Magical thinking is not limited to political actors from right or left, many technocrats indulge in it too.

Sir, Edward Luce referring to “brassy slogan” and “fabulism” among politicians of all sides writes: “Facebook’s algorithm rewards magical thinking” “Magical thinking crosses party lines” March 21.

Yes, solid common sense thinking and truth generates much less advertising revenues than grandiose idiocy or mindboggling fake news.

So what are we to do? There’s no easy answer. 

I would suppose that limiting some social media use to duly identified citizens, would at least reduce all the anonymous noise that is so much harder to put to shame, when it should be shamed. 

Also charging a truly minuscule fee for each web access would help limiting the polarization and redistribution profiteers from marketing their messages of hate and envy at zero marginal cost. (That fee could help fund a universal basic income).

But, magical thinking is not limited to political actors from right or left, or needing the web for its promotion.

The Basel Committee’s risk weighted bank capital requirements are pure unabridged utterly dumb magical thinking, imposed by a bunch of loony technocrats.

Their magical thinking guarantees us a weak economy, and especially severe bank crisis, resulting from especially large exposures, to what was especially perceived as safe, against especially little capital.

@PerKurowski

Yes, cities can be great, but these can also be dangerous bombs in the making.

Sir, Edward Luce writes about how trying to attract big companies like Amazon to the cities might make it harder on the poor in the city. “Beauty contest reveals ugly truths” June 6.

Yes, of course, the weaker, the poorer, they will always be relatively more squeezed by any development that occurs in cramp conditions where there will be a fight for space.

But it is when Luce quotes Richard Florida with, “America’s most dynamic cities have played right into the company’s hands, rushing to subsidise one of the world’s largest corporations rather than building up their own economic capacities.” where the real discussion should start.

Why would a city want to bet so much of its future on so few actors as would here be the case with Amazon? Have they not seen what happened to Motor City Detroit? If you want to use incentives to attract jobs, which is of course to start “a race to the bottom”, why bet all on a number, would you not be better off diversifying your bets? 

If I was responsible for a city, one of the first things I would be doing is to analyze how its riskiness would be rated compared to other cities? For instance, what are the chances that suddenly another city offers your city’s wealthy, the possibility of moving to a place that has not accumulated impossibly high debts that will need to be served, supposedly primarily by them?

And, if your city faces a financial crash, what would be ones’ first priorities, to help the poor, or to make sure the rich do not leave without being substituted for by other rich?

PS. Luce writes: “Big fund managers… are putting cash into global urban real estate portfolios. As a result, property prices are becoming a function of global capital movements rather than local economic conditions”

Again, for the umpteenth time, what initially feeds high property prices is the inordinate ease of access to financing it, provided among others by regulators allowing banks to leverage much more with “safe” residential mortgages than with “risky” loans to entrepreneurs. 

The fund managers are just following the results of it… when that regulation-easing plan begins to be reversed, which will happen sooner or later, they run the risk of being left holding the bag. 

@PerKurowski

What does “stored wealth” mean? Is it really redistributable, just like that, without any consequences?

Sir, Edward Luce writes: “America’s elites have stored more wealth than they can consume. This creates three problems for everyone else” “The discreet terror of the American bourgeoisie”. February 8.

What does “stored wealth” really mean? You do not hide your main-street purchase capacity in cash under a mattress; you hand it over to someone else in exchange for an asset or a service.

When some very wealthy recently bought Leonardo da Vinci’s “Salvator Mundi”, he froze, with a sort of voluntary tax, US$450 million on a wall or in a storage room. Those US$450 millions were received and used by some other wealthy or not that wealthy. Should that not have happened? Should he have used his money better? What if those who now have his money know how to put it to much better use?

The war against wealth is raging. Whenever wealth has been obtain by criminal, or by unjustified means, like monopolies or excessive intellectual property rights exploitation, that war makes sense. But, those who preach that all will be well and dandy, if only wealth is redistributed, like from the 1% to the 99%, never explain how one now converts a Salvator Mundi, into fresh main-street purchase power, and the consequences of doing so.

We could assume that much of that lack of explanation is because many of the wealth redistribution fighters are in fact redistribution profiteers interested in increasing the value of their franchise.

