2006 Long-term benefits of a hard landing

Monday, April 18, 2016

Don’t let redistribution profiteers raise your expectations. In offshore centers there are no shining treasures, only documents.

With relation to Panama, the Mossack Fonseca affair and offshore centers in general how many articles do not begin with something like “The wealthy conceal their cash”?

That gives the impression of an Ali Baba cave where fabulous unused treasuries are stored and that if only these could be recovered from the 41 thieves everyone would live happily ever after.

What devious bullshit! What exists in those offshore caves is a load of documents that gives the holders of these the ownership of a lot of assets, almost all of these to be found onshore... for instance stocks, property in London or municipal infrastructure bonds.

Granted, the ownership of some of those assets is incorrect, since in not so few cases they should belong to the governments… but that is another issue that has little to do with the assets as such.

And many of those assets are the result of loopholes… but who can throw the first stone holding that using loopholes is an odious behavior.

If you hate loopholes, I do, fight for their removal, by for instance making tax laws simpler, better and fairer.

But in the same vein we have corporations who, egged on by smart tax-lawyers, intensely exploit the opportunities loopholes provide, let us not forget that on the opposite side, we most often find redistribution profiteers waiting to lay their hands on new business opportunities.

For instance if we want to redistribute wealth and income, the most efficient way would be through a Universal Basic Income scheme, at a cost of 2 percent tops, but that leaves many of the redistributes asking "what’s in it for me?"... and so they oppose it.

If for instance we imposed a big carbon tax and distributed its revenues equally to all as a part of Universal Basic Income then we would align beautifully the fight against inequality and climate change, but a lot of the mercenary soldiers in the wars against climate change and inequality, would also ask… what’s in it for us?

Profiteers surround all wars, no matter the cause. It is impossible to avoid them, but let us at least try to point out their theoretical existence.

And please when I refer to “profiteers” I do not only speak of those who collect their profits in cash. Much much worse are those demagogues and populists who collect their profits in political power… like the late Hugo Chavez did.

Tuesday, April 12, 2016

Here are some proposals to help our children and grandchildren have a better future than what is painted for them now.

First of all, we need to get rid of the credit risk weighted capital requirements for banks. 

These allow banks to hold less capital against what is ex ante perceived, decreed or concocted to be safe than against what is perceived as risky; which allows banks to leverage much more with “the safe” than with “the risky”; which allows banks to earn higher risk adjusted returns with “the safe” than with “the risky”; which means the banks will lend too much to “the safe” and too little to “the risky”; which means the banks are not any longer financing sufficiently the riskier future, they are only refinancing the for the short time being, safer past.

If we are to distort the allocation of bank credit to the real economy, let us at least do that with a good social purpose. In this respect we might benefit from introducing pro-SDGs and pro job-creation capital requirements for banks.

And since I believe that any redistribution of income and wealth managed by governments, becomes just too expensive because of all the redistribution profiteers involved, we should launch, as soon as possible, a Universal Basic Income scheme. 

That would be great: for the wealthy, as they would need to distribute less or at least get more bang for each buck handed over; for the poor, since they will get more much more net result of any redistribution; and for fiscal transparency, since it will help separate the redistribution functions from the ordinary tasks of government.

And finally, if we also fund such Universal Basic Income scheme with carbon taxes, then we will beautifully align the incentives in the fight against inequality with those of climate change.

What are we waiting for?

Helicopter money? Why should we trust the pilots?

Sunday, April 10, 2016

The wealthy and the poor should all be interested in a Universal Basic Income scheme

What is a Universal Basic Income? It refers to a payment, made for instance monthly, to all citizens, without any differentiations based on wealth and income.

The wealthy must know that' some voluntary redistribution must occur, in order to stop involuntary distribution from happening, and so they know that some Pro-Equality Tax on wealth and income is lurking around the corners. In that respect they have a vested interest in that the redistribution is done as cost effective as possible, so that the redistribution needs are minimized. 

And to top it up, that redistribution could help the real economy, and so that the wealthy can perhaps recover fast what was redistributed from them.

The poor have also a vested interest in that the redistribution is done as cost effective as possible, so as to get the most out of the redistribution. 

And to top it up, with the resulting increased demand, the poor can help the real economy to provide them with jobs and, hopefully, with opportunities to also them become wealthy.

The direct cost of redistributing by means of a Universal Basic Income should be 2 percent… tops! What current distribution performed by government can compete with that?

That some who received the Basic Universal Income might, because of wealth and income, not merit it? So what, they only gave a gift to themselves, at a cost much less than what they ordinary pay for a tip.

