December 29, 2010
December 21, 2010
December 17, 2010
Again, for the umpteenth time, don’t control for credit risks, it is best handled by the market, without interference.
December 16, 2010
December 15, 2010
December 13, 2010
December 10, 2010
December 08, 2010
December 06, 2010
Sir, Prof Jean Dermine in “Take regulations of bank capital one step at the time”, Letters December 6, lends his support to the Basel Committee´s decision to spread out the capital increases in Basel III over eight years. The problem though is that in the process there will still be many borrowers unduly penalized because lending to them generate larger capital requirements for banks than the lending to others. That is why I am so adamant that while we cannot afford lifting all capital requirements immediately, neither can we afford not lowering them for others.
At this particular moment billions of bank liquidity are already painted into the corner of the bank balances which does not require bank capital, namely the lending to high rated governments, and no matter how much everyone wants it to happen, that liquidity cannot be translated into loans to small businesses or entrepreneurs, because that would require bank capital for which there is currently no real appetite.
Let us allow small businesses and entrepreneurs to help us to get out of the doldrums, let us not place that burden on government bureaucrats alone.
November 30, 2010
November 26, 2010
November 24, 2010
November 18, 2010
If a bank when lending to a triple-A rated client were only permitted to leverage its equity as much as when lending to a small unrated business, namely 12.5 to 1, then the bank, if it made a .5 percent on a loan to a triple-A rated client would generate a 6.25% yearly return on equity, good, but nothing to pay huge bonuses on.
November 11, 2010
Capital requirements for banks based on job creation, makes more sense than those based on risk of default.
November 10, 2010
November 09, 2010
November 08, 2010
November 03, 2010
October 26, 2010
October 25, 2010
October 24, 2010
October 23, 2010
Should we not have a serious man to man conversation with our bank regulating chaps at the Basel Committee?
A verse of a Swedish Psalm reads: “God, from your house, our refuge, you call us out to a world where many risks await us. As one with your world, you want us to live. God make us daring!”
“God make us daring!” That is indeed a prayer that the members of the Basel Committee do not even begin to understand the need for.
October 20, 2010
To help trade and other worthy of help, you first need to stop giving assistance to those who should not need it.
When the regulators used (and use) a risk-weight of only 20% to reflect the risk-weighted value on the books of banks of for instance lousily awarded mortgages to the subprime sector that manage to hustle up a triple-A rating, it was (is) the regulator who is taking 80% off the balance sheet(books)of the banks.
When the regulators used (and use) a risk-weight of only 0% to reflect the risk-weighted value on the books of banks of loans to a sovereign rated triple-A, like the US or UK, it was (is) the regulator who is taking 100% off the balance sheet(books)of the banks.
Sincerely, I doubt the banks could have managed that kind of disappearance acts on their own.
October 15, 2010
October 14, 2010
October 07, 2010
October 04, 2010
September 30, 2010
September 27, 2010
September 24, 2010
September 22, 2010
September 21, 2010
September 17, 2010
September 16, 2010
It was built with lousy materials, like arbitrary risk-weights and humanly fallible credit rating opinions.
And it was built on the absolutely wrong frontier, for two reasons:
First, it was build where the risk are perceived high, and where therefore no bank or financial crisis has ever occurred, because all those who make a living there, precisely because they are risky, can never grow into a systemic risk. Is being perceived as risky not more than a sufficient risk-weight?
Second it was built where it fends of precisely those clients whose financial needs we most expect our banks to attend, namely those of small businesses and entrepreneurs, those who could provide us our next generation of decent jobs and who have no alternative access to capital markets.
Now with their Basel III the Basel Committee insists on rebuilding with the same faulty materials on the same wrong place and it would seem that we are allowing them to do so.
I am trying to stop them… are you going to help me or do you prefer to swim in the tranquil waters of automatic solidarity with those who are supposed to know better?
The implicit stupidity of the current Basel regulations could, seeing the damage these are provoking, represent an economic crime against humanity!
September 15, 2010
September 10, 2010
In case you have an interest in learning the truth about the financial crisis may I suggest a kindergartenish lesson? http://bit.ly/c66DLp