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.

Monday, August 25, 2014

Here the famous Venezuelan/Nicolás Maduro method to eliminate income inequality among citizens.

For all of you who like Thomas Piketty are very concerned with income inequality, you can sleep like babies now. 

Venezuela´s president Nicolás Maduro has designed an easy 3 step method that will forever condemn to bad memories all inequality among citizens.

1. With expropriations, price and foreign exchange controls, and similar creative methods, you create a scarcity of many vital consumer products.

2. Then you introduce a rationing system which allows for limited purchases of some of the really scarce consumer products, and which requires you to present your right hand thumb at a machine, for fingerprint recognition.

3. Finally, you allow the poor to negotiate freely in the market the lease of their right hand thumb.

It is a beautiful method. The more severe the scarcity, the more are the rich prepared to pay in order to lease the right hand thumbs of the poor, and so the less the inequalities. It can´t go wrong… that is for as long as you are still alive!

PS. I guess they will try to make the thumb of the left hand work too! That way you can lease out two thumbs at the same time… and make the inequalities disappear much faster. Hurrah!

Wednesday, August 06, 2014

My current list of prominent inequality drivers

I do not care about some having much more wealth than others, for instance having Picassos on their walls that if taken down only had to go up on somebody else’s wall… and I fret where all those jobs which are based on obnoxiously expensive manual procedures would be were it not for the insanely wealthy… and, if there were no accumulation of wealth where would all those savings that can be invested come from?... 

But I do care profoundly when wealth is acquired by ways of opportunities not accorded to everyone... and so here are some new non traditional inequality drivers of which I am currently most suspicious.

Intellectual property rights which give way to incredible fortunes… there should be some more explicit limits on these… like a maximum amount of profits covered … a fixed number of units produced protected… or at least that profits derived from intellectually protected activities should be taxed at a higher rate than profits derived from competing naked in the market.

Monopolies… profit derived from monopolies should perhaps be taxed at a higher rate than ordinary profits.

Market shares/globalization… profit derived from activities that have achieved especially large local or global market shares should perhaps be taxed at a higher rate than ordinary profits.

Financial returns produced by the fact that banks because of implicit government guarantees are able to hold less capital than other normal commercial entities should be taxed at a higher rate than ordinary on their profits… something which they could naturally avoid by simply keeping more capital. 

And then there are those regulatory inequity drivers like pushing quantitative easing flows through a banking system with risk-weighted capital requirements, which so much favoring what is perceived as absolutely safe so much discriminates against what is perceived as risky, and something which of course impedes that liquidity and credit gets to where it is needed the most. And had it not been for bail-outs and QEs Piketty’s book Capital in the 21st Century would not stand a chance to have seen the light as so much wealth would have been wiped out. 

And then there is the wealth tax, which if applied in a system where inequalities like those explained above persist, will only end up concentrating wealth more and more among fewer and fewer Plutocrats.

And, of course, perhaps foremost, all those other sources of discrimination that exist and hinders some from having the same opportunities as others... and all those resulting from the many existing inequalities at the start point.

And the list goes on, and the list goes on

And I also utterly dislike those who are only out to make a buck on the redistribution of wealth. If there is going to be redistribution do it through a system that guarantees that at least 99% goes where it was supposed to go… and that it all does not end in the hands of for equality fighting opportunists

But before ending let me pose the BIG Q.: Professor Thomas Piketty. What’s better, to live in your own inequality, or in somebody else’s equality?

Tuesday, July 29, 2014

Today I was censored in my homeland Venezuela

Since January 2000 I had been a pro-bono columnist at El Universal. It was recently sold to a group supposedly very friendly and cozy with the Nicolás Maduro government.

Today, July 29, 2014, two days before the centennial of the discovery of oil in Venezuela, something which has enriched governments so much so as to make a true democracy impossible, I was informed there was no room for me in the paper anymore.

Am I sad? Of course! It is truly hard to be censored in one´s own country, especially when one has so much one wants to say, especially when so much needs to be said.

