Parliamentary inquiry

't is something to see members of Parliament address (former) Cabinet members concerning their views on the Credit Incompetency Crisis (CIC). Today/yesterday the former Finance Secretary Zalm (look at picture) was questioned by the committee. He told his peers (?) that Regulatory rules had been too lenient towards banks, which resulted in the debacle we know so well. With only 2-3% of equity the banks could do anything they liked (and did so fervently) while regulatory bodies stood still and watched but never interfered because rules did not fathom reality anymore. And so on.

I think the whole bunch (BIS, central banks and their affiliates, governments, secretaries of Finance around the globe were star struck (we know NOOO-thing, we're from Barcelona...), unintelligent (whatever they do, WE do not understand), purely bureaucratic (your law/ruling is my command) is incompetent.

Banks also are 327% incompetent, where they themselves did not understand what they were doing (Christ Zalm shouted it today: Father, they do NOT know what they are doing).

It becomes more and more clear that incomprehensive products, as well as fraud-like products that seemed to carry a AAA rating, where they obviously did not deserve that qualification, is at the base of the CIC (see above).

As I said before, numerous times, securitization on a AAA-rated scale should never have been endowed with the AAA-rating. The MOODY'S AND THE S&P'S ARE TO BLAME FOR THAT. The suckers of the capital market believed the S&P's etc. and traded/bought/sold on the basis of this AAA-rating. We now know that trillions were traded based on this fairy tale and billions have been lost as a result of it.

I propose a new set of rules (also defined earlier in this -your favorite- blog:

1. equity minima must be 10% or more of total capital employed
2. (new rule): securitization may be used once on its nominal amount (of assets)
3. every 'new' financial product has to get a regulatorially approved passport
4. every 'new' financial product has to fulfill strict risk management (VAR) rules
5. bonuses on 'new' financial products will conditionally be granted 5 years after introduction
6. savings and term deposits must be secured 100% at all times (preferred above equity)
7. risk must only be taken untill equity is depleted
8. equity can only earn dividends on 'new' financial products conditionally, 5 years after their introduction

(this list is not complete)

Now to the matter of system change.

We all heard of maximizing shareholders wealth

We know this paradigm has shown to be erroneous

So we know that efficiency in returns is erroneous

So we need another paradigm.

Which includes society as a whole.

And is not purely shareholders owned

But what?

Any ideas?

Share it with me and I share your thoughts to the world.

Theo

Today minus 5 years Theo van Gogh was slaughtered by a guy the media call Mohammed B. The guy practically butchered Theo and at his death turned him over on his belly and drew his knife into Theo's back, the knife carrying a message of hate and revenge.

Theo has a nice name, 'van Gogh', and his name always reminds me of an american college professorini (this time female) who, on her visit through the Paris Louvre, told her not too bright and/or culturally inclined college class, that HERE was a selfportait painted by the famous french impressionist van Gogh. In my world, you have to invent something utterly spectacular around the van Gogh name to surpass this unbelievable story. Theo's death created that invention.

Theo is dead, he has been dead for exactly five years now. Theo was a documentary maker, a film maker, a person with too much love for the things he hated and that meant his death by Muslim hands. Yes, by spitting out the cause of his murder and equating that to a certain religion is exactly what I mean. By Muslim hands. Not by someone who happens to come from Marocco, happened to own a very big knife and happened to cross Theo, as usual bycicling through Amsterdam thinking, yeahhh, maybe I feel like killing today. Theo was not friendly to Muslims, he was neither friendly to more or less any minority or majority group in the Netherlands. But neither of these other groups killed him. Only Mohammed B. felt the need to do so, and he did so, thinking that his namegiver Mohammed (the 1st) would have done the same...(which is probably true).

Which of course is stupid, preposterous, and dangerous but IMHO -again- true.

Five years later a dutch member of Parliament (House of representatives if Parliament is too complex a word for you) by the name of Geert Wilders has been scrutinized by a three-member set of (assumedly) academic professionals. Today the conclusion of their 'research' effort leaked to the press and it said this Geert W. is a threat to our democratic system. Geert is stated to be 'ultra-right wing' and is -on his own- responsible for creating hate to the dutch government.