PS. Not long ago, visiting the Museum of Louvre, it dawned on me that most of what was exhibited there would not have come into being, were it not for the existence of the filthy rich. Can we really afford, do we really want, to live without them?

@PerKurowski

Edward Luce, what do you mean, is Mark Zuckerberg not paying the taxes he should pay, or is he just no taxed enough?

Sir, I come from a nation, Venezuela, where those in power have wasted hundreds of times more fiscal revenues than the amount of taxes citizens might have evaded. So I am no fan of the redistribution profiteers.

Edward Luce writes: “America’s new economy elites tend to cloak their self-interest in righteous language. Talking about values has the collateral benefit of avoiding talking about wealth. If the rich are giving their money away to good causes, such as inner city schools and research into diseases, we should not dwell on taxes. Mr Zuckerberg is not funding any private wars in Africa. He is a good person. The fact that his company pays barely any tax is therefore irrelevant.” “The Zuckerberg delusion” November 16.

What does Luce mean? Is Zuckerberg not paying the taxes he should pay or is he not taxed sufficiently. If the first Zuckerberg should be fined or even go to jail, if the second Luce is close to being defamatory and should suffer some consequences. 

And Luce also holds “The next time Mr Zuckerberg wants to showcase Facebook, he should invest some of his money in an actual place.”

What on earth does Luce mean? That Zuckerberg does not have his money invested in an actual place? That Zuckerberg keeps his wealth all in cash stashed away under his mattress?

I am clearly against how much rents are derived from monopolistic positions, and would of course like to see that kind of rent capturing to be diminished. But I also believe that once wealth has been created, and that wealth has been allocated to different assets, one should not come to the conclusion that redistributing these would actually result in something better.

It is so typical for wealth-redistributors to suggest, like Luce does, that Zuckerberg would do better funding “a newspaper to make up for social media’s destruction of local journalism” without given a single thought to what would then have to be defunded.

What is most conspicuously absent in the aggressive let’s redistribute the wealthiest wealth proposals, is an explanation of how that is done and of what that implies.

For instance, let us assume Mr Zuckerberg has a $200 million dollar Picasso hanging on the wall. How do you convert that painting into food, health services, education or money for the poor, without having to find another wealthy buyer of that Picasso?

And, if you did cash in the $200 million, how much would reach the less wealthy and how much would just enrich the redistribution profiteers… perhaps making them the neo-wealthy?

The fact is that if Zuckerberg had a $200 million dollar Picasso he has, in a sort of voluntary tax, frozen alternative purchasing capacity on his wall. In this case leading for art to be seen as a good investment, and most probably down the line causing some artists down to get some more income for their art. 

But Sir you would also probably agree with Luce in that journalists are worthier than painters. And I don’t hold that against you… because that’s life. Let anyone not wanting to redistribute something more to himself, cash if you are poor and goodwill if you are Zuckerberg, throw the first stone.

PS. I am an ardent defender of a Universal Basic Income because I find that to be the most efficient way to finance, among others, the creation of decent and worthy unemployments. But that redistribution method also needs to be clear on the implications of what is being redistributed. How much would exist in the Frenchman Thomas Piketty’s Paris’ Museum of Louvre, had it not had been for the existence of the odiously wealthy?

@PerKurowski

Those in 1989 so illusioned with the fall of the Berlin wall, never saw the Basel Accord that had hit the West 1988

Sir, Edward Luce writes: “We returned to England in 1989, hungover, each carrying a small chunk of the Berlin wall…We were infected with optimism.” “When west isn’t the best” Life & Arts, May 6.

And now, soon thirty years later Luce is so disappointed with what has happened thereafter, that he even writes such nonsense as “Others… in Caracas… share Russia’s hostility to western notions of progress”. Mr. Luce, dare go to the street of Venezuela and see for yourself how more than 80 percent of that country is risking their lives on the streets, fighting to maintain liberal values you hold, all in order to demolish a Havana-Beijing-Moscow-Teheran wall built by thugs, and which has destroyed a beautiful nation.

Luce ends with: “The west’s crisis was not invented in 2016. Nor will it vanish in 2017. It is structural and likely to persist. Those who gloss over this are doing liberal democracy no favours”; and that’s having already stated: “The self-belief of western elites saps their ability to grasp the scale of the threat.”