Thank God there are now such things a blogs otherwise I might have had to start putting up a print-shop in the basement or practicing graffiti.

The title of the article I was to publish July 31? “100 years of submission”... in it I was as always wanting for the oil revenues to be shared out directly to the citizens... so that we do not have to live any longer in somebody else's business.

Think of how you would feel if your government was receiving and disposing of over 97% of all the exports of your country. That is my Venezuela. That is the country where the price of milk, if you can find it, is 278 times the price of gas (petrol) and that is not viewed as something immoral.

That is an oil curse as big as oil curses can come!

PS. But, on the other hand can you think of "Daddy why are you not censored?" Indeed it is not easy to live in a low profile dictatorship! 

Friday, July 25, 2014

What does it matter whether the Picasso, hanging on my wall, is worth 5 or 50 million? I did not pump up its value.

Yes, I accept that you might have a point thinking it is not fair that the Picasso that had I been rich could be hanging on my wall, should now be worth 50 million, instead of the 5 million it was valued when I would have had to pay inheritance taxes to keep it in my family? But I did not pump up its value...that was done by those who with their QEs and fiscal deficits injected so much liquidity. 

I swear, it is the same Picasso as always, I did absolutely nothing to it… in fact it has perhaps even lost some of its shine.

If the government now takes my Picasso in a Thomas Piketty wealth-tax, to help repay its debt… would it not then have to sell it, causing it only to hang on somebody else’s wall? 

Of course the government could export the Picasso to pay for oil… but what about when we run out of Picasso’s on our walls… and these all hang on their walls? Is that fair?

PS. Down here, on earth, with no Picasso, I am still envious of that 50 million Picasso hanging on somebody’s wall and wondering whether a little wealth tax would not be such a bad idea.

Tuesday, July 22, 2014

Shamelessness is taking over the web!

The big web players are becoming more and more shameless… and there seems to be nothing that can stop them…

Initially they were quite respectful of your information… lately I have seen messages reading like “we will import your address book”… and, as a token, we will not store your email and password. Holy moly!

Wednesday, July 16, 2014

Why does Bill Maher, so funny when exploiting what’s exploitable, remind me so much of Monsieur Thénardier in Les Miserable?



Madame Thénardier: Master of the house isn't worth my spit. Comforter, philosopher, and life-long shit. Cunning little brain; regular Voltaire. Thinks he's quite a lover, but there's not much there.

Thursday, July 10, 2014

One question, and one opinion, on the Scottish independence referendum of September 18, 2014

Question: How many Scots under 16 years of age will not have a chance to vote on what will affect them the most? Why not give all thirteen and more that right and allow those over 50 to vote only if they do so in representation of a child or a grandchild under thirteen? That could really make this vote on the declaration of independence a real game changer.

Opinion: The draft of June 2014 of the Scottish Independence Bill states that “In Scotland, the people have the sovereign right to self-determination”. Great, but unfortunately, it would not seem that “self-determination” will include each Scottish citizen managing his share of natural resources his country has been endowed with, like oil.

And friends, speaking as an oil-cursed Venezuelan, who has had to live in somebody else’s business, until he could not endure that anymore and had to leave his country, you might think more about this issue.

If not, I assure you that this independence of yours could turn out to be a real Pyrrhic one, when all of you Scots will become dependent on the clan that manages those natural resource revenues for you.

Please don’t let that happen!

Wednesday, July 02, 2014

Should there be a limit to what ex presidents, ex first ladies, ex congressmen and other ex public officers could earn for giving a speech?

Like for instance the weekly median salary in the nation?

Otherwise, even though they are out of office, it seems so much ex-post rent extracting clientelism.

I mean does it make any sense to compensate one speech given to a few, with sometimes something that could sound like the salary paid to him by all for a full year of services to the nation?

Wednesday, June 11, 2014

Every time a candidate, no matter how good, looses because he took our votes for granted, that is great news.

