Tea with FT

The crisis afflicting the western world is not fiscal it is the running out of daringness.

noreply@blogger.com (Per Kurowski) — Tue, 18 Jun 2013 13:14:00 +0000

Sir I refer to Janan Ganesh’s “Britain ought to be thankful for its political class”, June 18. I cannot really tell whether it is backed by real empirical fundaments, but yet it is a fabulous ode that should at least help to stimulate, or shame out, a better behavior of politicians.

Frankly, I have no seen any similar constructive article in any of all the other divided countries that abound, and I just pray, at least for Britain’s sake, that it does not just reflect some delicate English black Jonathan Swiftish humor which has eluded me.

That said, when Janan Ganesh writes “The crisis afflicting the western world is fiscal”, he is being way too optimistic. The crisis of the western world is much deeper and reflects more baby-boomers economies reaching the point where they do not want to risk developing further, if that could endanger what they already have. In other words, a world that has reached the level of satisfaction that initially guarantees stagnation and then later leads to its fall.

The main expression of having run out of daringness, are regulatory capital requirements for banks based on perceived risk, which much favors bank lending to The Infallible and therefore hinders banks lending to The Risky.

G8, scrap all corporate tax, it only dilutes the citizen’s tax representation.

noreply@blogger.com (Per Kurowski) — Mon, 17 Jun 2013 23:19:00 +0000

Sir, in all discussions about corporate taxes, like your editorial “The world needs global tax reform”, June 17, it amazes me how it is ignored that, sooner or later, at the end of the day, one way or another, all corporate taxes end up being paid by citizens, but in this case without the representation that tax payment should have awarded them with.

Corporate taxes stimulate politicians and corporations to negotiate in all coziness, leaving the citizens out of it.

The easiest, most efficient and best way to reform taxes on a global basis, is a zero corporate tax.

And of course there are hundreds of ways to tax citizens so as to make up for that fiscal income shortfall.

Martin Wolf, what if Sir Mervin King had been an engineer and a bridge he helped design had collapsed?

noreply@blogger.com (Per Kurowski) — Sat, 15 Jun 2013 14:49:00 +0000

Sir, retiring bank regulator Sir Mervin King explains: “I think what went wrong with regulation in the period running up to the crisis was that there weren’t any obvious problems with the banks in the sense that no one was coming to the central bank for money and none was failing. So it was very hard for anyone to argue that prudential supervision was at the heart of regulation”; and his lunch companion journalist Martin Wolf kindly comforts him with a: “I say that almost nobody thought that a failure of the British banking system on the scale we have experienced was possible”, Lunch with the FT Sir Mervyn King”, ‘I’m going to miss it enormously’, June 15.

Sir, if Sir Mervin King had been one of the members of a group of engineers who designed a massive bridge system which had later collapsed, and caused the death of millions, would this journalistic endeavor really have been acceptable to you?

Of course bridges and banks are not the same, but do you really think our world can afford this type of lack of accountability? No wonder the Basel Committee goes on as if nothing has happened and their bank regulation only needs some tweaking here and there.

I must say though that when Martin Wolf advances the idea so dear to him that “if people are happy to lend to the government, at negative real interest rates, the government should borrow and build something” it speaks very well of him that he clearly records Sir Mervin King's resistance: “I’m always struck when I speak to not just ministers but people who work in the Treasury that it is actually quite difficult to produce the investment projects. It’s very easy to spend money but in a way that maybe doesn’t add to the real gross domestic product.”

Here are two wicked questions for Gillian Tett on the Math and physics vs. English and history debate.

noreply@blogger.com (Per Kurowski) — Sat, 15 Jun 2013 13:35:00 +0000

Sir, Gillian Tett, with a lot of good reasons and arguments, raises the issue of whether it is good for America that fewer students opt for, let us say harder science subjects and settle for, let us say easier English and history courses, “A need to change the subjects of desire” June 15. This is a really difficult topic and to prove here are two wicked questions for the debate:

If there were too many Americans studying science and therefore too many American scientists could be out of work, could that not provoke the kind of protectionist actions which could lead perhaps for some of the best scientists in the world not being able to get to America?

In terms of keeping the society strong, united and peaceful, what courses would you prefer that a forever-unemployed had taken…English or physics?

Gillian Tett describes another reason for using a tangible equity to asset ratio as suggested by Thomas M. Hoenig of FDIC.

noreply@blogger.com (Per Kurowski) — Fri, 14 Jun 2013 13:42:00 +0000

Sir, Gillian Tett is on the dot with her warnings in “Watch out for the interest rate hike hit to US banks”, July 14.

