In EU the lines separating the real responsibilities between national and local politicians, and Brussels technocrats, are way too blurry, at least for the ordinary European citizens

Sir, Simon Kuper writes: “In recent years, we have improvised our way into an EU that works for most Europeans of our generation. We now have what Charles de Gaulle called a “Europe of nations”, in which the big decisions are made not by Brussels bureaucrats, or the European Parliament, but by national leaders acting in concert.” “Why today’s Europe of nations works” May 18.

I disagree. Because of the most probably very disastrous consequences for the euro and for the EU, the single most important decision that has been taken in the EU is, for the purpose of the risk weighted bank capital requirements, assigning to all eurozone sovereigns a 0% risk weight, and this even though they all have their debt denominated in a currency that de facto is not their own domestic printable one.

Sir, what German politician would like to be asked: why did you consider that German banks needed to hold eight percent when lending to German entrepreneurs but could lend to Greek bureaucrats against no capital at all. I venture the answer to that to be, no one!

In EU, technocrats and politicians will blame each other, whenever it’s convenient for any of them, but that is usual in most places. The real difference here is that in EU, the lines separating the responsibilities between national and local politicians, and the technocrats, are as blurry as can be. To know that it suffices to follow the European Commission twitter account, and therefore receive the most amazing barrage of publicity on it doing things that nobody could ever think was their responsibility.

Sir, those supporting Brexit could wrongly suppose too much decision power rests in EU, but those supporting Remain could be just as wrong supposing too much decision power remains in Britain. Who knows? Not me, but perhaps not you either.

@PerKurowski

Italy’s problems are not all of its own making; much is caused by a regulatory mistake committed by bank regulators and the European Commission.

Sir, Franco Debenedettiwrites “The flexibility accorded by Brussels was used neither for reducing the debt, nor for implementing the ‘painful structural reforms to promote growth’ [and] The budget actually under examination by Brussels is all about more public expenditure employed for giveaways and does nothing to improve productivity and growth of the country, “A bargain with Brussels looks unrealistic”, November 19.

He is correct, in that, but he leaves out a crucial element that is an essential part of current realities.

Basel II, approved in June 2004, held that banks as Italy was rated at that time, AA-, needed to hold 1.6% in capital against Italy’s sovereign debt. Currently rated BBB, banks were supposed to hold 4% in capital against that debt. But the European Commission then surpassed those per se already extremely generous and pro statist capital requirements. Through “Sovereign Debt Privileges” it assigned a 0% risk weight on Italy’s sovereign debt; which meant banks did not need to hold any capital against it.

That allowed (or in reality forced) Italy’s banks to end up with a huge overexposure to Italian sovereign debt in Euros, a debt that de facto is not denominated in Italy’s domestic (printable) currency.

What to do? Any solution is going to hurt, but one has at least the right to ask whether Italy, as was Greece, should have to carry the whole costs of a mistake committed by the European Union authorities.

To top it up, there is no way one can improve productivity and growth of any country that distorts the allocation of bank credit to the real economy, as do the risk weighted capital requirements for banks.

@PerKurowski

Brexit is sure a bad idea, but how can you be sure Remain is not even a worse one?

Sir, Alex Barker and Jim Brunsden quote Catherine Barnard, a professor of EU law at Cambridge university: “Never before has a treaty been constructed of this kind,” “The EU is a unique organization. What the Brexit process has revealed is just how deep the integration is in reality.” “Accord leaves Britain bound to Brussels” November 16.

On the first, indeed, to for instance adopt a Euro in order to push forward a union instead of letting a union produce a common currency, is a truly strange way to construct a union.

But, on the second “how deep the integration is in reality” I beg to differ. Having a member like Greece walk the plank, especially as EU authorities were most to blame for its problems, is not the doings of a real deep union.

Sir, let me refer to a speech delivered by Mario Draghi, President of the ECB, at the Frankfurt European Banking Congress, given today, “The outlook for the euro area economy”. 

It concluded with: “I want to emphasize how completing Economic and Monetary Union has become more urgent over time not less urgent – and not only for the economic reasoning that has always underpinned my remarks, but also to preserve our European construction.”