I am not an American, and I lack sufficient knowledge of the candidates in order to opine on whether I would prefer Eric Cantor or the other one… of whom I do not even know his name.

But, as a citizen, any time a candidate, no matter how good, loses anywhere, because he seemingly has taken the votes of us citizens for granted… that is great news.

Tuesday, June 10, 2014

What has become of you Europe? Don't be a defeatist dear!

I just saw a photo of your Britain’s David Cameron, Germany’s Angela Merkel, Holland’s Mark Rutte and Sweden’s Fredrik Reinfeldt, in a row boat, in a little lake, probably surrounded by thousands of life guards… wearing life vests.

The same boat used years ago by Tage Erlander (Sweden) and Nikita Khrushchev… without life vests.

And all I could think of was “Would Winston Churchill (or Putin) ever want to be photographed in a little row boat, on a small lake, wearing a life vest?

What has become of you Europe? In Swedish churches we used to sing psalms praying “God make us daring!

Life is never ever that safe so as to allow you send this type of subliminal messages to our youth!


Sunday, June 01, 2014

Should not Google and other public private eyes search our permission before searching us for other to us unknown parties?

I have been giving lots of thought on the whole Google-search-engine issue for quite some years and below you will find some links to that:

But now the following has hit me.

Way back, when about 16 years of age, clearly before I knew what was good for me, (as I might still not know) when in a Swedish high school, a very good one I must say, (SHL Hum SSHL) I got some really lousy grades in German (from Sven Lindestad a.k.a. "Bull")

And now, looking at how good Germany seems to be doing, at least in Europe, I suddenly realized that it might not be in my best interest to have anyone look into my proficiency in German grades.

I know I am talking about events around 47 years ago, so the chances of someone finding those records are very slim indeed… but as some can say "traditions!" other can say "precautions!"

Since Google has now been told by the European Commission to eliminate some embarrassing registers… and it could be somewhat embarrassing for me to ask them to eliminate my high-school grade records… sort of to play it safe, should I not request the European Commission to impose on those public eyes that Google and other search engines have become, the obligation of asking all us individuals for our approval of being searched, before searching us to satisfy the curiosity needs of some usually unidentified third party who is searching us for reasons unknown to us?

I do not think so... but the question should be asked... I think :-) And the European Commission should dare to respond! :-(

http://perkurowski.blogspot.com/2012/06/we-might-need-global-web-constitution.html

PS. By the way at what point could Facebook be labeled a stalker?

PS. When is any social media going to share advertising revenues with those being searched or receiving the ads?


Monday, May 26, 2014

When writing about “Capital”, like Piketty, can you just use data about it, without ever having seen it at work?

The real importance of capital is when it marries risk… meaning when it is willing to burn itself up in order to multiply enormously or reach something much higher.

And that angle is entirely absent in Piketty´s “Capital”.

The closest he gets is when on page 115 he writes “Capital is never quiet: it is always risk-oriented and entrepreneurial, at least at its inception”. 

Indeed… but then? What happens after its inception? Truth is that from being muscle creating capital, most of it turns into obesity creating capital… and dies out over time.

Look for instance at those many trillions invested in the debt of the “infallible sovereigns”. Is that capital? No way! In fact all that has already been condemned to disappear through financial repression.

Frankly… the more I read the book (I am almost through it) the more upset I get... at least with its too capitalistic publisher's campaign.

From reading Thomas Piketty’s Wikepedia biography it becomes absolutely clear that he has never ever seen capital put to work… and yet he dares to write about capital.

Is this an expert to follow? No way Jose! He is just another Bill Easterly tyrant!

PS. Avoid the merchants of poverty!

Thursday, May 22, 2014

Risk premiums and ethic ratings

And again, for the convenience of those who do not have sufficient political leadership, the government of Venezuela, and PDVSA, announced new bond issues, in order to pay for social "investments" today ... leaving the bill to the Venezuelan youth of tomorrow.

