Can we get us some good and courageous technocrats please!

Sir, Tony Barber writes “Enter the technocrats” November 12, and that could be good unless of course it is the failed technocrats who are entering… and frankly most of the European and American technocracy, in the area of finance, have failed miserably. 

Technocrats who never understood, and still fail to understand, that the risk-weights used for determining the capital requirements for banks that based on ex-ante perceived risk of default, were layered on top of the banker’ own risk-weights, which drove the banks to create dangerously high exposures to what is officially perceived as “not-risky”, are not worthy being called technocrats… no matter how revered they are in Brussels. 

At this time, when we all need the risk-takers to work for us, they are being choked by the lack of access to bank credit… just because these failed technocrats believe them to be risky. Come on, these were the regulators who believed sovereigns to be safe! Are we still supposed to blindly follow their courageous calls for entering their land of no-risks? 

These wimpy technocrats –bureaucrats, who demonstrated even less courage than many politicians, and who are in fact more responsible that most politicians for this crisis, do not seem to be the leaders we now need!

But the misalignments turned monstrously large only because they were financed.

Sir, Martin Wolf in “thinking through the unthinkable” November 9, quotes Thomas Mayer of Deutsche Bank saying “below the surface of the euro area´s public debt and banking crisis lies a balance of payments crisis caused by a misalignment of internal real exchange rates”.

Yes, the misalignment of the real exchange rates within the eurozone were always in the cards, but the main reason for why they could grow so out of proportion was the fact that it could be financed… and the foremost cause of that were the truly stupid regulations which allowed the banks to finance European sovereigns against little or no capital at all.

I would presume Martin Wolf has many friends among regulators, while I have none, but nonetheless he should have used his column long ago to ask… is it rational to allow banks to finance for instance Italy and Greece, or any sovereign, against basically no capital at all? Had he and his colleagues done that, then perhaps Europe would have had a better chance to nip the current crisis in the bud.

Even the most perfect monetary union would not withstand what attacked the Europe and the Euro

Sir, Steve Rattner holds with respect to Europe that “today’s crisis is structural… stemming from the euro’s flawed design. “Look to America for lessons in sharing currency” October 21.

The same week the euro was launched, in an Op-Ed, I predicted all the problems that could arise, with one notable exception. What I did not predict was the possibility of having bank regulators allowing the banks to leverage 62 times, at least, when lending to the European Sovereigns. And that my friends, is an attack that not even the most perfect monetary union could have defended itself against. 

To honestly recognize that is a must, in order for Europe to understand that it was not really the Euro or Europe which failed, to avoid the self-doubts, so as to be able to regain the confidence necessary to move the Euro and Europe forward.

Mr. Padoa-Schioppa, you helped to pick out "the intelligent", so now you better live with them

Sir it is somewhat hard to comment Tommaso Padoa-Schioppa’s “The euro remains on the right side of history” May 14, because it includes so much of that glorious babble that I produce when I have had a glass of wine too many. That said let me remind Padoa-Schioppa that when he describes those enemies who besiege his euro and refers to “targets selected by the intelligence of three credit rating agencies” he should do well remembering that he himself was among those empowering these credit rating agencies and innocently believing them to be so intelligent that you could structure your whole financial regulations around them.

I am also left with a lingering doubt, is he suggesting that the omnipotent nations-state of Europe should be replaced by an even more omnipotent union. Mind you I am all for EU, as long as it is subservient to the citizens… since deal-making Maastricht bureaucrats can be just as obnoxious as deal-making Westphalia kings.

They´re just plain dumb

Sir Arvind Subramanian is absolutely right when in “Greek deal lets banks profit from immoral hazards” May 7, states the case that there has to be a debt restructuring that includes a lot of hair-cutting to turn Greece´s economy into something reasonably viable, something reasonably livable.

But then he goes into a lot of convolutions trying to explain why the parties in charge do not understand it, but leaves out the most simple and the most normal human possibility, that of them being plain dumb.

I mean anyone who has allowed banks to stock up on Greek and alike debt by authorizing them a 62.5 times to one leverage can´t be anything but plain dumb… and we the dumber allowing them to do so.

A German Eurozone would suffer the reserve currency curse.

Sir Martin Wolf (who seems to be as obsessed with lacking German demand as I confess to be with the lousy Basel regulations for banks) writes “If the Eurozone itself became Germany, I cannot see how it would work”, “Why Germany cannot be a model for the eurozone” March 31.

It would work, with the Euro at 3 dollars, making it much harder to export the Eurozone would suffer like the US from the reserve currency curse... the safe-haven curse. That it would seem impossible for this to occur, on that I agree though.

P.S. I invite you to read what I wrote in Daily Journal of Caracas in1998 a couple of weeks before the adoption of the Euro… it explains what is happening now. http://bit.ly/9nuavy

Why do you have to sound so envious of Germany?

Sir you might be absolutely right but with yours “Europe will not save its way to growth” March 16, you come out, for the umpteenth time in some few weeks sounding just envious of Germany. Though Germany might indeed have benefited more than its fair share from the conditions previous to this crisis there is no way you could blame German frugality for causing it.

If instead you spent some time trying to point out a seemingly viable way to sustainable economic recovery I am most certain that most Germans, or all of those non Germans that lay their hands on Germany’s savings, will gladly help out to take us there. But, just in case let me remind you that sustainable recovery does not seem to have a great chance in a world where China buys even more cars than the US.

FT seems to be seriously obfuscated by some European issues.

Sir, in a world where there seems to be no sustainable way of taking average world per person consumption to even a frugal German level, I must say that I find your editorial of March 7, “The burden of German thrift” and in which you actually demean those not consuming as much as they could be consuming, to be outright irresponsible.

Yes, the economic variables need and will sooner or later be realigned so as to take care of the current disequilibria that are more the result of Greece having abused the strength of the Euro than of Germany abusing the weaknesses of the Euro. But, to be so obfuscated so as to prefer the Greek economic model to the German one points to some very serious underlying European issues in FT, and that I sincerely hope they can sort out for the good of all.

Is Greece becoming Germany´s fart-payer?

Sir Wolfgang Münchau writes “Greece can expect no gifts from Brussels” November 30, and which makes us reflect on what it would have looked like if for instance Greece still had the Drachma and Germany the Deutsche Mark. 

In such a case Germany would have had to be doing the Chinese styled currency weakening on its own instead of having Greece and others euro-black-sheep average the Euro down for them. And clearly Greece would be able to devalue and use that politically more friendly approach of being able to inflate yourself out of the problems, instead of having to impose Germanic discipline on their citizens. Come on, does not Greece deserve a little gift?

Rumours have it that in old Venezuela the fine ladies of society were always accompanied by a small coloured boy whom they could hit on his head whenever a lady farted. These boys were known as fart-payers (paga-peo). Could it be that Greece is becoming Germany´s fart payer?

You have to root out the monsters in their homeland first

Sir Stefan Wagstyl should perhaps have expanded the title “Stalin still looms large over eastern Europe” with the “because he still looms large over Russia” August 31. Wagstyl rightly points us to see that the way countries victimized by foreign monsters can overcome such events starts with how the monsters´ homelands overcome being just that. Since Germany has done so much more in accepting the horrendous realities of a Hitler, than Russia those of Stalin, Germany has been more able to overcome its own demons and shames, and, consequentially the world has been much more able not to hold it against it. Besides, these monster´s, if not pulled out completely, with all their roots, can rot and infect and propagate.