I agree, because as is, Italy will not walk the plank as Greece did, and that could bring on the end of the euro, as we now know it, which could bring an end to the European Union, as we know now it, or, clearer yet, as we perhaps really don’t know it.

Sir, whether Brexit or Remain supporters, does not Britain (and all other UE members) have the right to know what “completing Economic and Monetary Union” to “preserve EU our European construction”, which Draghi urges really entails?

Draghi also mentioned “as urgent as the first steps were in euro area crisis management seven years ago”, “The completion of the banking union in all its dimensions, including risk reduction, and the start of the capital markets union through implementing all ongoing initiatives by 2019”

Sir, does not Britain, a nation where banking means so much, have the right to know exactly what that entails so that it banks are not castrated in the process?It is not just me a foreigner asking. Let me remind you that seven years ago, Alex Barker in [Mr. Brexit Negotiator] “Barnier vs. the Brits” wrote about the fears of Sir Mervin King that Brussels reforms would reshape a vital British industry, banking, to the benefit of eurozone rivals.

Draghi also said: “Household net worth remains at solid levels on the back of rising house prices and is adding to continued consumption growth.” 

That is an untrue statement. A much truer one would be: “Household net worth remains very fragile since it rides almost exclusively on rising house prices, as a consequence of the distortion produced by too much and too favorable financing being offered for the purchase of houses. A distortion that helped to anticipate much of the consumption we have seen, but that will come back and hurt house owners, whether by house prices falling, or hurt everyone, by inflation eroding our real consumption power.

Sir, when that happens, and the crisis needs to be managed so as to impede the destruction of all social cohesion, would you prefer to do that on a national level, instead of on the level of a union in which very few know how to sing its anthem?

Sir, I’m no one to give a recommendation but, should not the Brexit vs. Remain discussions refer more fundamentally to the future of Britain and of EU, instead of being turned into another profitable venture for some opportunistic polarization profiteers?

Should not FT inform its readers, in a much more balanced way, of all challenges that lay ahead, not only those of a Brexit but also those of a Remain?

A long time friend and admirer of Britain 

@PerKurowski

Poor Italy! So squeezed between inept Brussels’ technocrats and their own redistribution profiteers.

Sir, I read Miles Johnson’s and Davide Ghiglione’s  “Italy’s welfare gamble angers Brussels and worries business” November 10, and I cannot but think “Poor Italy”, squeezed between inept Brussels’ technocrats and redistribution profiteers.

“Italy’s welfare gamble”? That welfare which Brussels’ technocrats, for the purpose of bank capital requirements have with their Sovereign Debt Privileges of a 0% risk weight helped finance? Italy’s public debt is now about €2.450 billion, meaning over €40.000 per citizen? 

That 0% risk weight is alive and kicking even though Moody’s recently downgraded Italy's debt to “Baa3”, one notch above junk status and that even though it might not have yet considered that the euro is de facto not a real domestic (printable) currency for Italy. If that is not a welfare gamble by statist regulators on governments being able to deliver more than the private sector, what is? Poor Italy.

But then I read about a government proposal that could increase welfare payments to poor and unemployed Italians to as much as €780 a month but which eligibility and distribution criteria remain unclear and again I shiver. That sounds just as one more of those conditional plans redistribution profiteers love to invent in order to increase the value of their franchise. Poor Italy. 

For me a way out that would leave hope for the younger generation of Italians would have to include a restructuring of their public debt with a big haircut for their creditors; hand in hand with an unconditional universal basic income, that starts low, perhaps €100 a month, so as to have a chance to be fiscally sustainable.

And if that does not help, then Italy will have to count (again… as usual) on its inventive and forceful strictly citizen based “economia sommersa”, something that is not that bad an option either.

PS. Oops! I just forgot that most of that Italy debt is held by Italian banks, so perhaps a type of Brady bonds EU version could be used. Like Italy issuing €2.4 trillion in 40 years zero-coupon debt, getting an ECB guarantee for a substantial percentage of its face value, and allowing banks in Europe to hold these on book on face value; all so that Italy can use it to pay off its creditors could be a shooting from the hip alternative… and then of course have all pray for some inflation to reduce the value of that debt.

PS. I am not the one first speaking about Nicholas Brady, then US Treasury Secretary, approach in 1989. Here is William R. Rhodes “Time to end the eurozone’s ad hoc fixes” in FT November 2012.