And all this while the Financial Times of London described that soaring interest rates paid, for example by Venezuela, "tempts investors to ignore the fears of civil war, crippling inflation and legal battles."

And indeed Venezuela ( PDVSA and ) pay for ten year credit interest rates that are about 10% higher rate about 10 % than the U.S.. 8% more than Mexico ! That means in essence that already after the first year we have paid the creditor an additional 10 % ... and still owe him 100% of the loan. And that means in essence that at end of the tenth year, when we have already paid the creditor additional 100% ... our children still owe 100% of the principal. This is simply something abominable.

In fact, when a sovereign country is required to pay an interest rate that exceeds by more than 4% the rate of those who pay less, the risk premium, I consider we are in the presence of an economic crime against humanity being committed, fragrantly, against future generations.

And we citizens of the world should do something about it ... for example:

All stock exchanges of the world should suspend trading of all sovereign debt that show a risk premium higher than 4%... (as that would indicate a basic incapacity of the government)

Besides credit ratings, we should develop and use a system of ethic ratings.

All those who purchase sovereign bonds carrying a risk premium of more than 4% risk, and which do not meet minimum ethic ratings, should be exposed publicly as financiers of Sovereign Evils.

We the people should refuse to pay taxes while our sovereign bonds pay a risk premium higher than 4% and do not possess some minimum ethic ratings... and that should be a clause explicitly included in all bond issues.

PS . Whoever believes that China treats us Venezuela as accommodating as we treat Petrocaribe, is a dreamer.


You, who are about to finance Pdvsa, are you sure crimes against human rights are not committed in Venezuela? Ask your children!

Tuesday, May 20, 2014

My view on minimum wages

In a booming environment a minimum wage might do some good, as it is not that kind of big hinder to employment, and helps to distribute the boom more equitably to those less benefiting from it.

In a recession, sometimes even with deflation threats, a minimum wage is utterly bad, as it hinders many from at least being able to get a foot in the door of an employment... in fact in these dire cases, the lowering of a minimum wage could be the right signal...

The economy is the economy is the economy... and there is sadly very little little me can do about that. 

Sunday, May 18, 2014

This is what Sean Penn, Oliver Stone, Danny Glover and Mark Weisbrot, with their deafening silence, support in Venezuela!

Imagine that this was your daughter in a country where some macho robocops, obeying instructions from Cuba, are emboldened and busy themselves confronting students, but cower when they see any real criminals ... God bless and take care of our young!



What can we say?


Thanks Amnesty International!

Friday, May 16, 2014

How much would you pay per year for a guaranteed net neutral search engine?

How much? Per year? Per search? 

I do not know, but I would certainly pay something for a search engine that guaranteed giving me the results, instead of making me the searched for result of others.

Thursday, May 08, 2014

Did you know the banks are regulated by means of an ideology?

In 2004 I wrote in the Financial Times: "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 (sovereigns)?

In May 2014, in the Brookings Institute in Washington, while discussing the book by Jean Pisani-Ferry "The euro crisis and its consequences", Jörg Decressin, the deputy director of the European Department of the International Monetary Fund (IMF), dared to put forward an explanation...finally! ... God bless him.

My question: “In Sweden there is a psalm that prays ‘God make us daring’. And risk-taking risks has been critical to get Europe to where it is. However, in June 2004, the Basel Committee introduced bank capital requirements based on perceived risks, which subsidizes risk-aversion and taxes risk-taking.

For example, a German bank, when lending to a German businessman should keep 8 percent of shareholders’ capital (equity) but, if lending to its government, or to Greece, it could do so without having to hold any capital. That distorts allocation of bank credit in Europe. The book does not mention that problem. Do you have any comments?"

His response: "You raise a very good question and an answer to this revolves around: 

Do you believe that governments have a stabilizing function in the economy?

Do you believe that government is fundamentally something good to have around?