And so there we have it again, with regulators fixated with credit risk, while ignoring most of the other millions of risks that abound. Here banks, not only in the US but all over the world, could be holding long term and fixed rate assets classified as absolutely safe, and therefore allowed to be held against very little capital, all of which could be wiped out by some minor interest rates hike.

This is just another evidence for why one simple capital requirement, in my opinion between 8 and 10 percent of tangible equity to assets ratio, such as the one Thomas M. Hoenig of the FDIC is proposing would make so much more sense. In fact any other type of micromanagement would only constitute an expression of regulatory hubris.

Martin Wolf, instead of peddling inflation, should be more concerned with the dangers of regulatory distortions

noreply@blogger.com (Per Kurowski) — Wed, 12 Jun 2013 10:43:00 +0000

Sir, in “Overstated inflation dangers”, June 12, Martin Wolf writes: “So what limits banks’ lending? The answer is: its own solvency and that of its customers.” And though Wolf has served on the Independent Commission on Banking, he ignores bank regulations, which cannot only allow banks to keep on lending, to what is perceived as “absolutely safe”, even while basically being insolvent, or stop them from lending, to what is officially perceived as “risky”, even though being solvent.

Mr. Wolf is slowly and dangerously turning from a balanced “we should not be overwhelmingly afraid of inflation” spokesman, into an outright and shameless inflation peddler. So much that when he refers to the possibility of “financial repression”, he presents inflation as only a comfortable fit with it. So much that he even presents inflation as an almost welcomed option, “the simplest way”, to resolve “distributional conflicts – between creditors and debtors or perhaps between young and old”

Wolf ends though with something we can all agree with, namely: “Strong and sustainable growth is the solution. That can turn the inflation threat into a paper tiger.” But, for that type of growth to happen, we need to get rid of the distortions produced by the capital requirements for banks based on perceived risks, which make it completely impossible for banks to allocate resources in the real economy in an efficient way. Mr. Wolf, there is where the real understated dangers are.

PS. Sir, just to let you know, I am not copying Martin Wolf with this, since he has asked me not to send him any more comments related to “capital requirements for banks based on perceived risk”… he already knows it all… he thinks.

G8, by championing the Extractive Industries Transparency Directive, might be selling snake-oil-illusions

noreply@blogger.com (Per Kurowski) — Wed, 12 Jun 2013 02:59:00 +0000

Sir, I refer to Vanessa Houlder’s note “Extractive Industries” June 11, where she writes about Cameron urging his G8 partners to champion the Extractive Industries Transparency Directive, June 11.

I certainly appreciate the efforts of the initiative but, as an oil-cursed citizen of a country like Venezuela, where over 97 percent of all the nations exports go directly into government coffers, I cannot but feel that selling the idea that that kind of transparency could solve our oil curse problems, is like selling snake-oil-illusions, something which can only help the ruler and his petrocrats.

Let me ask you, if the UK was in a similar position, would you settle for more transparency, or would you directly go for wrestling that excessive natural resource power out of your ruler’s hand?

By the way, in 2003 you published a letter in which I held that all European taxmen were, by means of gasoline/petrol taxes getting more revenues per barrel of oil than any country who gives up that non-renewable resource forever. And, since that is still true, even at current oil prices, I ask again why does not EITI’s call for transparency cover that?

Why does Ms. Tett value risk-taking here, but not there?

noreply@blogger.com (Per Kurowski) — Sat, 08 Jun 2013 12:51:00 +0000

Sir, Gillian Tett describes how her life was saved by some daring physicians in Singapore, “How Singapore remains healthy” June 8. She also comments that, had she’d been in the USA, because of litigation risks, the doctors might perhaps not have dared to performed a risky “antibiotic gamble”.

How strange then that she has not really understood, or wants to accept, that bank regulators should not, as they do now, favor risk-avoidance, to such a degree that what is safe might become risky, while discriminating against what is perceived as risky, even if those are the ones who, living on the margins of the real economy, we most need to have access to bank credit in fair and efficient terms. Might there be an anthropological explanation for it?

Europe, to cure its malaise, more than affordable credit, needs correct and justly priced credit.

noreply@blogger.com (Per Kurowski) — Fri, 07 Jun 2013 14:10:00 +0000

Sir, Tony Barber writes “Affordable credit for all will help cure Europe’s malaise” June 7. No! Credit should not be allotted based on it being affordable, but based on who pays its correct price.

