January 07, 2013
Sir, Wolfgang Münchau writes against “blindly rushing into semi-automated austerity” and about the “perma-austerity” that he sees invading the US and Europe, “US joins Europe´s misguided pursuit of austerity” January 7.
And again I must comment that the most dangerous austerity, in the US and in Europe, has nothing to do with fiscal or central bank accounts, and all to do with the foolish risk-taking austerity that, by means of capital requirements based on perceived risk, has been imposed on our banks.
That austerity signifies that those in the real economy who are the most vulnerable and dependent on access to bank credit on favorable terms, “The Risky”, are currently the ones most discriminated against by bank regulators who like overly scared nannies, insist in favoring “The Infallible”, those who least need favoring.
Before you get the regulatory distortions out of the way, the discussions, for instance of fiscal multipliers, is just a huge waste of time.