If that is what you believe then it does not make sense necessarily to ask for capital requirements on purchases of government debt, because you believe that the government in the end has to have the ability to act as a stabilizer, when the private sector is taking flight from risk, that is when the government has to be able to step in and the last thing we want is then for people also to dump government debt and basically I do not know what they would do, basically like buy gold. 

If on the other hand your view is that the government is the problem then you would want a capital requirement, so it depends on where you stand [ideologically]. 

I think the issue of the governments being the problem was very much a story of the 1970s, and to some extent of the 1980s. The problems we are dealing with now are more problems in the private sector, we are dealing with excesses in private lending and borrowing and it proves very hard for us to get a handle on this. We have hopes for macro prudential instruments but they are untested, and only the future will show how we deal with them when new credit booms evolve.” End of quote

Jean Pisanny-Ferry… said he agreed and left it at that. 

No Decressin! It is not about the government or the private, it is about the balance between the two, that which is broken.

And I had no chance to ask: Are you arguing that we should support the government’s borrowing ex ante, so that the government can help us better ex post? Would that not result in that when the government is truly needed it might not be able to help because it would already be too indebted… like Greece?

Who authorize regulators to regulate the banks with THEIR ideology?

And what about those who argue that the IMF is a bastion of neoliberalism?... Is it just a Potemkin facade?

Europeans, the structural reform most necessary for Europe to grow, is to get rid of its current bank regulators with their foolish risk aversion and their pro-government and anti-citizen ideology.

Translated from El Universal

Friday, May 02, 2014

FCC any impairing of network neutrality will de facto increase the man-made inequality.

And this not by increasing the wealth of the 1% but of the 0.01%

If I am to be solicited at home on my flat screen or my on computers, the least I can ask is that all solicitors stand on equal ground.

That is all!

Sunday, April 27, 2014

Some questions on Time Magazine naming Nicolás Maduro as one of the 100 most influential


"Last year, as Nicolás Maduro ran for the Venezuelan presidency, he received a visitor from the beyond. He was praying in a chapel when a bird flew in, circled him three times and began to whistle. Maduro said he felt the spirit of the late Hugo Chávez, his mentor and former President, who had come to bless his bid for high office.

The Maduro campaign frequently invoked Chávez during the contest, and perhaps it helped. Maduro won — but only just, and not without the opposition alleging electoral irregularities. A year on, lacking Chávez’s firm grip on power, Maduro is struggling as a litany of ills, from soaring inflation to food shortages, fans popular discontent. All this in a country that many in the region trade with or depend on for cheap oil. Whether it collapses now depends on Maduro — and on whether he can step out of the shadow of his pugnacious predecessor and compromise with his opponents."

Some questions:

From the description above should Time not have included the bird that whistled or the spirit of Chávez instead of Maduro?

How can one name as "influential" one who cannot convince his own people to pay more than US$ 1 cent per gallon of gas? Allowing the price of milk, when it is to be found, to be 278 times the price of gas?

Could the being able to convince by sheer use of force a criteria to make into this list of influential?

How come TIME magazine, knowing how split Venezuela is, can take a side like this in favor of the regime? Intellectual or vanilla corruption?

Thursday, April 24, 2014

Let us avoid the merchants of poverty

I admire those who help the poor. Not so those who use the poor to help themselves.

Even though there has been a considerable reduction in the number of poor in the world (not necessarily sustainable), inequality, in terms of differences in income and wealth between the richest and the poorest has increased considerably during the last decades ... and that's not healthy, to say the least.

And accordingly, opportunistically, those who argue that everything is solved redistributing, meaning taking from the rich and giving it to the poor, now appear on the scene. How easy it would be if everything was just that easy. It is not. It is our duty to make sure that merchants of poverty, with their insidious sowing of envy and hatred, makes it even more difficult to help solve the poor’s already sufficient precarious situation.

The proposed solution is based on the illusion that it is possible to take away purchasing power from the rich and hand it over to the poor; and that the poor can then go with that purchasing power to the grocery store. False!