@PerKurowski

Instead of working on a Brexit, Britain should do all Europeans a favor and negotiate a very tough EU Remainer

Sir, Simon Kuper, in a back and forth discussion on Brexit, ends upcontemplating “a soft Brexit or Brino, in which Britain becomes a poorer Norway, accepting all European rules including freedom of movement to keep trade and travel flowing.” “Why there won’t be a no-deal Brexit” October 4.

As a reason for that Kuper opines “Few European officials want the UK back now, anyway”. Indeed I can understand that EU’s Brussels bureaucrats feeling rejected and questioned want to spank the Brits for Brexit, but do Europeans want that too? I don’t think so.

Sir, as I see it, and as I have been writing to you for some time, the best way out is a tough Remainder offer in which Britain lays clear what it wants the EU to do, in order to want to remain a member of it.

I am not a Brit, and I do not live in Europe, but my list of request would include:

1. EU needs to solve the challenges that the euro poses to it and about which they have done little to nothing in the twenty years since its inception. If they do not do that, the EU has no future. And don’t let them tell you those challenges were not known.

2. EU must make sure never again treat one of its members like it treated Greece, which for the risk weighted capital requirement it assigned a risk weight of 0%, and thereby doomed it to tragic excessive indebtedness, only to later put the whole blame, and costs of that, mistake on Greece.

3. Understand that Europe has no future with risk adverse risk weighted capital requirements for banks that distort the allocation of credit to the real economy, and sets it up to a financial crisis of monstrous proportions, by means of incentivizing dangerous excessive bank exposures to something considered especially safe, against especially little capital. 

4. That EU stops behaving like a Banana Union getting involved into such issues as regulating the entry fees to Romanian monasteries.

Sir, if those requests would come to fruition, many Europeans would be immensely thankful to Britain… again.

@PerKurowski

Will the many “General Data Protection Regulation” profiteers help or stand in the way of a better future for our grandchildren?

Sir, Richard Waters writes that “Europe’s new online privacy regime is a gravy train for lawyers and consultants, and it has kept IT departments and compliance officers working late for months [and] it is likely to take an onslaught…from privacy activists” “Brussels forces online reckoning by setting high bar on privacy” May 25.

That raises a question: Will that mean a better future for my grandchildren, or will it just extract value from what has been developed, making what’s to be developed more distant and expensive?

Waters also writes: “One Silicon Valley figure argues: if users were able to capitalise the future value of personal data like this that they will throw off over a lifetime, it would turn out to be one of their most valuable assets”. I have argued a similat the thing with letters sent to FT… but I have also indicated the possibility that all the web and social media added monetary value, could be used to fund a Universal Basic Income, a sort of Human Heritage Dividend.

Personally, scared of some “Big Brother Is Watching You” joint ventures between data gatherers and goverments coming into fruition, I prefer allowing development to run its full course to see where it takes us. 

Sir, I just do not feel sure enough about taking development limiting decisions on behalf of my grandchildren. Do you? 

https://teawithft.blogspot.se/2015/09/ad-blockers-do-not-allow-any.html

PS. If social media is to be fined, then have all the fines help to fund Universal Basic Income schemes. What we absolutely do not need, is to have social media (ambulance) chasers, redistribution profiteers, like a European Commission, or similar, capturing these.

@PerKurowski

In not listening sufficiently to the European people, which includes the British, resides great risks for the two technocrats negotiating Brexit

Sir I refer to George Parker and Alex Barker discussing Michel Barnier and David Davis, “Meet the Brexit negotiators” March 17.

For me the best of the Winter Olympics 2018 was seeing Sofia Goggia singing her Italian national anthem with such an enthusiasm. I am sure Europe has not been able to remotely capture the hearts of Europeans in such a way; and the reason for that must foremost be the technocratic haughtiness of Brussels.

I have not the faintest idea if it rests on some real event, it most probably doesn’t, but the most powerful moment depicted in “The darkest hour”, was when Churchill journeyed the London Underground to hear the voice of regular people in the subway.

And that is what I have a feeling neither Davis nor Barnett have done enough of. Whatever the result of Brexit, they might be in for a great surprise, because, much more than arteries and veins are at stake for Europe, including Britain, it is the heart that has to be nurtured and cared for.