Sir, let us put the house in order. Luce writes: “The year 1215, the year of the Magna Carta, is today seen as the “year zero” of liberal democracy… By limiting the power of the king, the Magna Carta set a precedent for what would later be known as “no taxation without representation.”

Limiting the power of the king? In 1988, one year before Luce chipped away at the Berlin wall, the Basel Committee for Banking Supervision managed to get the Basel Accord agreed… and that accord, for the purpose of the capital requirements for banks, risk weighted the king, the sovereign, with 0% and its subjects, the citizens with 100%. From that moment on the statists’ wet dreams were realized and, amazingly, the western elite said nothing about this rape of the Magna Carta.

But Basel’s bank regulations did not only favor the king, it also introduced a risk aversion that had nothing with that “God make us daring!” attitude that made the west great.

That also realized the wet dreams of bankers, namely that of leveraging the most with what was perceived as safe, so as to be able to earn the highest risk adjusted returns on equity on what was perceived as safe, so as not having to lend the credit umbrella to risky SMEs and entrepreneurs.

Of course the west, with banks no longer financing the riskier future but only refinancing the safer present and past, and the sovereign, could, after that, only go in one direction, namely down, down and down.

Add to that the complications created by robots and automation. Those, on top of having to create jobs, now also require us to create decent and worthy unemployments.

The challenges for the west loom immense. To face these requires a neo Magna Carta that probably has to include something about a universal basic income, and of course getting rid of that insane mindset that came up with current bank regulations. That because, as Einstein said: “No problem can be solved from the same level of consciousness that created it”.

@PerKurowski

Is it opposition that weakens or loosens up support, or opposition that stiffens and compacts support?

Sir, many of us Venezuelans have lived trough many years thinking the fall of Chavez/Maduro just to be a question of few days. That it did not happen was in much the direct result of that the opposition, instead of loosening up the Chavez/Maduro support, by preaching excessively to the choir, only compacted it.

So when I now read opinions against Trump I ask myself, does it loosen or does it compact Trump’s support?

Sir, with respect to that what Edward Luce expresses in “Trump and the siege of Washington”, February 20, what would be your own gut feeling… loosening or compacting?

My own opinion is that the more you stick to the issues and the less with the person the better. Of course, as you well know, that is easier said than done.

@PerKurowski

If President Trump makes unfit profit on his hotels, so might those who are in the business of opposing him.

Sir, Edward Luce’s “America’s monetiser-in-chief” of February 13, could easily end up being used by all those who by email and other means, ask us to give money to them so that they fight Trump on our behalf.

Currently too many are reminded of Irving Berlin’s song “Anything You Can Do” from the “Annie Get Your Gun” musical. The days open up with a: “Some say they can fight Trump, but I can do that better, I can fight Trump, better than all”, which is then followed by an ever increasing number of voices belting out their, “No you can't. Yes, I can. No, you can't. Yes, I can. No, you can't. Yes, I can, Yes, I can!”

Luce writes: “Even where Mr Trump has the highest motives, he will fail the Caesar’s wife test”. In what world does Luce think we are living? Do not failed Caesar’s wife tests surround us everywhere? Is political profiteering really so much different from business profiteering? Surely if Trump is caught in an act of extending an overt invitation to be corrupted, I am sure that the consequences for him and for the corrupter, will be much more severe than for all those politicians who daily mingle with their dedicated lobbyist.

Sir, I am not condoning any possible Trump shenanigans, and I will protest it as much as you, or even more than you, if and when any real evidence is presented. But, meanwhile, there is a vital need for staying focused on realities and not being distracted by anti-Trump populists or anti-Trump profiteers. 

First, as a Venezuelan still living the “Chavez” era, what Luce describes when preaching for the choir, means nothing in terms of eroding the popularity of a populist. Quite often the opposite happens.

Second, there are too many infinitely more important and urgent issues at hand. Just think of all those robots that compete with us humans for jobs without being burden with payroll taxes and similar handicaps. Just think of those regulatory gnomes distorting as they see fit, with their risk weighted capital requirements, the allocation of bank credit to the real economy.

