Mr. Martin Wolf, please run a regression of the current problem loans on the 20 percent or less Basel II risk weights

Sir, Martin Wolf, in “The riddle of German self-interest”, May 30, refers to governments and banks as “the drunks are seeking to stay upright by leaning on one another”, but fails, as usual, to explain that the brewage these drunkards intoxicated on, were the basically non-existent capital requirements for banks when engaging with something officially perceived as not-risky. 

Mr. Wolf should run a regression between all the problem loans in banks that caused this crisis, like lousy securities disguised as splendid triple-A’s, loans to Icelandic banks, loans by the Spanish banks to the real estate sector in Spain, loans to a Greek government, and other similar… on the risk-weight of 20 percent or less and which, according to Basel II, allowed the banks to finance that mentioned holding only 1.6 percent or less in capital. 

If the Germans would come to understand what was the primary cause Europe ran into trouble, then they might be more sympathetic to Wolf’s urgings, otherwise there is no reason why they should not believe these are simply the expression of his own self-interest.