October 27, 2016
Sir, Claire Jones’ quotes Adam Posen, a former member of the UK central bank’s Monetary Policy Committee with: “at the time after the financial crisis when lending to small businesses had fallen off a cliff. It was very compelling to hear from small businesses what credit rationing felt like in practice.” “Beer and bratwurst in Bavaria a missed opportunity for ECB” October 26, to ask one question.
Sir, how do you think Mario Draghi could explain to a German widget maker that his bank, when lending to him has to hold much more capital than if it lends to his government or to some other governments, like the French one?
I ask because in essence those risk weighted capital requirements, tilted in favor of the sovereign and against We the People, de facto implies that regulatory technocrats like Draghi, think bureaucrats are better able to decide what to do with bank credit than for instance German SMEs or entrepreneurs.
Come to think of it, Adam Posen was very lucky the “eight very small business owners” he recalls meeting then at the pub, had not the faintest idea about what was going on… they probably still do not.
PS: Again, here is an aide memoire on some of the monstrous mistakes of said regulations.