The most dangerous underlying condition of the US, is that like so many other nations, it has been hit by the Polarization Pandemic.

Hannah Kuchler writing about her FT lunch with Atul Gawande on the battle to beat Covid-19, writes: “The US is polarised over its priorities, between those arguing in favour of putting the economy first, and those who want to concentrate on saving lives.”. It also states “People are more at risk of Covid-19 if they have underlying conditions such as diabetes and hypertension.” 

Sir, when compared to age, diabetes and hypertension read like truly insignificant underlying conditions. In USA, as of October 14, those older than 70 years comprise 89% of all those dead from Covid-19 in USA, those under 45 years, 3%. Yet, in terms of who will have to pay the economic/ mental health/ societal costs of any top down imposed responses to the virus that favors saving lives, the reverse percentage is to be expected. 

Sir, with those kinds of figures, don’t you think one could develop a response to Covid-19 that could better consider both priorities?

Of course, one could. Just look at Sweden keeping schools up to 9th year open while asking grandfathers to refrain from hugging their grandchildren.

Why has that not happened in the US? The answer to Hannah Kuchler’s “Is the US as a country more at risk because of the underlying condition of its healthcare system?” Is YES! It also suffers the polarization virus, and way too many polarization profiteers just don’t want harmony vaccines to appear.

Communications in a polarized world

@PerKurowski

Bank regulators don’t dare hold “morbidity and mortality reviews of bank crises”, less these would find them responsible

Sir, Timothy Geithner while lunching with Martin Wolf refers to “Complications: Notes from the life of a young surgeon” by Atul Gawande and states “It was a fascinating book, in part because [Gawande] described how in that profession they do things that in economics we don’t do that well. They have this thing called morbidity and mortality reviews each Friday where they go over mistakes”, “Stresses and messes” May 17. And Wolf agreed with that “central banks don’t like analyzing their past mistakes but should.”

Indeed, how could bank regulators allow banks to hold much less shareholder’s capital against those perceived as “safe”, than against those perceived as “risky”? Could they not understand that allowed banks to earn higher risk adjusted returns on “safe” assets than on “risky” assets; and that this would distort the allocation of bank credit, and doom the banks to end up holding too much “safe” assets and too little “risky” assets.

Because of course, as they all should know, it is when banks hold “too much” of a “safe” asset when an asset could turn into a very risky asset for the banks. Empirically this is something well proven. Never ever has a major bank crisis resulted from excessive exposures to what was perceived ex ante as “risky”, these have all, no exceptions, resulted from excessive exposures to what was ex ante, erroneously perceived as safe... like AAA-rated securities, Greece, etc.

And besides, holding “too little” of the “risky” assets, like loans to medium and small businesses, entrepreneurs and start ups, is very bad for that part of the real economy which thrives on risk-taking, and is therefore, in the medium term and long term, something also very risky for the banks.

So YES! Bank regulators should hold “morbidity and mortality reviews”... but they don’t dare since these would find them the responsible.

And, if they did, I am certain Geithner and Wolf would also have more productive luncheons discussing bank and financial crises.

PS. Sir, just to let you know, I am not copying Martin Wolf with this, as he has asked me not to send him any more comments related to the capital requirements for banks, as he understands it all… at least so he thinks.