Now who could be against all that? The usual redistribution profiteers of course.

Besides a Pro-Equality Tax, there could be are many other good alternatives to how to fund a Universal Basic Income scheme.

It could for instance be funded by carbon taxes, which would help us to align the fight against inequality with the fight against climate change… and thereby also keep the climate change profiteers at bay.

And all that would provide us all one great additional benefit. By keeping the social redistribution functions separate, we could have a better and more transparent oversight over how the government is performing its other functions... and that would help us to keep the government profiteers at bay, and increase our chances of getting good governments. 

It’s a win, win, win!

Wednesday, March 30, 2016

As a foreigner I get so confused reading America’s Declaration of Independence while listening to President candidates

The Declaration of Independence states as one of its basic motives that “The King of Great Britain… has endeavored to prevent the population of these states; for that purpose obstructing the laws for naturalization of foreigners; refusing to pass others to encourage their migration hither, and raising the conditions of new appropriations of lands.”

And it also states as a motive for Independence: The King of England has also “combined with others to subject us to Jurisdiction foreign to our Constitution, and unacknowledged by our Laws; giving his Assent to their Acts of pretended legislation: … For cutting off our Trade with all Parts of the World.

And it also states, as a motive for Independence: The King of England “has excited domestic Insurrections among us” 

PS. How did America move from Reagan’s “Tear down that wall” to Trump’s “Build up that wall”, in just a few decades?

PS. When you build a wall, how can you really be sure you end up on the right side, with the right company?

Friday, March 25, 2016

We need a Pro-Equality-Tax on income and wealth that keeps the redistribution profiteers away

I am convinced it behooves all of us who have much more than those who have much less to think about the need of a Pro-Equality tax on income and wealth.

That need is mainly the result of interferences and abuses of free markets, many of these promoted by governments, many of these hidden in well-intentioned regulations.

If a Pro-Equality-Pot were to be redistributed through current ordinary channels, not much would change, in fact inequality and other problems could get much worse.

As an absolute minimum we must keep all redistribution profiteers away.

The Pro-Equality-Pot should be distributed in equal parts to all nationals, line through a Universal Basic Income scheme, and that should not cost, tops, more than 2 percent to do.

To achieve that I believe it is indispensable to separate the Pro-Equality taxes from all other ordinary taxes paid to keep governments running.

That separation would bring much needed transparency, which also helps us to make it harder for dangerous demagogues to seed discord in our nations.

Initiatives like a Universal Basic Income sound promising. Let us stop the redistribution profiteers from killing these. 

The Universal Basic Income has nothing to do with the Right or the Left; it has all to do with the Radical Middle.

PS. I come from Venezuela a nation that in 2005-2015 received incredible amounts of net oil revenues. During that decade the poorest 40 percent of its people, from a government that identified itself as 21st Century Socialism, did not get even 15 percent of what should have been their per capita share of that income. I have fought a lot for the distribution to the citizens of the oil revenues. Unfortunately, until now, the redistribution profiteers have had the day.

Thursday, February 11, 2016

There are good and bad, or at least better and worse, distortions.

Place a universal 100 percent tax on all petrol/gas sold in the world, and then share all resulting revenues equally among all citizens of the world, and then let all that income be ploughed back into the economy without any distortion.

That would allow us to help the environment, fight inequality and promote the growth of the economy. 

Not bad eh?

But place a higher capital requirement on banks when they finance someone safe than when the finance someone risky, as is done now, and that does nothing for the environment, increases inequality and distorts the allocation of credit to the real economy, with serious consequences.

Bad eh?

Monday, January 25, 2016

“The wealth of 62 richest equals that of 3.6 billion poorest” That‘s a deviously false odiously divisive statement.

I come from Venezuela where I have seen a discourse full of hatred, carried out by those who want to profit financially or politically from promoting redistribution, destroy a country. I cannot sit back and see the Venezuelan tragedy reenacted on a global scale.

As always in all useful lies there are traces of truth. Of course the market value of the possessions of the 62 richest, especially after being inflated by means of fiscal deficits bailouts and QEs, could be similar to that of the market value of the possessions of the world’s 3.6 billion poorest. 

But, what does that mean when there is no way to liquidate the possessions of the rich in the market, so as to be able to transfer a similar amount of wealth to the poor. What on earth does a $25 million dollar penthouse in New York, which only some equally wealthy can buy, signify to the poor in terms of access to a better life? And what's to be gained from the wealthy selling all their Picasso's and the Picasso's losing a lot of value?

