Again, for the umpteenth time, don’t control for credit risks, it is best handled by the market, without interference.

Sir, Gillian Tett with respect to the “hardwiring” in regulations of the credit rating agencies that is not working writes that “the rub for the regulators … is that “nobody has any clear idea how to create a workable alternative to judge credit risk”, “Rating agencies stuck in a bind as eurozone pressures mount” December 17. That is absolutely wrong and I have hundreds of letters to FT to prove it.

Since the market already clears for credit risk, by means of risk-premiums charged, what regulators should do is absolutely nothing. Anything they would invent, like the risk-weights they imposed, only confuses and muddles the market, and leads to crisis like the current which was provoked by extremely low capital requirements for banks when investing in triple-A rated securities or lending to Greece or Irish banks, because regulators thought these were not risky… even though regulators should have known that it is precisely what is perceived as not risky by regulators and bankers alike, what is always the most risky for the system.

Yesterday I visited the Newseum in Washington and in doing so the question of how journalist silence ideas just because these seem to simple for them and they prefer the complicated convolutions of experts came to my mind. Not once has FT been willing to publish what I like here have argued for years now.