What if for instance to Sofia Goggia the relation Italy-Britain is much more important than the relation Italy-EU-Britain?

I have no doubt those who voted for Brexit really wanted more out of Brussels than out of Europe... because that I can understand.

Sir, you don’t have to go underground and travel subways to know what people might want. Some well designed, not biased, public opinion research on the wished and not wished for outcomes of Brexit, in all countries involved, would be the minimum I would have required before any first Brexit meeting.

PS. Just in case you are curious, the worst for me of the Winter Olympics 2018, was having to suffer with Egvenia Medvedeva when not winning her gold.

@PerKurowski

So now Brussels wants to join forces with Facebook, Google and alike, in order to also extract value from our personal preferences.

Sir, Mehreen Khan, Alex Barker and Rochelle Toplensky report that “Brussels is thinking about a “levy, which is likely to be set at a rate of 3 per cent… raised against advertising revenues generated by digital companies such as Google…fees raised from users and subscribers to services such as Apple or Spotify, and income made from selling personal data to third parties… it will raise about €5bn a year.” “Brussels proposes levy on Big Tech digital revenues” March 16.

For years I have argued that we users should have right to charge something for our preferences disclosed on the web, not only because that could yield a partial funding of a Universal Basic Income scheme, but, even more importantly, because that would help to limit the bothering and the waste of our limited attention span.

But seemingly Brussels wants to hear nothing about that, they as self appointed redistribution profiteers, want in on that revenue stream.

It is just like if governments, instead of helping to rid ourselves of the fastidious robocalls selling us all kind of products and services, would now share the incentives to push those calls even more.

Sir, though I do not live in Britain, or in Europe for that sake, I was pretty sure I would not vote for a Brexit… but every day that passes, and I read about things like this, the less sure I am of that.

@PerKurowski

For Britain’s and EU’s sake, Brexit negotiations should not be left exclusively in hands of Leavers and Brusselites.

Sir, most of the opinions on Brexit I have read in FT over the last year, seem to me have more to do with Remainers wanting it to turn out so bad so they can gorge on the “we told you so”, than with making the best out of something difficult.

In the same vein, on EU’s side, it seems to me that the Brusselites want to negotiate more in order to satisfy their by Brexit vote hurt egos, than with making the best out of something difficult.

Janan Ganesh writes in “The real saboteurs of Brexit are its own amateur leaders” November 14. So, if Leavers do not have what’s needed to negotiate Brexit well, as, that does not exculpate the Remainers from helping out in any which way they can… (or move out of Britain)

Gideon Rachman writes in namely: “Imposing a humiliating settlement on Britain might even seem economically advantageous. But the long term political and strategic consequences of a bitter Brexit are much harder to calculate.” “Britain is at the mercy of Brussels” November 14. And so, in a similar vein, the Brusselites need to be continuously reminded of that they could also be hold accountable for a bad Brexit.

If I were a British national and a Remainer, the first thing I would do is to launch a campaign messaging the following:

“Europeans since Britain will remain close to you… and since you could be next, it behooves you to keep an eye on your Brusselites so that Brexit goes well for all of us. The last thing we need in Europe at this moment is a neo-Versailles treaty.”

PS. As a Polish citizen, I would argue: “Brusselites, remember that many of us in EU have more in common with Britain than with some of our other Europeans”

@PerKurowski

Britain, don’t let all your hard and well-earned goodwill in Europe go to waste with dumb Brexit negotiations

Sir, Josef Joffe describes well the kind of goodwill Britain has in Europe. That goodwill is being horribly wasted in the Brexit proceedings, among other by those Remainders that want to get Brexit failures, in order to argue their petty “I told you so” “Brexit Britain has displaced Germany as the land of dreamers” August 16.

Had I been a citizen of Britain wanting decent Brexit negotiations, or one wanting to remain in EU, I would have reached out to all the millions of Josef Josses in Europe with the message of: “The Brexit vote indicates not all is well in EU, what can we do, and how can you help us to convince our fellow country men of not leaving?”