In my opinion this screams for a counter-answer.

As everybody who is more or less well informed and house-broken in the world of the dutch old boys/girls network (and beyond) will know, there is noone in this group who does not hate government less than Geert. To be more specific, a simple survey of people who hate government's actions will either be readers of the biggest newspaper the Netherlands has (the 'Telegraaf') or is a member of the dutch 'liberal' party, the VVD, as it is named over here. Liberal is not to be translated in its US-equivalent, meaning leftish, but has to be seen in its dutch perspective meaning anti-government, market oriented, ultra conservative (a bit like the GOP in the US), or both (reread the sentence to understand these last two words).

Our country is in turmoil. Geert's market share now accounts for about 20% of the electorate public and of course the old parties see that % as threatening -which is correct- and impossible to cope with, as they demonstrate on a daily basis. Another 20%-ish party, the second dutch liberal party which is more or less equivalent to the US noun 'liberal', called D'66, has a spokesman/leader named Pechtold, who today called Geert W. a racist. Stupid of course because Geert W. does not preach racism, he preaches anti-Muslim-ism, or to be more specific, he regards the Muslim faith to be an ideology, more than a religion and he (Geert) equates this ideology as fascism, which of course he has every right to, especially because of course he is right.

The only difference between him and me is that every religion (Jewish/ Christian/ Hindu/ Muslim/ name a few others if you like) has this same flaw: they are all non-democratic, are all woman suppressors, gay orientation negative, have one strong leader be it a pope, a dalai lama or otherwise, have their own sacred books, rituals and the like, that tell a god-given (or inspired) truth, and as far as I'm concerned cannot cope with the dynamics of modern day life. In short: Geert is right in his battle, he is not right in thinking that only Muslims carry misconceptions (albeit that the Muslim belief is record holder in all disciplines named above).

Geert is an asshole. He truly believes that the Muslim belief is detrimental to democracy. He is right of course, BUT, he does not extend his ideas to other 'beliefs' who are at least as detrimental to your spiritual health. The thing is: other beliefs have seen the signs of the time and do not stress anymore their idiotic rules, written down in their idiotic sacred books. Nobody reads books anymore so the religious leaders can easily free themselves of criticism by 'forgetting' to openly speak about their own sacred rules. Muslims have proven to be not so smart. They still think that the words of a war-monger named Mohammed were true, a man who married and had sex with a 7-year old girl, a man who made his fortune by robbing his enemies (yeah sure 'enemies of the faith....'), an illiterate man who did not even read the Thora or the Bible, where these books in the 8th century were readily available, and made statements on the basis of the Thora/Bible which are utterly crazy, unfounded, misinterpreted, untrue and thus the antithesis of 'truth'. This man-of men is adored in the Muslim world although his sacred book either condemns or accepts other religions (depending on their 'suras' being written in Medina or in Mecca). Whose book is ordened using the lenght of the sura texts as ordening principle, where historic dates would have been a much better criterion.

The Christian faith has at least the same or more of the same flaws. Our Bible was 'created' in the 4th century. Between the beginning of the first century (CE) and the fourth, many 'inspired' men wrote gospels and the like. Some 300+ gospels are known, but only four of them survived the fourth century. The Nag Hammadi finds as well as the Dead Sea Scrolls gave us much more than the four gospels we know. Rent the movie 'Stigmata' and learn that there are more than the easy four that Beethoven and especially Bach knew. We now have the Thomas gospel, where it says:

....... Lift a stone and you will find me......

Which is soemething else than joining mass at Saint Peter's Church in Rome.

I leave y'all with these thoughts, which are neither true nor useless. If you want to believe that prayers may help, one last set of words by my hero writer: Maarten 't Hart. He once wrote the following:

"Accepting nature's laws, a prayer would take 9 years to reach the first possibly inhabited planet. The answer (by god) would take the same 9 years. For your prayer to be answered you'd better have at least an 18 year patience...."

The Goast

Kent u de figuur in het plaatje van vandaag?

Nee?

Dachtikwel.