"Credit is the oxygen of an advanced economy, innovation and investment are its lifeblood” Yes! But the alveoli and capillaries of the banking system, the lungs of the economy, have been made dysfunctional by dumb bank regulators.

And that the Basel Committee did when it decided that banks were allowed to hold less capital when lending to what is perceived as “absolutely safe” than when lending to what is perceived as “risky”, which means that banks earn a much higher expected risk-adjusted return on equity when lending the “The Infallible” than when lending to “The Risky”.

And, as a result of the messing around with the lungs, now “The Infallible” get blood with too much and to cheap oxygen while “The Risky” do not only receive blood with less oxygen but must also pay more for it. And that Sir, that is Europe´s malaise.

Yes “The Risky” borrowers are forced into the shadows, by criminally stupid bank regulators.

noreply@blogger.com (Per Kurowski) — Fri, 07 Jun 2013 12:54:00 +0000

Sir, Anne-Sylvaine Chasanny’s and Henny Sender’s title, “Forced into the shadows”, June 7 describes precisely the results from having capital requirements for banks based on perceived risk which so odiously discriminates against the access to bank credit all those who are not perceived as “absolutely safe”. Though, where it says, “With Europe’s banks reluctant to lend”, a better phrasing would be “With Europe’s banks ordered not to lend to those perceived as risky”, because that is in effect what happens when with bank equity being extremely scarce, regulators tell banks they need more of it when lending to “The Risky” than when lending to “The Infallible”

I have explained this in perhaps over a thousand letters to FT, over many years, but FT has never understood or wanted to acknowledge how these bank regulations distort the resource allocation in the real economy. Yes, “The Risky” are being forced into the shadows, by criminally stupid bank regulators, and there is no other way to describe these.

Why cannot Martin Wolf understand the distortions the risk-weighting of bank assets produces in the real economy?

noreply@blogger.com (Per Kurowski) — Fri, 07 Jun 2013 11:27:00 +0000

Sir, of course Martin Wolf is right when he writes “Britain must fix its banks – not its monetary policy”, June 7, I have been telling him that for years. And he is also quite correct stating that banks have become far too accustomed to the rewards of a business model based in minimal equity and support of taxpayers”, But when he limits his discussion of risk-weighing describing it as a “way of pretending assets are safer than they are”, it shows that economist Wolf has not yet understood the extent of the distortions capital requirements based on risk-weights cause.

Risk-weighting implies that banks are allowed to leverage their equity more with some assets than others, and since return on equity is their natural objective, then of course some assets, those perceived as safe, will be artificially favored by the banks, and other, those perceived as risky, artificially disfavored. And that leads to a very inefficient resource allocation in the real economy… and that will certainly prove more expensive long-term for the economy than whether banks are safe of not. And that I have been explaining to Wolf in hundreds of letters.

Yes, capitalize banks, a lot, by means of incentives or by brute force, but, most of all, we must stop bank regulators, or other bureaucrats, from acting, with immense hubris, like the risk-managers of the world.

PS. The final report of the Independent Commission on Banking, on which Martin Wolf informs us he served, suggests keeping the concept of risk-weighting and says not a word about the distortions this produces

Dear FT Editor, are you dumb or are you hiding something?

noreply@blogger.com (Per Kurowski) — Thu, 06 Jun 2013 12:45:00 +0000

Sir in “The UK’s capital disagreement” June 6, again you refer to the issue of whether banks should have more or less capital, and again without making reference to the distortions caused by current capital requirements which allow the banks to leverage their equity differently depending on the perceived risk. I have written about a thousand letters to you explaining the distortion, and so I must conclude that you are either dumb or that you are hiding something.

For instance, when you write that banks must raise their equity asset ratio “not by shrinking core asset” you evidence not understanding that this has nothing to do with assets being core or not, and all to do with the shrinking of assets against which the regulators demand more capital.

Sir, a banking system with only 5 percent in capital and no risk-weighting, is much safer than a banking system with 25 percent in capital against risk-weighted assets. In fact the higher the basic capital requirement is, the larger the distortions caused by risk-weighting.

Should directors do “good” things for their shareholders without informing them?

noreply@blogger.com (Per Kurowski) — Wed, 05 Jun 2013 16:27:00 +0000

Sir, I do not really understand John Kay’s “Directors have a duty beyond just enriching shareholders” June 5.