So if we are to analyze wealth inequality with intellectual honesty in any concrete applicable way, we should refer exclusively to the inequality that exists in transferable wealth. 

And, besides that, I swear that, in years of life lived, air breathed, water drunk, land trampled, food eaten, laughs and tears shed, those 3.6 billion poor posses at least a billion more times than those 62 most wealthy.

And this does not mean I do not commiserate with the poor of the world, and would not like them to have much more resources available in order to diminish their hardships. I do so very much, and that is precisely why I insist that what we must do, is to analyze what type of interventions help to generate the existing inequalities, and what blocks the opportunities for the poor to reach up. And on that route, one of the most important steps is keeping the redistribution profiteers at distance.

And this does not mean I am against redistribution. In fact before we are able to enable the opportunities that can lead to a sustainable betterment for the poor, I accept the need of redistribution, even if that is clearly less sustainable. But, that redistribution should take place in the most direct and cost effective way among citizens… again with the least interference possible by redistribution profiteers.

In my Venezuela that starts by sharing out its oil revenues directly to the citizens so as to avoid these falling into the hands of redistribution profiteers like Hugo Chávez.

And again, much more important for the poor than having wealth redistributed, is the generation of more wealth for them, which can only happen by enabling their access to opportunities. 

And for the health of our planet's sake...keep all those non-productive climate change profiteers out of the way. As I have often said, if the fight against climate change fall into the hands of something like our bank regulators...we're toast! 

Did poverty in the world decrease over the last decades because the world redistributed wealth, or embraced the MDGs (Millennium Development Goals), or because many (like China) allowed their citizens more opportunities to generate wealth?

Wednesday, January 20, 2016

I fight against inequality, on the side of the opportunity enablers, not on that of the wealth redistribution profiteers

Around the world, government market interferences and many other inequitable arrangements, is  generating a dangerous inequality that will come back to bite us all... innocent or not.

But I come from a country, Venezuela, where a Minister of Education belonging to Hugo Chavez 21st Century Socialism stated: “The campaign against poverty should not help to move up the most needy to the middle class, since that could cause these to become ‘escuálidos’”, meaning opposition. 

In my homeland I now fight for the sharing out of all net oil revenues in equal parts among the citizens. That so that the government who currently  receives 97 percent of Venezuela´s exports, don't use those revenues to enrich itself and torment the citizens.

Thinking back, what got me started on that, was an experience as the first diversification manager at the Venezuela Investment Fund that was supposed to manage oil revenues, 1974,  a post to which I resigned after only two weeks, having convenced myself it was all just a cover up for politicians and technocrats to do what they wanted with our oil revenues.

So, as you can understand, I have experiences which lead me to believe that the worst part with taxes, is quite often not the tax evader, nor the taxman, but the tax revenue abusers. And so, when thinking about the need of fighting inequality, the last thing I want is for that fight to fall into the hands of any wealth redistribution profiteers... be those profits financial or political.

So what could we do? Perhaps all of us citizens could deposit annually 10% of our income and 1% of wealth in a Big Pro-Equality Pot, and thereafter just share it all out in equal parts among all of us citizens. There should be no or absolutely minimum government intervention, and the operations could be contracted out to the debit card company that charges the lowest fees. Any citizen paying into the pot more than what he receives, should of course be able to deduct that difference from his ordinary taxes.

The beauty of that wold be that since the Pot would be strictly a citizen to citizen responsibility, which did not involve any Sheriff of Nottingham taxman, it would be so much easier to apply social sanctions for its avoidance.

But, much much more important than any ex-post wealth redistribution, is the ex ante enabling of opportunities, since only that could  help us all to move forward.

For instance I have been fighting for soon two decades, against the credit-risk-weighted capital requirements imposed by bank regulators that favors the access to bank credit of The Safe, like the “infallible sovereigns”, the AAArisktocracy and housing. And that thereby odiously discriminates against the access to bank credit of "The Risky", like SMEs and entrepreneurs.

What got me started on that was when in the mid 90s I began to suspect that a dangerous credit-risk aversion was being imposed on our banks by the Basel Committee for Banking Supervision. And then reading the following passages from John Kenneth Galbraith’s “Money: Whence it came where it went”.

“The function of credit in a simple society is, in fact, remarkably egalitarian. It allows the man with energy and no money to participate in the economy more or less on a par with the man who has capital of his own. And the more casual the conditions under which credit is granted and hence the more impecunious those accommodated, the more egalitarian credit is… Bad banks, unlike good, loaned to the poor risk, which is another name for the poor man.”

