Thursday, May 28, 2015

There’s nothing like family support and trust

I have for more than a decade now been questioning, for a couple of hours most days, the bank regulators… telling them they are 180 degree wrong and should go home… in shame… 
And none of the regulators has even given me one answer and yet… not for one second, have I doubted that my wife and my daughters do not think I am absolutely right in what I am saying and doing… and that my friends, is the bliss of family support and trust.

I really doubt current bank regulators in the Basel Committee have even a fraction of what I have of it... and that is why I know I am going to prevail.

Thanks my dear girls! I do love you all so much.

Tuesday, May 26, 2015

My father was freed 70 years ago by courageous American boots on the ground… not by drones.

Yesterday… on Memorial Day 2015, as I try to do every year as often I can, I went down to the Washington Mall to express my gratitude to those courageous American soldiers that, 70 years ago, April 1945, helped to free my Polish father from Buchenwald.



This year I was only able to speak to one single veteran of those days in Europe. Sadly most of them are gone by now… and I never got a chance to thank them all.

And while walking around the World War II Memorial, a question that has been haunting me lately came back over and over again... My father was freed by boots on the ground… not by drones… will America still have it in it to free other future fathers if need be?



Friday, May 22, 2015

Google, Facebook, Twitter take notice: I already bought the tuxedo shirt I was looking for! Take me off that ad list!

How long is my already fulfilled intention to buy a tuxedo shirt, now going to pursue me on the web… on social media? I mean sort of every hour and ad on tuxedo shirts pops up.

There should be a way to notify the googles, the twitters and the facebooks of this world, that I already bought a shirt and have no intentions to buying another one soon… but then they might not be interested in doing such a thing… since they might prefer to keep alive the advertising tuxedo-shirt vendors’ illusion that I will buy a shirt from him.

PS. Can I get a copyright on my preferences and my life?

Fostering small admiration club groupthink, World Economic Forum's Davos meetings could be doing more bad than good.

While being one of the 24 Executive Directors of the World Bank, 2002-2004, I told the other 23 ED’s “If by lottery we substitute with a plumber or a certified nurse one of you, I guarantee we will have a much wiser board”. And of course, they did not like that too much. And of course I did not include myself among the substitutable... my ego does not allow such nonsense.

And now, when there is to be a change of the CEO, of the World Economic Forum’s Davos meetings… a gathering of experts… I wonder if it is not high time to guarantee in Davos the presence of a more diversified gathering.

Indeed what a wonderful PhD thesis it could be, to have somebody study what really game-changing or game-savings have come out of all those yearly meetings in Davos… As I see it, by fostering groupthink and small mutual admiration club mentality, Davos could have done more bad than good.

For instance having invited a couple of aspiring entrepreneurs to Davos would have allowed these to cry out “What the hell are bank regulators thinking of by making it even more difficult to access bank credit than we already have it? For God’s sake we have never set off a major bank crisis”.

The problem of course for these non-profit organizations is that aspiring entrepreneurs cannot afford to pay the same as already successful ones... like Klaus Schwab.

Sunday, May 17, 2015

A Tale of Two Worlds…roaming the web or roaming the streets… drones or boots on the ground?

I have horrible visions of my descendants sitting in front of computers with ever more capacity and connectivity… sending drones and roaming the web… while some other people’s descendants roam the streets, and develop a higher capacity in being boots on the ground.

And then one day, these other descendants come... and knock the power out of my descendants’ computers.

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.” ― Charles Dickens, A Tale of Two Cities

Thursday, May 14, 2015

Blocking citizens from venting their concerns, because of political correctness, is as dangerous as can be.

I just came back from a week in Sweden

If political correctness blocks the discussion of citizen’s ordinary and very human concerns, whether these are right or wrong, like those many have on what they feel is an excessive immigration, and the risk of diluting the meaning of being a Swede... that is a great growth hormone for extremism.

In other words, if you use a “That’s like Hitler” in response to all of their concerns, then too many might end up thinking “That Hitler guy sound’s quite right for me”.

Never forget that the emotions involved in the not liking something for the wrong reasons, are as strong as that of the not liking something for "the right reasons".


Friday, May 08, 2015

Stock markets and the real economy, c’est pas la meme chose.

Do not confuse the strength of the stock market with the strength of the economy.

The strength of the stock market can have to do only with the strength of owning what little there is to own. 

If central banks fueled share buybacks continue, we might end up with the strongest of stock markets, and the weakest of the real economies.


Saturday, May 02, 2015

We should dilute the influence of the influencers by increasing the number of those to influence.

Many, Lawrence Lessig included, feel that our political systems have fallen under the reign of “an engine of influence that seeks simply to make those most connected rich.”… And so they are doing their outmost to curtail the influence of the few.

Though I agree with the problem, I do not think that is the sustainable way to solve it.

The modern way, instead of augmenting to number of influential, should be to dramatically increase the number of those who need to be influenced. In other words we need to dilute the power of the few.