Does Mr. Kay suggest that the proposal of not using all available legal means to avoid paying taxes could receive the same type of enthusiastic response at a shareholder’s meeting, than one of keeping the workforce happy, or one directed to help reduce the environmental impacts of the company? I doubt it.

Or is Mr. Kay suggesting that the directors should pay more taxes than needed and keep this information silent, for their shareholders’ own good? Should they receive a bonus based on how much undisclosed good they have done for their shareholders too?

Bernanke hangs around to help put out the fire he unwittingly helped to stoke.

noreply@blogger.com (Per Kurowski) — Wed, 05 Jun 2013 13:09:00 +0000

Sir, Martin Wolf holds that “America owes a lot to Bernanke” June 5, and indeed I would agree with him, in the sense that one could owe gratitude to someone who unwittingly has lit a fire and hangs around to try to put it out.

The regulatory establishment to which Ben Bernanke, and sometimes also Martin Wolf holds he belongs to, instead of allowing the credits of the banking system to flow freely, imposed the use of an irrigation system with channels whose depths depended on the risk perceived. And of course, as should have been expected, what is perceived as absolutely safe and has much deeper and wide channels, is drowning in credit, and what is perceived as risky, irrigated with narrow and shallow channels, runs dry.

And the reason America is better off than Europe is that it implemented less of the Basel II’s more pronounce depth and width differences between channels.

Europe’s and America’s economies would have been so much better off if their central banks had used a free flying helicopter to drop money on the economy, or, even much better, if the banks had been freed from the distortions the capital requirements based on perceived risk create.

PS. Sir, just to let you know, I am not copying Martin Wolf with this, since he has asked me not to send him any more comments related to “capital requirements for banks based on perceived risk”… he already knows it all… at least so he thinks.

Authorities must learn to contain their desires to help and to meddle

noreply@blogger.com (Per Kurowski) — Fri, 31 May 2013 17:24:00 +0000

Sir, Sir Samuel Brittan writes “How we can reconcile this general wisdom [that we do not know enough] with the desirability of giving individual officials definite objectives is an unsolved problem”, “Modern economics for the diligent seeker of truth”, May 31.

Precisely, it is an unsolvable problem, and that is why we need our authorities to contain themselves designating individual officers to do anything not really knowing what they are doing, no matter how much they all desire it.

Just look at what happened when the authorities designated the Basel Committee to eliminate bank crisis and those thereto nominated, not knowing what they were doing, set up a system of capital requirements for banks which guaranteed that next time when a bank crisis resulted, because of excessive exposures to what was perceived as “absolutely safe”, the origin of all bank crisis, we would find all the banks standing there naked or with very little capital to cover themselves up with.

Professor David Camroux, referring to a Robin Hood tax, seems to be just another applicant to the position of a Sheriff of Nottingham.

noreply@blogger.com (Per Kurowski) — Thu, 30 May 2013 12:10:00 +0000

Sir, here is David Camroux, an Associate Professor of Science Po, quoting Jean Baptiste Colbert in that “the art of taxation” is taxing so that it is least noticed; writing that the FTT proposed by the European Commission could raise about €30bn to €35bn annually; and indicating it as an amount “rather small in comparison to the revenue needs of the 11 European Governments concerned”, and still he has the gall to refer to it as a Robin Hood tax, “FTT a feather in the cap for the average taxpayer”. May 30.

Sincerely as far as I am concerned Mr. Camroux is clearly only showing credentials to apply for the position of a Sheriff of Nottingham.

Perhaps one day we will find FTT as uncontroversial as VAT Camroux writes. Indeed, but was that to happen, that would just mean another regressive feather plucked from the goose average-taxpayer and put in an average European Commission bureaucrat cap.

If Professor Camroux really wants to help the average taxpayer, then what he should do is to question the revenue needs of their respective governments.

PS. There was a time that the FTT could have been a Robin Hood tax. That was when it was seen as an instrument to obtain resources from rich countries so as to help poor countries. But that was, at least, a financial crisis ago.

Regulators should not bet our banking system on the pigeons always carrying true messages.

noreply@blogger.com (Per Kurowski) — Wed, 29 May 2013 12:50:00 +0000

Sir, John Kay writes about “Enduring lessons from the legend of Rothschild´s carrier pigeon” May 29. I would like to pick up on some of the lessons who some, like our bank regulators, have seemingly not learned.

Kay argues “Today, as yesterday, it is differences in perceptions that give rise to trading opportunities” and he is correct. But yet bank regulators insist in trying to reduce those differences in perceptions by forcing banks to heed more the opinions and messages brought by some officially endorsed pigeons, the credit rating agencies.