And if that had not opened up new roads, then my minimum minimorum plea would be: “Europeans, make sure your relations with Britain are mot harmed more than necessary by means of leaving Brexit negotiations, unsupervised, in the hands of EU-technocrats who have suffered a love spat or want to show off as though macho negotiators.

@PerKurowski

European citizens must solve the Brexit affair, not EU technocrats with their egos hurt by that love spat

Sir, let me address some of Martin Wolf specific opinions expressed in “Britain is incapable of managing Brexit and calamity will follow” July 14.

“Michel Barnier, the EU’s negotiator, patiently explains, as if to inattentive children, that ‘the clock is ticking’.” Does Wolf really think that Michel Barnier has been authorized by EU, and especially by the Europeans, to impatiently allow the clock on Brexit negotiations to run out? If Barnier does that, on his own, to show off his toughness, they will run him out.

“Brexiters fail to understand the weakness of the UK’s hand” “Does that mean that EU understands their hand to be strong?

“Damage to access to the EU market would, for example, be far worse for the UK than vice versa, because the EU’s economy is some five times bigger than Britain’s.” What? I can’t believe Wolf says this. Whatever damage might in fact result, has very little to do with the size of the economy. A larger economy, on a per capita basis, could be just as sensitive.

“The EU is a creature of law. Members would view a [no deal] violation of UK obligations as heinous.” What members, the not so popular EU technocrats?

“The UK government is stuck between a rock and a hard place.” Does Wolf really think the governments in EU are feeling comfortable? They have their own need of votes.

“Another referendum would be dynamite, further aggravating the deep splits over the European issue” Does that not depend partly on the results of the referendum?

“Whom the Gods wish to destroy they first make mad. So it now is over Brexit”

There I agree. Because I wonder why Martin Wolf, and most other influential Brexiteers and Remainers, British foremost, supposedly, are not out there marketing the need for a very amicable Brexit, among all those Europeans that might wish the same, and who also the last thing they need, is for additional complications in their already hard as it is life.

PS. Did you not see how Trump and Macron got along well even with Trump’s Paris agreement exit?

Per Kurowski

I am besides a Venezuelan, also a Polish, and therefore a European citizen.

@PerKurowski

Brexit should not be a humiliating capitulation process, so as to fit the remainders’ wish to say, “I told you so!”

Sir, Carl Bildt writes “The essential and unavoidable fact is that Britain will not be in the room when EU summits are called on all the different issues that are certain to emerge in these increasingly uncertain times… For all its public ambivalence, there is little doubt that on the inside Britain has been very powerful in shaping the evolution of the EU... Many have seen the UK as a necessary counterweight to other countries keen on a more closed approach, both political and economic” “Europe’s political landscape starts to shift” June 20.

Absolutely! And this is a fact that Britain should make abundantly clear, reaching out to its so many European friends, bypassing completely those Brussels technocrats that have had their weak egos hurt, because of the Brexit rejection.

Instead, many of your columnists have been arguing for a sort of humiliating Versailles type capitulation treaty, most of them in order to be able to tell their readers “I told you so!” Well, shame on them!

What would I do if a British citizen? First I would carry out an opinion poll in all EU countries asking their citizens whether they want Britain to be castigated for leaving EU, or whether they prefer EU to live as closely and friendly as possible with Britain after Brexit.

Then, with those results in hands, which I am sure would favor the second option, I would ask whether they would like to leave the Brexit negotiations on behalf of EU, in the hands of Michel Barnier, someone who has clearly a tendency to want to show off as a strong man, as a macho man.

Sir, and you know this is not the first time I so opine… but of course, since I am censored by FT, just like I was censored in my Venezuela, I must be silenced.

@PerKurowski

Since Brussels technocrats took EU members too much for granted, Brexit could perhaps turn into a better deal for UK.

Sir, Martin Wolf in reference to Theresa May’s Brexit “No deal is better than a bad deal” asks, “Why, after all, would the EU offer better terms to a non-member?” “Trade realities expose the absurdity of a ‘no deal’ option” June 2.

That is true; except for if the current membership deals are based on technocrats taking EU members too much for granted; and now waking up to the Brexit fact they should perhaps not do so.

Also, would these technocrats dare to further weaken their not too strong position by declaring a war on Britain, a war that most of the Europeans probably do not wish? Do Brussels generals really have that kind of credibility? I don’t think so.

