Avoiding producing global bads is a must for a good globalization.

Sir, between mid 2004 and end of 2007, about a trillion dollars of European savings, flowed into triple-A rated securities guaranteed with mortgages in the subprime sector of the USA. This was primarily the result of absurd capital requirements which allowed European banks to hold or to lend against these securities rated AAA holding only 1.6 percent in capital, which meant being able to leverage their equity 62.5 times to 1. And, of course, disaster ensued.

And all that happened because some bureaucrats, in this case those of the Basel Committee for Banking Supervision, were allowed to concoct regulations in splendid isolation without having to answer to anyone.

I mention this in reference to Martin Wolf´s “Globalisation in a time of transition” July 17, because, if we want globalization to produce global public goods we must find ways of decreasing the risks of producing global public bads.