Are our brains wired so as to make us confuse ex-post real risks with ex-ante perception of risk?

Sir, James Macintosh writes: “When investors come to believe that the inherent uncertainty of markets or economies has gone away, it is usually a sign of trouble ahead, as it encourages excessive risk-taking.” Short view, June 19. And of course its opposite is the more uncertain economies seem to be, the less risk-taking will be done.

So I need to ask, once intellectually Mr Macintosh accepts that proposition, why is it so hard for him, and for others to take the leap and dare understand how utterly wrong current bank regulation is, with its more-risk-more-capital and less-risk-less-capital?

Is it something in our brains that confuses ex-post real risk with ex-ante perception of risk? Or is it something else. Like that it would require us believing experts could be 180 degrees wrong… and that is something too uncomfortable to accept?

Mr Macintosh, welcome to the real world where a Mario Draghi and many others, are just like any Chauncey Gardiner figure extracted from Jerzy Kosinski’s “Being There”. 

@PerKurowski

Has Europe fallen into the hands of a Chauncey Gardiner like figure?

Sir, I refer to Joel Lewin’s “European QE redraws junk bond frontier” April 14.

Were the implications not so tragic one could have joked about Europe having fallen into the hands of a Chauncey Gardiner like figure; the gardener elevated to Economic-Guru in Jerzy Kosinski’s “Being There”.

ECB’s/Mario Draghi’s seems not to understand the dangers of flooding the markets with QE liquidity, while the channels for that to flow by means of bank credit to where it is most needed, like to SMEs, are clogged. Firmly clogged by senseless credit-risk-weighted equity requirements for banks.

The overflow of liquidity, into more risky bonds, creates clearly serious risks for individual investors. But, for the economy at large, much worse is the dangerous overpopulation of the “safe-havens”; and the even more dangerous refusal to explore the risky bays, where there is a chance to find what could feed the future.

At least a normal gardener would now you need to water the plants, but not too much.

@PerKurowski

Chavez 21st-Century social vision! My oh my!

Sir, if Mugabe’s Zimbabwe had Venezuela's oil, would he perhaps also be associated with a “vision” of “21st-century socialism”? When writing about Chavez promoting his vision, don’t forget that we Venezuelan citizens would all be much happier if indeed Chavez really had a vision, of any sort? Then we would at least know where we were heading, and what to do about it. What we now have is just plain confusion, ineptitude and corruption financed by the mother of all oil curses, and that is as far away from a vision as you could possibly be. To really understand the Chavez phenomenon you need to think of him as the most fabulous stand-up improvisators ever; performing in front of an audience with an immense and justifiable appetite for hopes about a better future; and finally drawing most of his material from the traditional anti-Americanism tree, and which as you know has lately been able to provide unusually much energy for its parasites to munch on. Under such favorable conditions, can you doubt Chavez’s success?

Outside “objective” observers though, like FT, would also do good to also reflect upon the media’s huge capacity of inadvertently advancing the voice of figures like Chauncey Gardiner in Jerzy Kosiński’s Being There. Chavez is a haunted man, running ever faster forward and, any day now, the majority of his followers are going to suffer an immense deception. Honestly, they don’t need or deserve that.