Third, Trump represents a new wind in Washington, so let’s try to use it as much as we can. For instance the proposal by the Climate Leadership Council of imposing a carbon tax, which revenues would go directly to the citizens, is the best win-win possibility I have seen in many years. If that would be its price, I would gladly look the other way, if those horrendous anti America and anti economic plans of Trump Hotels to quintuple its outlets in America become reality.

PS. Hotel building needs financing, and bankers and investors, must consider the after 4 or 8 years profitability of the hotels.

PS. I have just received an email where someone indicates that after a review they have found that I have yet to donate the minimum $3 to fight Trump, and that I must hurry up. I wonder if someone keeps a list of the 10 largest anti-Trump-movement's profiteers?

@PerKurowski

If we get a copyright on our own personal data and preferences, then we have something to trade with.

Sir, I refer to Edward Luce’s “Big Data’s infinite harvest” May 25.

In it Luce asks “Should we charge Big Data for our personal data?” And my answer to that has for quite some time been, even to FT, that we should at least get a copyright on our own personal data, so as to have something to trade with.

I recently bought a Tuxedo shirt on the web, and since then I have been receiving many offers on Tuxedo shirts on the social media where I socialize. It crowds my computer and, in doing so, it definitely affects negatively my possibilities of going on with the rest of my own virtual life, as well as intruding on other ads trying to reach my immense purchasing power :-)

And so I believe that if all these content providers had to share some of the ad revenue they got from targeting me, with me, the owner of my own preferences, then we could put some order in the house, an order that could even benefit our Big Brothers. Frankly, I think that any advertiser would love this idea, as that would guarantee that the ad recipient looks more favorable, or even looks, at his ad… of course current advertisers would initially not like it too much… until they understand that would benefit them too.

Now on the issue of information and searches, there I might be a little bit more radical. Because there I would request that at least 50 percent of all search results provided by Google should be provided on a totally pro-bono basis. That is because it is much too important for us to know what the poorer outliers might be thinking, and because we cannot afford our information needs to be satisfied solely by information lobbyist.

But clearly all this is just in its initial stages and developing.

@PerKurowski

Mentally grey regulators make banks managers of retiree’s portfolios; and stop them from building future.

Sir Edward Luce argues that today’s pessimism, the western world’s “miserabilism”, results from us “growing older”, “Is the west clinically depressed”, December 22.

And Luce writes: “The greyer we become, the less we save. The less we save, the less we invest. The less we invest the slower we grow.”

But Luce forgets, or wishes to ignore, that the less we are willing to take risks, the more we will put the future behind us.

And that is precisely what have happened with or banks. Mentally greying regulators give banks huge incentives to avoid all what seems risky, like lending to small businesses and entrepreneurs.

That they do allowing much lower capital requirements for banks exposures perceived as safe; and which of course cause banks to make much higher risk-adjusted returns on equity on safe assets than on risky assets.

Can’t you hear them: “Lets squeeze the last ounce of safety we can get out of assets that seem safe today, even if that makes these more dangerous tomorrow, cause what only counts is for us to be more secure for the next few years…Après nous le deluge!”

I tell you Sir; anyone who has young children or grandchildren, and who does not criticize the castration of our banks performed by the Basel Committee and the Financial Stability Board, should be ashamed.

On bank regulations why can’t we get to the heart of its problems? Why can’t we keep political agendas out of it?

Sir, I refer to Edward Luce’s “Too big to resist: Wall Street’s come back” December 14.

Anyone who with an open mind reads Daniel Kahneman’s “Thinking, Fast and Slow” 2011, or this years “World Development Report 2015: Mind, Society, and Behavior” issued by the World Bank, should be able to understand the following with respect to current bank regulations:

Regulators (and ours) automatic decision-making makes us believe that safe is safe and risky is risky; while a more deliberative decision-making would have made us understand that in reality very safe could be very risky, and very risky very safe.

And so when so many now scream bloody murder about the influence of big banks in the US congress, because these managed to convince legislators to allow “banks to resume derivative-trading from their taxpayer insured arm”, they posses very little real evidence of what that really means… except, automatically, for the fact that it all sounds so dangerously sophisticated.

No, if there is something we citizens must ask our congressmen to resist, that is the besserwisser bank regulators who, with such incredible hubris, thought themselves capable of being risk-managers for the world, and decided to impose portfolio invariant credit risk weighted capital requirements for banks.