Ik leg uit:

Ooit was hij iemand die zich voordeed als monetair econoom (een binnenkort uit Van Dale's Woordenboek der Nederlandse Taal te verwijderen begrip, dat in het grootste deel der 20ste eeuw betekenis had, maar inmiddels al zo'n 36 jaar een historisch artefact is, waaraan echt niemand waarde hecht).

Nou dan weetuhetwel, iemand die niet bijtijds geloefd, gereefd, overstag is gegaan etcetera...

Tegenwoordig slijt hij zijn leven als miskend genie (zijn woorden), is hij directeur van een stichting die onder zijn beheer werd leeggeroofd (was dus als bestuurder nogal incapabel, maar werd uiteraard gesteund in zijn 'gedoe' door een College van Bestuurders dat net als Robin Linschoten en nog zo wat marktsukkels geen idee had waarover te moeten beslissen en 'het' dus maar overliet aan Plaatje's mening), wordt hij eens per honderd interviews weleens door RTL uitgenodigd om zijn zegje te doen (als alle andere coryfeeën b.b.h.h...), heeft hij bijgedragen aan de afbraak van wetenschappelijk onderwijs door af te dwingen dat cursussen van ca 8 weken voldoende diepgang bieden en de argeloze student verder (weg) brengen tot/van zijn ideaal, te weten: hoe wordt ik snel een bonusvanger, zonder daarvoor intellect te hebben meegebracht voor mijn nietsvermoedende baas. Want wetenschap gaat immers om ON-DER-ZOEK en dan mag het on-der-wijs wel een vachtje veren laten....

Zo iemand dus, maar dan erger.

Kort geleden werden de Nobelprijzen Economie (nooit door Alfred Nobel ingesteld, maar gefinancierd door een bank toch werkelijkheid geworden...) toegekend aan twee mensen (M/V) die tijdens hun carriëre getracht hebben IETS in te brengen naast het door de figuur in het plaatje voorgesteld, als alomoverheersend, overvloedig rationeel duidelijk, maar tegenwoordig amechtig naar adem happend, economisch systeem: het marktdenken, inclusief de daarbij behorende zegeningen. Alle gekheid op een teakhouten balk:

NIEMAND in het 'Nederlandse' heeft de moed genomen om iets ten faveure van Ostrom/Williamson (V/M) te zeggen, waar zij in vorige jaren maar al te graag werden geinterviewd en geciteerd om de zegeningen van MarktDenken-Economen te verheerlijken. Bij Ostrom/Williamson kijken ze wel uit, die 'old school' 'DESKUNDIGEN', want:

• a) ze weten niets van de kwaliteiten van die winnaars,
• b) ze hebben hun artikelen immers altijd als onzin in de open haard gedonderd
• b) als ze al iets weten zijn ze het er dus niet mee eens,
• c) want diep, maar ook ondiep, in hun hart geloven ze dat wat deze winnaars zeggen totale flauwekul is (en daarom zijn ze dus ook te typeren als 'old school')

en daarom dienen dit type klungeleconomen dus met wortel en tak te worden uitgeroeid.

Zo ook de plaatjes mens.

RARA wie bedoel ik met mijn welgemeende tirade.... (volgende alinea niet lezen, tenzij je het onderwerp van mijn dagblog bent...)

BTW: als je kijkt en leest, ontslagbeul, ik bedoel jou natuurlijk, maar daar was je zonder deze hint natuurlijk nooit op gekomen. Je bent en blijft immers een nietszeggende sukkel die zijn wetenschappelijke status ontleent aan (inmiddels als zodanig erkende) onzin, maar zal tot je 67ste (jou gun ik het als eerste, maar ik beklaag je publiek dat nog twee-extra-jarenlang zal moeten worstelen met de onzin die je preekt, met de kletspraat die je als 'deskundig' verkoopt op RTL [wat schokt dat trouwens, en zou jij ook niet graag bestuurslid/commissaris van DSB zijn geweest, gezien je illustere (???) voorgangers?]) moeten doorpijgeren, is goed voor je, dan leer je wat werken is, ook al doe je er niet veel voor.

OK, zo kandiewelweerevenjan...

Maar serieus, denken jullie nu echt dat het 'model' dat economenprofessorini dagelijks de wetenschappelijke onderwijswereld inslingeren ook maar ENIG realiteitsgehalte heeft?