Wolf writes: “Now Brexiters imagine the UK can refuse the EU’s terms for an amicable divorce and yet still count upon active and enthusiastic co-operation in ensuring the smooth flow of trade.”

Why can someone who like Wolf has attacked growing trumpist trade protectionism in the US, arguing it primarily hurts the Americans, yet be willing to accept the thought that trade protectionism from EU towards UK, would not hurt the Europeans too?

That is what Wolf should be informing Europeans of, so that they help to keep their hurt-egos technocrats from enforcing some stupid vengeance plans. But no, Wolf seems determined to want that UK should just take its well deserved punishment for not listening to his advice, and then shut up.

@PerKurowski

No Martin Wolf! You do not get good results, for all, with Brexit negotiations, arguing that the UK holds a weak hand.

Sir, Martin Wolf, with respect to Brexit negotiations writes: “Theresa May should have realised, above all, that she holds a weak hand: the costs of no deal would be far bigger for the UK than the EU.” “Britain has the chance to secure a smooth Brexit transition” May 5.

What? Weak hand? EU has more to lose from Brexit than UK. EU gets stuck with the Euro, and so many other unresolved differences, languages included, without having Britain as a calming unofficial arbitrator. How many EU countries does Wolf think that will be glad seeing UK leave, and would settle with a high indemnity payment?

That is the only starting point that can lead to a continuous amicable and useful for all Britain and EU relation.

The more all European citizens send that message to those dummkopfs in Brussels who want to play macho men, in order to get back at those who showed so much disdain for them that they wanted to leave, the better for all in Europe.

The local European governments should be especially alert and not allow some few technocrats in Brussels to decide their future relations with Britain. It is they who will pay the costs.

Everyone might be helped by an ad campaign along the lines of: "EU, Brussels’s technocrats share blame for Brexit. If you Europeans want an amiable separation, help keep them in check"

Britain, of course, do not let these arguments I make go to your head either. It’s all a quid pro quo.

@PerKurowski

Lord Adonis, as your National Commissioner, could do more for UK’s infrastructure by going to Brussels and Basel than staying in London.

Sir, I refer to your “A commission for firing up Britain’s bulldozers” October 7.

You write: “In economic terms, more infrastructure ticks every box. It enhances productivity, while building it also creates jobs. With interest rates near to all-time lows, the financing costs are nothing to fear. Should prudence or ideology demand the use of private instead of public money, there are pension funds crying out for a stable return, if the state bears the construction risk.”

Not so fast! In infrastructure, what could and how it will be financed, in the UK, depends a lot on what the financial regulators think; as they express in their capital requirements for banks and insurance companies. These regulators are in so many ways the real Great Disrupters. 

In fact, your Lord Adonis would be well advised to take a little study trip to Brussels and Basel to learn about all this. In fact you’re your Lord Adonis could well be doing UK’s infrastructure sector much more favors staying there, helping to eliminate the distortions to infrastructure finance that regulators create, than what he could achieve by remaining in London leading the National Infrastructure Commission.

Per Kurowski

@PerKurowski ©  J

Brussels and US, when ruling on cyber space, never forget it is we, the undefended accessed, who most need assistance.

Sir, Carl Bildt holds that “Digital mercantilism — a misguided attempt to regulate away competition, or build up new boundaries to achieve some imaginary sovereignty in cyberspace — can only hurt Europe’s ability to innovate, compete and succeed in this new world.” “Brussels should resist the urge to rig the rules of cyber space” May 4.

Absolutely, but that does not mean all is fine and dandy.

Bildt writes: “Google, Facebook and Twitter have been extremely successful in establishing services that have a commanding lead in the markets in which they operate… not by exploiting the advantages of incumbency, but through groundbreaking innovations that have led users to flock to the services they provide.”

Indeed, but those companies did not create the internet Mr. Bildt; and all of us flocking to obtain their services are paying a price for it, by means of allowing these to access information about us, in order for them to resell advertising access to us. And that price could be reasonable or not.

If it constrains too much our ability to access information freely, the price would be way too high.

And it is in the area of unfair restrictions in the competition for information of all sort, that we, the undefended accessed, sure need some assistance from regulators, whether European or American, or from anywhere else on the globe where they might be hosted.