“For the new parts of the country [USA’s West]… there was the right to create banks at will and therewith the notes and deposits that resulted from their loans…[if] the bank failed…someone was left holding the worthless notes… but some borrowers from this bank were now in business...[jobs created… It was an arrangement which reputable bankers and merchants in the East viewed with extreme distaste… Men of economic wisdom, then as later expressing the views of the reputable business community, spoke of the anarchy of unstable banking… The men of wisdom missed the point. The anarchy served the frontier far better than a more orderly system that kept a tight hand on credit would have done…. what is called sound economics is very often what mirrors the needs of the respectfully affluent.”

What could we do about that? Obviously getting rid of those credit risk weighted capital requirements for banks, and just have one single capital requirement, perhaps 10 percent, on all assets.

But unfortunately, when I hear about “we have to fight against inequality”, I hear much too often the voices of inequality profiteers, not at all interested in either enabling opportunities or redistributing efficiently.

PS. There's a world of difference between a redistribution of wealth cost of let us say 2 percent and one of 80 percent.

PS. #WEF #Oxfam #Davos What is the wealth of 62, $1.76 trillion, divided by 3.6 billion? What happens the day after if that inequality is gone? The problem is not that some are wealthy but if how they became wealthy blocks the opportunities of other.

PS. My Tax Paradise

PS. In fact “The wealth of 62 richest equals that of 3.6 billion poorest” is a deviously false and odiously divisive statement 

PS. Universal Basic Income is being studied and the redistribution profiteers will do all they can to have it fail. 

Tuesday, November 03, 2015

Who’s to save me from an incestuous intellectual degeneration, when being fed info based on my own preferences?

I have some preferences and Google, Facebook, Twitter and other social media feed me based on these. And so the more Goggle, Facebook, Twitter and other social media gets to know my preferences the more I will be entering into an incestuous relation with myself… in other words the more I run the risk that my intellect might incestuously degenerate.

Who is to supply me the diversity I need in order to find out any new preferences in life?

So, for a starter, it looks that, as a minimum minimorum, I need a copyright of my own preferences.

Sunday, November 01, 2015

Who wants to be my agent, marketing my attention span of 64 30-second ad spots daily, so as to maximize my returns?

For 8 hours I am willing to look at adds 1 minute an hour, and for other 8 hours 3 minutes per hour.

That adds up to attention span availability for ads per day, equal to 64 30-second spots.

Who is willing to be my agent marketing my attention span of 64 30-second spots per day so as to maximize my returns?

The agent would have to guarantee I am not bothered over this attention span allotment of 64 30-second spots per day.

I would accept payment in cash or products, like being able to see a movie that interests me. 

I would accept paying my agent, either in cash or by ceding to him, some of my 64 30-second spots per day.

Ad-blockers might be especially interested in representing my attention span.

Monday, September 28, 2015

UN’s Sustainable Development Goals, SDGs, against the backdrop of the Credit Risk Weighted Capital Requirements for Banks

The fact is that current bank regulations, by allowing for lower capital requirements, allow banks to earn higher risk adjusted returns on equity when lending to what is perceived as safe than when lending to what is perceived as risky. 

That’s it! Just avoid taking credit risks and you earn more. Not a word about a purpose for banks; like helping to generate jobs for the young or making the planet more sustainable. So we have a banking system that no longer finances the future, it now only refinances the past.

And to top it up, the regulators assigned a risk weight of zero percent to the sovereigns (governments) and of 100 percent to the citizens and private sectors on which that sovereign depends. Which means they believe government bureaucrats can use bank credit more efficiently than SMEs and entrepreneurs.

And of course those regulations completely distort the allocation of bank credit to the real economy and, by diminishing the opportunities of the risky to gain access to bank credit, increases existing inequalities. 

And of course those purposeless bank regulations are also dangerously useless. We know that major bank crisis never occur because of excessive financing of what is perceived as risky; they always result from excessive financing of something erroneously believed to be very safe 

And not one iota about this is being discussed in the UN, IMF or elsewhere

Can you imagine if by allowing banks to hold less somewhat less equity when lending to what finances SDGs, we made banks earn higher returns on equity when financing SDGs?  

And so I am sorry, against this backdrop, the announcement of the Sustainable Development Goals, the SDGs, might suggest the term Pollyannaish should henceforth be spelled as PollyUNnaish.

PS. Volkswagen should have rudely reminded UN bureaucrats that there is a real world waiting out there to game their SDGs.