Martin Wolf, as part of the elite, should read the “Explanatory Note on the Basel II IRB Risk Weight Functions”, and then tell us ordinary people what he opines of it.
Sir, even if qualifying for degrees of sophistication, when Martin Wolf places a human rights violating dictator Nicolas Maduro in the same list of strongmen as Donald Trump, he certainly seems to have lost it. Nicolas Maduro has now 90% of Venezuela against him and is staying there by brute force, and the elections he won in the past, were fraudulent. Or could it be Wolf still wants to believe that Trump won also because of Putin’s help? “Elected despots feed off our fear and rage”, April 23, 2019.
Wolf argues that the reason president Trump was elected and why is he still trusted by so many, is “partly due to longstanding economic failures, partly to the financial crisis and partly to cultural changes”; and also the willingness of parts of the elite to exploit such emotions, to achieve huge tax cuts and eliminate regulation, something Wolf defines as “pluto-populism”.
Pluto-populism? There’s now more than 30 years since the Basel Accord introduced risk weighted capital requirements for banks that assigned a risk weight of 0% to the sovereign and 100% to the citizen. If that’s not statism that feeds a crony statism what is?
And those regulations based on that what’s perceived as risky is more dangerous to our bank systems than what’s perceived as safe, is utter lunacy, that is unless its purpose is to realize bankers’ wet dreams of being allowed to leverage especially much with what is perceived as especially safe.
The financial crisis resulted 99% from excessive exposures to what Basel II in 2004 backed by an AAA rated entity, like AIG, which meant banks could leverage a mindboggling 62.5 times their capital with these assets.
And much of the weak response to the immense post crisis stimuli, is the result of “risky” entrepreneurs and SMEs not having competitive access to bank credit, because of having to make up for the fact that banks can leverage much less their capital with loans to them.
But yet, the monstrous missregulation by the Basel Committee is still not really discussed, and so it is still not really corrected.
I assume Martin Wolf, as the chief economics commentator of the Financial Times must qualify as part of the elite. So Sir, if you think he should live up to the responsibilities that entails, I suggest you dare him to read the Basel Committee’s “An Explanatory Note on the Basel II IRB Risk Weight Functions” of July 2005 and then inform you, and us ordinary people, whether that mumbo jumbo makes sense or not.
But back to Venezuela. Obama agreed to negotiate with Cuba leaving its de facto invasion of Venezuela out of it. President Trump does not want anything of that sort. Sir, I wonder, if Martin Wolf was one of the so much suffering Venezuelans, what do you think he would prefer, an American “strongman” or an American “weakman”?
@PerKurowski
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