PS. Should I have a copyright over my own preferences, so that I could share in the ad-revenues from advertising directed to me, because of my preferences?

@PerKurowski

When are they going to fine the bankers and not, suicidally, fine the banks?

Sir, right now, when the European banks are leveraged to the tilt and unable, because of faulty capital requirements and lack of capital, to finance those in the real economy most in need of bank credit, we read, reported by Alex Barker and Daniel Schäfer that “Brussels poised to announce hefty rate-fixing fines on global banks” December 4.

When are they going to fine the bankers and not the banks? Don´t they know that in these days of so little bank capital, derived from regulators requiring so little bank capital with Basel II, that every fine a bank pays, translates into less bank credit… primarily to those medium and small businesses entrepreneurs and start-ups we most need to have access to bank credit in competitive terms?

Too careful is also “carelessly”

Sir, Gideon Rachman writes “It is a standard, self-pitying complaint in Brussels that the crisis in the eurozone was triggered by the collapse of a US investment bank, Lehman Brothers”, “America cannot live so carelessly forever”, October 8.

Yes that is the superficial fact, but the real truth is that what caused both Lehman Brothers, the eurozone and the US to have a financial crisis, were bank regulations coming from the Basel Committee. For instance, on April 28, 2004, the Securities and Exchange Commission, which supervised Lehman Brothers, effectively delegated its role to the Basel Committee.

And by the way, the crisis was not caused by being too careless, on the contrary by being too careful. It was capital requirements for banks which were so much lower for what was perceived as “absolutely safe” than for what was perceived as “risky”, which caused that extraordinary dangerous large level of bank exposures, backed with minimal capital, to AAA rated securities, to banks of Iceland, to real estate in Spain, and to sovereigns like Greece.

FT, I just can’t believe you believe we need regulators, like Michel Barnier, to save us from Libor scandals

On September 3 you wrote “Barnier’s revolution”, in which you held that Brussels is right to end self-regulations”, like in the case of setting the Libor benchmarks.

Please read carefully your own reporters “Court papers reveal Libor broker called banks ‘sheep’” September 26, and tell us: Now that the market knows what happened, what good can come from having a regulator, perhaps Mr. Michel Barnier himself, overseeing the setting of Libor?

Mr. Anders Borg, what democratic legitimacy has bank regulators to distort and discriminate, and to be so dumb?

Sir, Richard Milne, in “Sweden attacks bloc fiscal union”, February 20, quotes the Swedish finance minister Anders Borg opining with respect to the European Union, “I do think that you’re overstretching the democracy legitimacy when you’re pushing more resources and more powers to Brussels”.

This is a concern I could identify myself with, but, in that respect, much more worrisome is how the bank regulators in the Basel Committee, and the Financial Stability Board, have adjudicated themselves so much powers so as to decide who our banks should lend to. Let me explain.

In a world free of bank regulators, banks and markets would lend to those borrowers who offered them the highest expected net margins of return, after adjusting for differences in perceived risks and transaction costs. That way they maximize the returns of their shareholder’s capital, simultaneously helping to allocate the financial resources in the most equitable an efficient way, so as to help the real economy grow.

But, that is in an ideal world, because now, in this world, loony bank regulators have told banks that if they lend to those qualified as “The Infallible”, then they are allowed to leverage those net expected margins many many times more than what they can do if they lend to “The Risky. And of course, that completely distorts the resource allocation mechanism.

And it is also highly inequitable, because one dollar or one euro paid in interest by a borrower belonging to “The Infallible” will, as it can be leveraged so many times more, then be worth much more than a dollar or an euro paid in interest by a borrower perceived as “risky”.

Mr. Anders Borg, who authorized the regulators to do such thing, you and your ministers of finance colleagues? Do your other Swedish minister colleagues now that? Does your parliament know that? Do the citizens know that?

PS. By the way, besides distorting and being inequitable, those regulations are plain silly. Never ever have “The Risky” detonated a major bank crisis, that dubious honor belongs exclusively to those falsely perceived as members of “The Infallible”, precisely like in the case of the current crisis; and also because those who operate on the margins of the real economy, and might be best suited to get us out of the crisis, and get our young ones their jobs, are quite often “The Risky”.