And in doing so they bet our whole banking system on that the pigeons were always to relay the truth, completely ignoring that our problems, and theirs as regulators, are almost exclusively to be derived from when the news brought by the pigeons happen to be false. Indeed “A damn rum thing, Wellington might have said.”

EU, ECB, what “Robin Hood” taxes are you talking about? Sounds like mislabeling to me

noreply@blogger.com (Per Kurowski) — Mon, 27 May 2013 14:16:00 +0000

Sir, Ralph Atkins writes “ECB offers to recast‘Robin Hood’ tax amid fears over market impact” May 27, and I just have to ask “What Robin Hood tax?” as in its current form it seems just to be another tax collected by a Sheriff of Nottingham to feed the coffers of Prince John.

PS. Never forget, nothing as effective against tax-havens than tax-heavens

The challenges of the “We have nothing to do” and of the society as a changing habitat.

noreply@blogger.com (Per Kurowski) — Mon, 27 May 2013 13:53:00 +0000

Sir, you title the article on the current riots in the suburbs of Stockholm as “The challenges of the Swedish model” May 27. Although that is quite understandable perhaps a “Not even the Swedish model gets away” would have been more appropriate, since what is happening in Sweden is perhaps foremost a reflection of the growing unemployment of youth.

This is really nothing new in Sweden. In 1965 in the middle of Stockholm there were thousands of youngsters (I was not there) rioting for days and causing damages… and the basic explanation heard was that of “We have nothing to do”.

And in this respect, given the possibilities of prolonged large unemployment, I have often argued that the well being of nations might come to depend more on the capacity of the unemployed to deal with their reality in a constructive way, that on what the employed are capable to do.

That said there is no way to avoid the fact that whether we like it or not, current rioting in many places also closely correlate with immigration problems and the de-facto creation of immigrant ghettos which result even though no one wishes that to happen. Especially disturbing in Sweden is that during some of the car burning, some religious slogans were overheard.

A society is more than a piece of land, it is a delicate habitat. It thrives on the slow introduction of new species, but it can also fall apart if too many new species are introduced too fast and cannot adapt, without destroying too many of the previously existing ones.

63 year old grandfathers need to stick together, ‘cause next year… we’ll be "Sixty-Four"

noreply@blogger.com (Per Kurowski) — Sat, 25 May 2013 21:21:00 +0000

Sir, to be interviewed in FT´s Life&Arts must be an honor for an author. But for 63 year old grandfather Martin Amis, to be described when opening the door to the interviewer Martin Dickson, as having skin which has advanced from “plump to papery”, clearly must spoil much of the fun.

As a 63 year old grandfather, pondering the fact that next year we’ll reach that so distant “When I’m Sixty-four”, we heard the Beatles sing just minutes ago, with our respective Vera, Chuck and Dave on our knees, I feel I should express my deepest sense of solidarity with Mr. Amis.

Is Ms. Gillian Tett now, at long last, beginning to understand what is happening?

noreply@blogger.com (Per Kurowski) — Sat, 25 May 2013 00:27:00 +0000

Sir, Gillian Tett, writes about “how inefficient central banks’ pump priming has been when it comes to delivering capital to the parts of the economy which need it badly – and which are essential to long term growth”, “US venture capital falls short on love in buying frenzy” May 24.

Since I am not a PhD, a bank-president or a famed bureaucrat, Gillian Tett might not be reading my letters, but that is precisely what I have been telling her and some of her colleagues for years, namely that capital requirements for banks based on perceived risk hinders banks to deliver credit to the parts of the economy which most needs it and which are essential to long term growth.

Perhaps this might be a reminder for her that, now and again, it is convenient for everyone, including anthropologists, to walk the streets of the real economy, and not only those of Davos and alike.

What UK (and Europe) needs, is a massive capital injection into the banking system

noreply@blogger.com (Per Kurowski) — Fri, 24 May 2013 12:22:00 +0000

This is in reference to “Osborne is too complacent about Britain’s economy” Martin Wolf, May 24.

Sir, first, in the UK, if a bank would give a loan to a Solyndra, the solar power company that recently went bankrupt in the US, it would need to hold, according to Basel II, 8 percent in capital. But, if the bank instead lent that money to the UK government, and so that a UK government bureaucrat could relend it to a Solyndra then, according to Basel II, the bank needs to hold no capital at all against that. That is a huge distortion that needs to be eliminated, and to be replaced by a general capital requirements against any asset, 8 to 10 percent.

