November 25, 2017

Mr. Tim Harford, so you want an intriguing puzzle that might engage your curiosity? Have I got one for you!

Sir, Tim Harford writes: “Marina Della Giusta and colleagues at the University of Reading recently conducted a linguistic analysis of the tweets of the top 25 academic economists and the top 25 scientists on Twitter and found that the economists tweeted less and had fewer Twitter conversations with strangers. “Economicky words are just plain icky” November 25.

But not only might they tweet less, they might block more. I say that because I have never, as far as I know, been blocked by a scientists, but I sure have been blocked by an economists, the undercover economist Tim Harford.

Why could that have happened? Perhaps because I might have complained too much that Harford, as an economist, shoud also be out there dennouncing one of the most important economic regulatory cock-ups in world history, namely the risk weighted capital requirements for banks.

Harford writes “If we use a surprising fact as an ambush, that will provoke a defensive response; far better to present an intriguing puzzle.”

Okey Mr Harford here is one for you:

Why on earth do regulators want banks to hold the most capital when something ex ante perceived risky turns out risky? Is it not when something perceived very safe turns out ex post to be very risky one would really like banks to have it the most?

PS. But Sir, of course it is not just Tim Harford. You yourself, advertising a “Without fear and without favor”, seemingy do not dare to ask bank regulators where they got the idea of risk weighting the so dangerous AAA rated with a minimum 20%, and those by being rated below BB- made so innocous with a whopping 150%?