Nou dan.

What a Day

Yesterday minus 20 years I had my 60 minutes of fame: I received my doctorate.

Thnx Roger, Guy, Jaap, Frans, and a few others for granting me my final university diploma. One question posed at this exam (by Guy) will always be on my mind. He asked: 'all the attention for performance measurement, does that not evoke massive hysteria among finance professionals to do better (= to be more greedy) than their competitors, and does that not lead to a financial community that is not servicing money transactions only, but tries to live luxuriously on the proceeds of their risky ventures?' (In short they receive bonuses and do not care about risk).

Uhhmmm, what Could I Say in response. Something like: I do not believe finance people are That greedy, but if they are, they share a common goal: be/act/trade efficiently.... 20 years later I know better. Indeed finance professionals as well as professors (the first 7 letters of both words are the same, but please do not let yourselves be confused, they both Think the same.

I got my doctorate, I had a party that same evening/night that (at the time) had all the characteristics of a marriage, with the exception of a bride... But I enjoyed it. Hope you did too.

Yesterday minus 0 years marked the end of the DSB (Dirk Scheringa Bank), a small bank that was presided over by its founder, Dirk Scheringa, who ruthlessly forced non-finance-educated people into contracts beyond their potential, capital wise that is. He sold his clients mortgages and demanded that these same clients bought capital insurance with provisions as high as 85% of the insured sum. He sold loans with the compulsary added extra of high penalty cost whenever the client would opt out and refinance elsewhere. In short, he sold financial products to financially illiterate people that believed in their saviour Dirk S who was a former assistant accountant and a policeman before becoming a self-made banker .

Today the DSB filed for bankruptcy, forced to do so by its regulators. These regulators (the dutch central bank and the 'Authority on Financial Markets' or AFM) showed to be incompetent during the last 5 years, yes FIVE years, by not acting against near criminal intent, against outlawed double sales (meaning: you cannot have ONE of our product UNLESS you also buy another), against practically everything a bank should NOT do. The dutch central bank's president is Nout Wellink, migraine victim as I am, who will step down from his position in one of the coming months, because of negligence shown in his decision making actions.

Pieter Lakeman is MY hero. Back in the 70s (former millennium) I had the pleasure of working with him on a number of cases (mostly power-related law suits on the effectiveness and strenghts of worker's counsel legitimacy regarding reorganisations as well as mergers and acquisitions). He (Pieter) is 67 now, I am his junior with only 60 to my name/age. Pieter is the financial Don Quijote that I always wanted to be. October 1st 2009 he participated in a TV news item on the DSB case and told DSB-clients to get their money out as soon as possible, which in fact induced a bank run that ultimately resulted in DSB's filing for bankruptcy. The bank run ran to about 600 million euros until yesterday early morning. After that the curators stepped in and froze every single transaction to or fro DSB.

Pieter and Arnoud Boot, a finance professor from Amsterdam appeared on THE dutch talk show, and Pieter easily won as Arnoud unmistakingly lost the debate. Arnoud, one of the OLD SCHOOL economists with no academic future whatsoever, babbled about generics, while Pieter had an easy job talking about specifics, finishing Arnoud as a non-informed amateur. Great job or should I say: GREAT performance.

All is well that ends well. An active DSB is more dangerous than a dead one.

Reading Glasses

There comes a time in a (wo)man's life when it is OK to say 'I can't read those silly little letters in the newspaper anymore dear' and then being sent to the optometrist to get your eyesight (re)measured. Same answer from them to all of us passed the age of 40-50: YOU are in NEED of reading glasses...

Same thing happened to me. I am a MINUS-type as far as spectacles are concerned. I see nothing far away but very much nearby. This is beautiful and guarantees perfect eyesight the longer you live. One handicap though: it won't happen overnight and it is very discriminatory as lengths of vision are concerned. Close reading (in dutch we say 'dichten', joke) is the first sign of progress, while the horizon view stays behind in terms of performance. In short: I fell for the optometrist's suggestion and went home with socalled Varilux glasses that offer the best of both worlds, i.e. read the newspaper: look through the lower part of the glasses, read road signs far ahead: look through the upper part of the glasses. Only problem, as I experienced, was computer screens. Not far away, but instead of horizontal a computer screen reads vertical on the table, which meant that the only way to read the screen is to tilt your head backwards in order to read (closeby means lower part of glasses, get it?).