First, the rich have their wealth invested in assets, houses, stocks, paintings, yachts, etc. And so, to transform those assets into money, you have to sell them. To whom? Without wealthy buyers around, the sale would only translates into a reduction in the value of the assets ...resulting in a lower amount than estimated to be delivered to the poor. How does it help the poor that a Picasso valued at $50 million, is then only worth $1 million? 

Second, assuming you could sell the assets and give the money to the poor, will there be sufficient supply to satisfy the needs of the poor? No! The unexpected new demand will result in much inflation.

Does this mean that there is nothing to do? Not at all! What is clear is that instead of attacking the results of the inequitable distribution of income and wealth, we must concentrate on attacking its causes ... especially the artificial ones, those not based on the natural reality that we are not all equal.

What are these artificial causes? Each economy has them, in different degrees, but their most frequent common denominator is state interference. Licenses leading to monopolies (intellectual property rights?), foreign exchange controls, transparent and non-transparent subsidies, corruption, discriminatory regulations, etc. For example, in Venezuela, how much more could you have benefited the poorest if the government had not insisted on giving away gasoline at US$ 4 cents a liter... or selling foreign exchange cheaply to those vacationing abroad?

A seemingly easy way out like re-distribution, is simply not enough, nor is it sustainable, and it is the poor who most need to know that. It cannot be that the final result of the redistribution of wealth and income in Venezuela would be to concentrate even more income and wealth in the hands of our Boligarchs of turn… whatever political color they wear. 

But Kurowski! Have you not for years insisted in distributing all of Venezuela´s net oil revenues to the citizens­? Yes! But with that, much more than a redistribution of purchasing power, I mean the redistribution of powers and opportunities... from petrocrats to citizens.

And if the rich want to help, welcome, but perhaps they better deliver that help directly to the poor, instead of going through the politicians who so often are only acting as the merchants of poverty.

In other countries, where for the .01% plutocrats what the 99% holds seems not to suffice they are now looking for the other 0.99 %. Tax the wealth and, at the end of the day, without further changes, most of it will come back to fewer and fewer Plutocrats.

Monday, April 14, 2014

Thomas Piketty. Would you tax wealth if this only benefited even more some few oligarchs?

We begin to hear proposals about taxing wealth, like that presented by Thomas Piketty in “Capital in the Twenty First Century

Taxing wealth might reduce the fever of inequality, but it does not attack its causes. In fact, forcing the sale of assets, which is where wealth is stored, in order to increase the consumption of the less well off, might direction the funds away from those who have earned their wealth naturally, to those who earn it thanks to market imperfections, or to outright crony capitalism. An in such a way it could undermine even more the meritocratic values on which democratic societies are based, something that Piketty himself would seem to abhor.

In other words, if in Russia, would you tax wealth if that benefited the oligarchs?

I believe it would be better to concentrate on what is causing unjust artificial inequality and in this respect I could mention the following possibilities.

Like to eliminate the concept of risk weighted capital requirements for banks which channels bank credit away from “the risky”, in much a proxy for the poor, to “the infallible”, in much a proxy for the wealthy.

Like to increase the tax on all those profits which have originated under the protection of intellectual property rights. There is no reason for these to be taxed at the same rate as profits obtained from competing naked in the markets.

Finally, let´s give it a thought to what would have happened to all that unequally accumulated wealth, had not TARP and Quantitative Easing come to its rescue.

Just the fact that, except for religious considerations, when in the grave, we’re all equal, and the Gini coefficient is zero, should not mean we should hurry to get there... I think.

Saturday, April 12, 2014

3 weaknesses of the Gini coefficient when measuring inequality

  1. It does value a dollar earned the same as a dollar received in transfers, and we know that is just not true.
  2. It cannot consider all the unregistered wealth or income that is siphoned away by corruption.
  3. It does not make it clear when an increased equality is primarily the result of many turning poorer.
Considering those 3 factors alone would shed the supposed reduction in inequality produced by the Chavez Revolution in Venezuela in a completely different light.

