February 17, 2015

At the end of the day, with these bank regulations, even Germans will suffer the same or worse tragedy than the Greeks

Sir, bank regulators, the Basel Committee and the Financial Stability Board, fully endorsed by ECB, allowed all European banks to hold much less equity when lending to the government of Greece or to the banks in Greece, than when lending to Greek small businesses or entrepreneurs. That led to the excessive indebtedness of Greece and Greek banks, and caused too little bank credit to be awarded to those who could best drive the real economic growth in Greece.

And because of that Greek and Cypriot citizens will now have to suffer deflation or inflation (same shit), having to pay higher taxes, and perhaps even be the subject to capital controls as those Hans-Werner Sinn proposes in “Impose capital controls in Greece or repeat the costly mistake of Cyprus” February 17.

If I was a Greek citizen I would of course lodge my “J’accuse the ECB of high treason or imbecility” … but I would also warn my fellow Europeans, that, with these lousy and discriminatory regulations, they are all no doubt heading the same way to a similar tragedy... including the Germans.

In fact Germany, which shares with the US the largest possibility of becoming the last safe haven in town, might end up with its sovereign safe haven as the one most dangerously overpopulated.