A few years ago I concluded this solution made me (and my neck) unhappy. So I went back to the optometrist and asked for a set of computer glasses, where down (closeby) was to be up and up (faraway) was to be down istead of the normal (reversed) set. Stupid as they are the optometrist first says NO, because he does not understand. After long and painful discussions it finally became clear to the person involved that what I wanted was actually possible. So I ordered my reversed set of glasses. And upon delivery I was very happy, reading my screen as if I was still 20...

But times pass and after a few years (we are at the 'now' BTW) I noticed that I did not wear my computer glasses any longer. In short I went back to glasses I could use when 'faraway' was the needed view and looked 'over' my glasses whenever 'close reading' was required.

Now what.

New idea: After a tennis excercise with a friend who wore clip-on sunglasses, I came to realise that clip-on reading glasses was my thing. Back to the optometrist asking how soon he could deliver. Never, was his dull answer, what you are asking I cannot sell you.

Google is your friend so in 30 minutes (OK, slow, sure...) I found what I wanted: clip-on reading glasses perfectly fitting my eyesight handicap. 19 US$, or 13 € (ex shipping) from a US company (so there IS hope for the good old US of A). This is how they look:

Simple uh? Right! But then comes the difficult part: dutch service potential. Again, back to the optometrist: 'Hello, here I am again, and I got a surprise for you. What you could not deliver, I ordered on the internet and lo and behold.... a clip-on set of reading glasses....'

'But they are much larger than the glasses you wear now', the man said. 'Sure', I answered, 'that's why I came back to you because, of course, you can fit the clip-on to the size of my glasses'.

'Alas', the man said. 'Your clip-on is made out of polycarbonate and that will splinter if I try to saw it...' And he was adamant, I can tell you. No history of being a client for 30+ years could change his mind. No offer from me that it would be my risk and my risk alone if he would only try, could persuade him. I was sent away, into the rain (not his fault I must stress)...

But I have my tools I thought. I can do what he refuses to do. I use my Dremel miniature drill/saw/polish/grind/whatever-thing and I will fix this. You'll here about my ventures at this later... (I tell this story beforehand, because if splinters will make me blind you would not have known the cause and the story behind it, because I cannot type blind(folded)).

Devaluation

The time is right, or at least almost right. We're going in the right direction, but we're not there YET...

• Last week headlines told us that China is cautiously starting to sell off their US$-currency stock,
• It gets clearer by the day that the US-government debt (too big a number to pronounce) the US-government deficit (33%, compare that with the so much criticised dutch deficit around 5%), the US-trade deficit (nearly 31 bln US$ per october 2009), unemployment (the US says 9.5%, I say 15-20% counting 6-10% of people constantly on the road, moving from one job/place to another)

Much more figures could be given but this is sufficient: The US is headed in the direction of a (much) lower creditworthiness. And what happens when that happens? Right, one starts to think about devaluation... Beware, we're talking double digit devaluation here. I would expect something in the range 20%-40%!

As world trade and the US$ are so intertwined that disentangling the resulting knot would require the number crunching potential of all existing computers globally (let alone the programming and data part of this problem) that noone can tell what the consequences of such an act might be. Sure, the US$ would lose part of its value, sure, US-debts can be repayed easier and also: sure, every foreign investment in the US must be capitalized at a much lower value than before (e.g. in Euros).

Is this the most probable scenario? It would be like a massive Marshall plan in reverse at the expense of US-foreign millions of savers and investors. Therefore: I don't think so (and, planners and decision makers beware: there will be instant civil/global war against you if you decide not to act).

What will happen of course is the instant devaluation of Euro, Yen, British Pound and Yuan, exactly equal to the devaluation of the US$. In this way (practically) nobody will be worse off, everything stays the same (financially) and the US still has to think of a better way to deal with the fact that they overconsumed, overspent, undertaxed etcetera for the last 50 years. It would be pathetic if their answer would be: Yes, we can...