If we are to foster equality, let’s do it right, and concentrate foremost on the equality of opportunities, whatever that might entail.

Thursday, April 03, 2014

Creditors of Venezuela, read our Constitution!

In the same way there are international conventions that help foreign investors to collect what governments duly owe them, there should be agreements that help citizens not to be saddled with the payment of debts incurred by governments who violate their constitutions.

If the articles of incorporation of a company stated that it was not allowed to borrow more than 50 % of its assets, but its president is asking for loans that would take its debt to 100% ... it should be difficult to get a reputable law firm to issue a legal opinion stating that there will be no problem.

And, if constitutions are the statutes by which citizens defend themselves from the excesses of their governments; and if creditors expect citizens to sacrifice themselves honoring the debts of their country to which their governments have subscribed... I think citizens should be able to expect from potential creditors, to at least throw a glimpse at their constitutions, to see if these are met.

And it does not matter where the creditors come from, whether Wall Street, San Cristóbal or Cochinchina.

And it is not that I expect creditors to be aware of everything in our Constitution, such as if the expressed rights of indigenous people are complied with but, as a minimum minimorum, sophisticated financiers should be able to tell, detail, whether there is compliance of an Article 320 which states:

"The State shall promote and defend economic stability, prevent the vulnerability of the economy and ensure monetary and price stability, to ensure social welfare. The Ministry of Finance, and the Central Bank of Venezuela, will contribute to the harmonization of fiscal policy and monetary policy, facilitating the achievement of macroeconomic objectives. In exercising its functions, the Central Bank of Venezuela will not be subject to directives of the Executive and may not endorse or finance fiscal deficits."

and so! Can anyone who knows anything about finance, argue that our Constitution has been complied with? Of course not! And so, as a citizen, I here inform our creditors they better not come crying to me tomorrow looking for my support to get paid.

And all citizens of the world, messed up by their bad governments, should take the same attitude ... and we should show solidarity with them all.

And I'm not throwing out warnings after the fact... like would a bad payer. In "Odious Debt", March 2004, and "OdiousCredit", April 2004, I begged creditors to collaborate with citizens ...and nothing! And as salt in the wound Venezuela has paid them exorbitant interests. Well guess what? You can begin applying those high risk premiums to the principal owed... in order for us to at least confirm you your risk assessment.

And what fault of mine is it that the creditors did not read it? They should follow me on Twitter!

Having us Venezuela citizens recently been mocked by the OAS, that clubhouse of governments where constitutions are not even read, it is clear that we need the OCA, the Organization of American Citizens.

PS. There are many polls, but the one I would most like to see, is one that asks the participants of the 4F-1992 Hugo Chavez coup, whether what we now have in Venezuela is what they dreamed about.

PS. I am seeking a democratic dictator who would be willing to rip our oil revenues out of the hands of our Petro-state, and hand these over to the citizens. That would earn him a place in history, as the one who achieved the true independence of Venezuela.


PS.When reading in the Financial Times an article by Michael Holman titled “Investors incorrupt ‘new Africa’ repeat old errors”, April 9 2014, I immediately sent FT aletter which concluded: “More than sovereign credit ratings we might need sovereign ethic ratings … and to make these count”

Who needs a tax or an asset haven the most? The rich or the middle class?

Dear Jo Marie.

The other day, on the radio, I heard the following advice: “If you are going to rent your house, put it in the name of a company and leverage that company up to the tilt with debt. Otherwise the lessee, for whatever happens, might sue you and clean you out.”

Is this not one as good as it comes recommendations to you, the middle class, to find yourself a little safe haven?

The rich can afford things to happen… and so perhaps it is the paying for it all middle class who is in most need of safe havens, of any kind.

As to me, as you know, I wish I lived and paid taxes in a tax paradise


This might not be about the 99% against the 1% but about the 51% against the 49%

Cheers,

Per


Dear Jo Marie

I have a serious problem with the 1%-99% debate!