Second, because of such regulatory distortions UK banks (as all European banks) have ended up with a dramatic gross, not risk-weighted, shortfall of capital, and which now not only stops them from being able to lend but even forces them to contract. And so, when Martin Wolf writes about “the private sector has a huge structural excess of income over spending” my recommendation, instead of those huge government investment programs Wolf suggests, would be to launch a massive bank capitalization program, offering special tax incentives for all “private excesses” which are converted into bank equity.

How much capital? Whatever is needed for the banks to hold 8 to 10 percent of it, against all assets, including government debt. At that moment the general risk-profile of banks would also change dramatically. At that moment banks can start to contribute to help the real economy to grow.

Why is it that some insist that all rescue actions is to be carried out by governments? Could it be that this crisis is being exploited to advance some political agenda through the backdoor?

Get over it. Set a high credible capital requirement for banks and ask for it to be met within a very short time.

noreply@blogger.com (Per Kurowski) — Thu, 23 May 2013 15:40:00 +0000

Sir, you finish your “Noise and truths in the IMF’s verdict” May 23 writing: “Inadequately capitalised lenders will continue limit lending. This in turn, will hamper growth. For all the brouhaha about changing tack on fiscal policy, Britain’s priority should be to fix its banks”.

Absolutely right… and we all have known that for many years…right?

To fix the banks you need to set a high but achievable goal, let us say 8 to 10 percent of capital for all bank assets, and ask for it to be complied with in a very short time. It would also be recommendable to help out in the process of raising all that bank capital, by for instance offering some special tax incentives.

What you cannot do is to meekly be tip-toeing around the issue, because before bank investors are absolutely sure that the capital raised will be the capital needed, and that it will dramatically reduce the risk-profile of banking, they will not volunteer to try it out.

FTT is no longer a “Robin Hood tax”, now just another “King John tax”, to be collected by another Sheriff of Nottingham

noreply@blogger.com (Per Kurowski) — Thu, 23 May 2013 14:26:00 +0000

Sir, Alex Barker and Philip Stafford report that “Brussels looks at incentives to ease collection of ‘Robin Hood’ levy” May 23, and I do think some clarification is in order.

There was a time, many years ago, when some thought that the financial transaction tax was going to be used to redistribute wealth from the richest to the poorest countries. And so those days, branding FTT as a “Robin Hood” tax made some sense. Not any more, now it is a quite ordinary and traditional “King John” tax to be collected by a Sheriff of Nottingham.

I do not mind the distribution from the rich to the poor… what I do mind is that in the collection and distribution process, most funds transferred end up in pockets other than those of the poor.

PS. Against tax-havens, nothing is as powerful as tax-heavens

If climate change believers do not abandon their holier than thou attitude, climate skeptics will always win.

noreply@blogger.com (Per Kurowski) — Wed, 22 May 2013 12:54:00 +0000

Martin Wolf writes about China that “Its leaders feel rightly, that there is no moral reason to accept a ceiling on the emissions allowed for each Chinese individual far lower that the level Americans insist upon for themselves”, “Climate skeptics have already won” May 22.

And of course, if the climate change challenge, instead of being placed in terms of a shared human responsibility, where even the poorest of the poor, as a human, has the right to feel the same responsibility as the rich, and this is instead phrased as an issue of quotas and fairness, which only divides, the climate skeptics will win… almost by walk-over.

Also, at least in the US, it is clear that the climate change challenge has been politically captured. It is almost as “if you are not a progressive-democrat, you have no right to be concerned with climate change” or “if you are concerned with the environment you have no right to be a conservative-republican”. Before climate change is freed from that sequestration, there is no chance of a united front, and again the climate skeptics win.

Wolf mentions eight possibilities to curb emissions and buy some time and I fully agree with all of them, most especially with the “go nuclear” one, our only bridge between now and when something better for the environment is found. That said I would like to make the following comments:

First, with respect carbon taxes it is important to be consistent and transparent. That little dirty trick used by some European countries of taxing gas-petrol to assist the environment, while at the same time giving out subsidies to coal, cannot be allowed.

Second, in finding the best way of financing for creating and saving energy I have often mentioned that if we can use credit ratings to determine the capital requirements for banks, something which for no purpose at all distorts , why do we not distort somewhat with a purpose and do the same based on sustainability ratings?

But, first and foremost, in terms of advancing on climate change issues, we really need to get rid of all those holier than thou attitudes, which instead of making us plant a tree, so often makes us feel like going out and chopping one down.