Sir, John Authers in “Four questions markets should not pass over” April 12, includes the following two: “Why are Treasury yields falling, when all other times when the Federal Reserve has prepared to raise interest rates, they have risen?” and “Why can Greece successfully borrow on the markets once more, when it is barely two years since it partially defaulted and nearly left the euro?”.
In response I would ask John Authers to respond: Could the fact that banks need to hold basically zero capital against those two assets, while they must hold 7 to 8 percent against any assets perceived as “risky”, have anything to do with it?