It is sending message that it is ok to be in the 99%

Because I want my kids, and grandchildren to know, that if they do not make it into the 1% top, I want them to at least make it into the range of 09% 19% 29% 39% 49% top… and absolutely nothing less!

Wednesday, March 26, 2014

Me, in favor of and against... free market think tanks

I believe profoundly in that our world is driven forward by the risk-takers operating in a free market. And as typical risk-adverse citizen it behooves me to fight for that to be happening.

And that is why even though I admire profoundly many free-market think tanks, their silence on two issues extremely important for me, drives me nut.

1st. I hate it that when free-market supporters imply that if only there was a free market supporter in charge of the government, he would be able to overcome the problems that the concentration of power in governments cause… like that of 98% of all my nation’s, Venezuela, exports going into the government coffers. That is intellectually dishonest of them!

2nd. I hate it when free-market supporters ignore the distortions in the allocation of credit to the real economy that risk-based capital requirements for banks produce, and have it in their minds, that someone should stop their banks from taking risks, so that their money is safe. That is also intellectually dishonest of them!

Thursday, March 13, 2014

The Hugo Chavez Revolution cheated the poor

And before “Chavistas” stop reading this let me point out that the title does not imply that Hugo Chavez, as a person, deceived the poor, all the time, since for sure he himself was also much deceived by some of his most dedicated followers.

So let me explain the Great Deception.

If there is one thing that the Chavez Revolution holds, is that it foremost works for the poor of Venezuela... and it congratulates itself with reports where the Gini coefficient evidences that inequality has declined in Venezuela. Well ... that is completely false unless you want to argue that this was achieved by impoverishing many of those who had something more.

But the Gini coefficient in itself contains falsehoods. As an example, its calculations, for “methodological" reasons, does not include the income of those who became rich via corruption and deviation of funds, like the “boli-bourgeois” (the new rich) and the “briefcase companies” (a name for those who have abused the foreign exchange controls)

And I can argue the Great Deception even stronger.

Imagine that the government had not directly given dollars to other countries or purchased services at inflated prices (Cuban doctors and nurses)

Imagine that the government had not given away the gasoline in Venezuela ($ 6 cents per gallon, € 1.5 cents per liter) and had sold it at its international price.

Imagine that it has not sold cheapo-dollars to those traveling abroad

Imagine that it has not sold cheapo-dollars for imports, those who benefit criminal importers, for instanbce those who over-invoice, or good faith importers, by providing very generous distribution margins ... and which all ultimately delivers only a tiny portion of benefits to the population which, precisely because it is poor, consumes less imports.

And imagine instead that all these resources just HAD BEEN distributed equally in cash among all Venezuelans.

In such a case, I assure you that the Gini coefficient would have shown a vastly larger, more real and more sustainable reduction of inequalities in Venezuela.

So you the poor of Venezuela and you the middle class in the process of being part of the poor in Venezuela, demand your share of the net oil revenues, in cash, in dollars.

And please, I beg you, stop being so naïve as to believe the story that some experts, no matter where they come from, no matter how beautiful they speak to you, know better than what you know what to do with an amount that can represent 150-250 dollars monthly for each one of you 

PS . Reading about some new government efforts to further indebt our country, I beg our students: “You, who would be the surest payers of this debt, declare that debts, incurred only to postpone much needed corrections are "odious", and that therefore you have not the slightest intention of sacrificing yourself by paying these.

PS . Some thoughts during Christiane Amanpour’s interview of Nicolas Maduro:

How can one ask other countries for respect when one disrespects one’s own countrymen?

How can one ask for a multi-polar world while requiring a single-polar country?

How can a government which manages 98% of all the exports of the country, declare itself so innocent of its problems?

How can you say to sleep like a baby and wake up with such large bags under the eyes?

Do you think that Hugo Chavez would sleep happy as Maduro says he does, when so much unhappiness abounds?

Some countries have governments that washes brains, Venezuela has one which is brainwashed