No more QEs and fiscal stimulus. Bet on a bank stimulus for the “risky”, in America and in Europe

Sir, Wolfgang Münchau writes on “Why QE would be the right policy for Europe, too” September 17. Since I do not feel Bernanke’s QE is correct either, I cannot agree with this. 

It is high time to forget about any QEs and or fiscal stimulus, decided on an implemented by bureaucrats at a long distance from the real markets, and which have only consumed scarce monetary and fiscal space, with very little sustainable to show for it. 

Instead we need the banks to direct those stimulus flows to where these are most needed and could be the most productive. And this, governments can do, without asking anyone’s permission, or worry about any unconstitutionality. All it takes is that they instruct the bank regulators to drastically reduce the capital requirements for banks when lending to what is perceived as risky small businesses and entrepreneurs. 

Would this be reckless? Not at all, or at least much less than when allowing the banks to hold very little when lending to what is perceived as not-risky, precisely the type of exposures that have always been behind any major bank crisis.