For instance, in the US, instead of having 535 senators and congressmen representing each 600,000 persons, there should be 600.000 senators and congressmen representing each one 535 persons.

Current technology allows that!

The more people you represent, the further away you are from representing each one of them.

Friday, April 24, 2015

Why is the social demand for hate increasing so much?

Why is the social demand for hate increasing so much, in a world where so much good advancements have supposedly been achieved? 

Might it be some are wetting the appetite for hate? Is that their business model?

If so, who?

You tell me.

Sunday, April 19, 2015

My early calls for the sort of antifragility expressed by Nassim Nicholas Taleb in his “Antifragile” of 2012.


"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." 

And in my book "Voice and Noise" of 2006 I said the following:

"Too well tuned?:  Martial arts legend Bruce Lee, whom many people regarded as immortal, died at the age of only 32 of a cerebral edema, or brain swelling, after taking some sort of aspirin. I have not the faintest idea whether that pill actually had anything to do with his death but I have frequently used (or misused) this sad death as an example of how an organism could be in such a highly tuned and perfect condition that it could not resist a small external shock. 

And I used this metaphor to explain why companies nowadays, pressured by the stock market’s expectations for the next quarterly results; the latest theories in corporate finance as to how squeeze out the last drop in results; and, perhaps, even some bit of creative accounting, might be so well-tuned (no little reserve fat left) that they would not be able to withstand any minor recession. (Whenever I expose this theory, I can see in my wife’s eyes that she believes this is just my preparing an excuse for my growing—ok, grown—midline.)"

Nassim Nicholas Taleb's "Antifragile"

And here two of my early warnings on fragility

In 1999 in a Op-Ed in I wrote: “The possible Big Bang that scares me the most is the one that could happen the day those genius bank regulators in Basel, playing Gods, manage to introduce a systemic error in the financial system, which will cause the collapse of our banks”

In January 2003 in FT I wrote: “Everyone knows that, sooner or later, the ratings issued by the credit agencies are just a new breed of systemic error to be propagated at modern speeds”

And, Professor Nassim Nicholas Taleb, please stop referring to the last financial crisis as a “Black Swan”… it was a perfectly predictable manmade event.

Saturday, April 18, 2015

My proposal for this Earth Day 2015.

Stop using purposeless, dangerous and silly credit-risk weighted equity requirements for banks, those which allow banks to earn higher risk adjusted returns on equity when lending to those perceived as safe than when lending to "the risky".

Purposeless: because major bank crises never ever result from excessive exposures to what is perceived as “risky” but always from excessive exposures to what was erroneously perceived as “absolutely safe”. 

Dangerous: because that completely distorts the allocation of bank credit to the real economy.

Silly: because why on earth should we taxpayers lend our support to banks if their only goal is to act as safe mattresses to stash away money in. Better to build a super-safe storage facility then.

Begin using more purposeful potential of planet-earth sustainability, job generation and poverty reduction weighted equity requirements for banks.

That way our banks will earn their highest risk adjusted returns on their equity when financing what is deemed useful for the society.

That way it makes sense for us taxpayers to lend our banks the support they need, in order for these to take the astute risks we need for the world to move forward in a sustainable way generating jobs and poverty reduction.

Who shall you tell about this proposal? All bank regulators starting by the Basel Committee for Banking Supervision and the Financial Stability Board; and to multinational entities such as the UN, IMF, and World Bank.

If they do not listen to you, at least force them to try to justify why they are supporting current credit-risk weighted equity requirements. These only impede the access to bank credit of "the risky", thereby killing opportunities and increasing inequalities.

Sunday, March 22, 2015

For each drone kill, the “home of the brave” might become more vulnerable.

I refer to Karen J. Greenberg’s review of Grégoire Chamayou’s “A theory of the drone”, Washington Post’s Outlook of March 22.

In it Greenberg writes: “Drones are the opposite of warfare… a warrior culture in which readiness to kill has been inseparable from the willingness to die. With drones the ethics of warrior cultures have been superseded, and the warriors have turned into invulnerable, cold-hearted executioners.”

As to “invulnerable”, I am not sure. For each drone kill, as opposed to a combat kill, the executioner distances himself more and more from the real world, and so becomes perhaps more and more vulnerable to it. What we already so often hear about “not wishing boots on the ground” might be just an appetizer of things to come.

Currently many kids, by the web, walk the whole world, but rarely set their feet out in the real world. Others have no access to the web, but keep on learning how to fight it out on the streets. When push comes to shove, who are going to prevail… those handy with drones, or those handy with pliers able to cut the power lines off?

@PerKurowski


A letter not published L

Saturday, March 21, 2015

The myth of the unused wealth

Every day we read of some excessive wealth that has quite shamefully accumulated in some very few hands, and which should be redistributed for some good purpose that most often sounds very meritorious.

Unfortunately that wealth is not some magic unused wealth stored under a mattress, but something that represents value somewhere. 

