Mr. Gross was the victim of bank regulatory distortions in favor of the “infallible sovereigns”

Sir, Gillian Tett writes: “After a life of trend spotting, Gross missed the big shift” September 29 and she argues that “Mr. Gross is a potent symbol of a distorted investment world”.

Indeed he is, but again Ms. Tett is not able to identify the main source of the distortion that I believe Gross missed, namely the risk-weighted capital requirements for banks which allow banks to hold debt of the “infallible sovereigns”, against much less capital than what they need to hold against any other asset. 

In November of 2004 FT published a letter in which I wrote “how many Basel propositions will it take before they start realizing the damage they are doing by favoring so much bank lending to the public sector”

Clearly neither Mr. Gross nor Ms. Tett read that letter.