January 20, 2017

Why has Ms. Tett waited until now when President Trump is inaugurated to so champion the importance of start-ups?

Sir, for me it is somewhat surprising to read Gillian Tett’s “Start-ups will make America great again” January 20. Of course she is correct in what she writes there, but why did she have to wait until now for recommending Trump to “think small — in a big(ly) way”?

I ask because over the last decade I must have written at least a 100 letters in commenting on Ms. Tett’s articles I have argued the vital importance for the real economy and job creation, of the start-ups and SMEs; and also how risk weighted capital requirements for banks distorts the allocation of bank credit, effectively reducing bank credit availability for those perceived as risky, like SMEs, like start ups. But, during all those years Ms Tett has kept mostly silence on this, and so why right now?

Why has she also not told Mark Carney, Mario Draghi, Stefan Ingves and so many others about this? If in USA, SMEs and entrepreneurs have since Basel II of 2004 found it harder than ever to access bank credit, even worse are the conditions these borrowers have to face in Europe. And by the way, when will Ms Tett also remind those gentlemen who are all involved in bank regulations, that these SMEs / start-ups really never pose major dangers to the bank system, and that precisely because they are ex ante perceived as risky?

Since the introduction of Basel II millions of SMEs, entreprenuers and similars around the world have been denied the opportunity to that bank credit that could have helped our young to find jobs and not have to settle to live with their parents in basements. Well-done Basel Committee!

Finally, does Ms. Tett really need researchers from McKinsey to wake her up on what robots or automation could signify to jobs in general… is this really new news? And where has McKinsey spoken out against regulatory distortion of credit?