If for instance part of that wealth is invested in public bonds that helped finance education in the wealthiest’ home lands, should these bonds be sold in order to finance education in the land of the poor?

Or should it finance education in poor lands before financing some green investments that could make planet earth more sustainable?

And for one wealthy to sell the Picasso he owns or a bar of gold to another wealthy does not really seem to be the source of a solution for getting rid of the inequalities either.

To phrase good intentions, without fully spelling out the full range of possible opportunity costs, and upfront suggesting squarely what should be cut, is irresponsible and does little to help to solve the great challenges the world faces.

On that we need to call out all those who make a career of creating false illusions among the needed… offering one big redistribution party but not saying a word about the morning after.

By the way, how can we redistribute wealth without redistributing powers and paying commissions to wealth-redistributors?

Wednesday, February 18, 2015

If a Hitler imprisoned my grandchild, could he hope to be liberated by the Americans, like my father was?

I ask this because:

Seeing the number of safety instruction posted on the pool where I live in Maryland.

Hearing rumors about sport-teams being sued for allowing players to take risks

Seeing, in the Home of the Brave, how they are using sissy bank regulations, which require banks to hold more equity when lending to “the risky” than when lending to “the safe”.

And seeing the development of the taste for drones... and distaste for boots on the ground.

I have enough reasons to get nervous about America, slowly but surely, getting to be too risk-adverse for its, and for ours, the rest of the world's, own good.

June 1940, my father was on that train which carried polish prisoners and which was the first train to arrive to Auschwitz. He had the number 245 stamped on his arm for the rest of his life. In April 1945, 70 years ago, he was liberated from Buchenwald, by American boots on the ground.

Wednesday, September 10, 2014

Yes! to the Call for a Global Constitutional Convention Focused on Future Generations

Stephen M Gardiner makes “A Call for a global Constitutional Convention Focused onFuture Generations” to avoid the “tyranny of the contemporary”. In general terms Gardiner bases his argument on that “current decision-makers, and indeed the current generation more generally, face a serious temptation: they can take benefits now (for themselves), but defer many of the costs of their behavior far into the future (to others), even when this seems ethically indefensible”. And as a specific example he puts forward the challenges of climate change. 

I agree very much with his arguments and would propose the following two items are put on the agenda of that convention.

First to analyze the possibility of awarding all citizens, including children, the right to vote. The fact that for instance mothers or fathers could exercise the voting rights of their children under a certain age, like 15, would presumably put some pressure on parents to consider more their children’s future... for instance with respect to climate change.

Second, to exhaustible present as clear evidence of the tyranny of the contemporary the case of current bank regulations. With these, baby-boomers concerned exclusively with the immediate safety of the banks, imposed credit risk weighted capital requirements, which de facto stop banks from financing the “risky” future and have these only refinancing the “safer” past. We do not need climate change to evidence the costs of shortsightedness, when millions of young unemployed Europeans are currently threatened to become a lost generation. It would be a good opportunity to make a call for bank capital requirements based on job creation and sustainability ratings.

It would also be a good opportunity to make clear that, were we to put the climate change challenge into the hands of something as little accountable as the Basel Committee for Banking Regulations, then most likely planet earth would be toast.

PS. And if it was for me to decide, given that so much would have to do with ethics, I would try to squeeze in a session on the need for ethic ratings, since I am fed up with banks and regulatory authorities only using credit ratings, as if financing the construction of concentrations camps would be morally permissive, as long as its credit risk has been adequately priced.

Monday, September 08, 2014

On an odious bond issue to finance an odious government

Ricardo Hausmann and Miguel Angel Santos, in their “Should Venezuela default?” refer to a “$5 billion private placement of ten-year bonds with a 6% coupon, it effectively had to give a 40% discount, leaving it with barely $3 billion” 

That in cost represents approximately the same as a $3 billion ten-year bond issue with a 13.5% coupon. 

That type of financing of a sovereign should be prohibited for two reasons: 

First, that is, as you can understand, especially when the exact placement price of the issue is rarely reported, a completely non-transparent way of financing. 

Second, in the 2nd alternative, any new government who could obtain access to better credit terms, could much easier offer to repay the $3 billion issue, and thereby free the nation from those usury rates. As is, unless it enters into a default, it has to repay the full usury interests that are hidden away in the repayment of the $ 2bn in principal not received. 

And I would also like to know… who arranged that private placement and who bought it… so that I could express my contempt for it. Do they not know that Human Right’s Watch has clearly established that in Venezuela human rights are being violated? I mean where does the limit go? Would it be right to buy bonds to finance the building of concentration camps... if the price, the risk premium, is right? 

If financiers need credit ratings to base their decisions on, we citizens need governance ratings and ethic ratings to base the permission for our sovereigns to take on debt. 

Also… speculative investors should not have the right in any restructuring to have the cake and eat it too, meaning collecting their high-risk premiums and the full principal.

If you define clearly and effectively what needs to be considered as odious credits you solve about 90 percent of the problems with odious debts.