There is a massive state stealth intervention of the financial markets

Sir, Francis Fukuyama writes that “Conservatives must fall back in love with the state” July 21, and I do indeed agree on the need for a complete organizational overhaul of a state that has become an amorphous monster, in order to turn it into a lean and efficiently mean governing machine, though, perhaps, “Conservatives must help the state to become more lovable”, would be a better phrasing. 

The problem is how do we get from here to there? Especially since the here is so much worse than what conservatives (and the left) can imagine. 

The here includes the most massive state stealth financial intervention ever. By means of that concoction known as capital requirements for banks based on perceived risk, the banks need to hold immensely more capital when lending to a “risky” citizen than when lending to an “infallible” sovereign… and that as you could understand translates into an immense subsidy for government borrowings and allow the governments to exercise their financial repression so much easier. 

Look at the current treasury yields and ask yourself if these would be the same without the help of bank regulators. No way Francis, it is one of the least transparent but largest taxes ever. How much tax is a purchaser of 30 years US bond yielding 2.55 percent paying? Not so lovable eh!