To get balanced economic growth using risk-weighted capital requirements for banks would require a miracle.

Sir yesterday, was the 10th anniversary of the G10 approving the absolutely senseless Basel II bank regulations. And here we are and still one of your star columnists, perhaps The Star, Martin Wolf, does not understand that getting a balanced economic growth with the distortions produced by the risk-weighted capital requirements, would require a miracle, “An unbalanced recovery is no cause for complacency”, June 27.

The risk-weight on a residential mortgage is 35%, but the risk weight for a loan to an SME or an entrepreneur is 100%. And bank capital can be leveraged 20 times more when financing the purchase of a residence, than when giving business those loans that could create the jobs that could help home buyers to pay their mortgage and their utilities.

Wolf correctly opines that the only way to regain balance “is via a huge (and extremely unlikely) investment surge”. Yes more than “extremely unlikely” while we allow bank regulators to play the Masters of Universe with their risk-management based on the same perceived risks that should already have been cleared for by banks.

PS. Sir, as always I leave it to you to decide whether to copy or not this comment to Wolf. I won´t since he has told me in no uncertain terms he does not want to hear more about this as he understands all there is to understand about the risk-weighted capital requirements… though clearly he does not!