These regulations distorted all common sense out of credit allocation, and cause the banks to expose themselves dangerously much to what is perceived as “absolutely safe”, while exposing themselves dangerously little for the needs of our economy to what is supposedly “risky”, like lending to small businesses and entrepreneurs.

If we, based on what caused the current crisis should prohibit banks to do, it would have very little to do with derivatives, and all to do with investing in AAA rated securities, lending to real estate sector (like in Spain) or lending to “infallible sovereigns” like Greece.

Does this mean for instance that I do not agree with FDIC’s Thomas Hoenig’s objection to US Congress suspending Section 716 of Dodd-Frank? Of course not! But, before starting to scratch the regulatory surface, something which could create false illusions of safety, or even make it all much riskier… we need to get to the heart of what is truly wrong with the current regulations… Sir, enough of distractions!

And also enough of so many trying to make a political agenda and election issue out of bank regulations… as usual it would be our poor and unemployed or under employed youth who most would pay for that.

Europe, why would you like to hand over dictatorial monetary policy to a failed bank regulator, like Mario Draghi?

Mario Draghi as the former chair of the Financial Stability Board obviously thought it ok for banks to be able to leverage their capital (equity) a mindboggling 62.5 times to 1 when lending to anything private that had an AAA credit rating or to a sovereign rated like Greece. If such craziness had been displayed in any other profession he would be long gone. Amazingly, Draghi got promoted to chair of the European Central Bank.

And now, on top of it all, Edward Luce complains about Draghi’s lack of powers, “Blinded EU can learn from one-eyed US” October 6.

I just don’t get it. In Europe, where banks are so much more important to the financing of enterprises than what they are in the US, the number one priority should be to get rid of those who want to deny medium and small businesses, entrepreneurs and start-ups fair access to bank credit, only because they label them as “risky”.

Let me assure you Europe, fair access to bank credit for "the risky”, is indispensable if your economy is to survive, and just not stall and fall.

Is a 3 dollar per ticket tombola, to meet president Obama, really a comme il faut political fund-driving mechanism?

Sir I refer to the issue of fundraising raised by Edward Luce in “A farewell to trust: Obama´s Germany syndrome” July 14

Even though I am not a US citizen and have therefore no right to vote, I have recently gotten some emails where Michelle Obama addresses me very kindly with a “Per”, and then asks me to chip in 3 dollars for the cause, and that if I do, I will have a chance to meet Barack personally… all expenses covered.

It has a sort of delightful country fair tombola ring to it, but I also must confess it makes me a bit uneasy.

Is this really an adequate behavior for the president and the first lady of the most powerful country in the world, and upon which so much of my and my family future depends on?

First, I understand that Michelle Obama might have nothing to do with this, and also that I might be just a bit too old fashioned to understand the marketing of our times… but still, I can´t help having some serious reservations about it all.

Yes, America, the Land of the Free and the Home of the Brave, is suffering some serious mutations.

Sir, Edward Luce is absolutely right writing about “America’s compulsive urge to regulate” April 28. It would suffice with reading all those mindboggling, never less than two dozen, of safety instructions stapled around those American swimming pools from which you are extracted, every half hour, for a water quality check.

And when it comes to incongruities with “The Land of the Free and the Home of the Brave” it suffices to know that in America too… by means of risk-weighted capital requirements banks are allowed to earn much higher risk-adjusted returns on shareholders capital, when lending to the “absolutely safe” than when lending to the “risky”

When deconcentrating power beware of that you do not just concentrate it somewhere else.

Sir, no distribution on earth can do as much to combat inequality, as the fight against too much power concentration, whether that happens in the government or in the market. And so Yes! Edward Luce is completely correct when he writes that “The power of US cable barons must be challenged” April 14, good for him!

But, I would personally have left out the term “baron”, which because its association to “robber” shows a bit of unnecessary ill will; and before sort of favoring “municipal broadband” solutions I would like to be completely sure that a Great-National-Municipal-Broadband network is entirely ruled out, since when deconcentrating power you really want to avoid concentrating it somewhere else.

Democracy goes way beyond the 1% vs. the 99% debate.

Sir, I agree in much with what Edward Luce puts forward in his “America’s democracy is fit for the 1 percent” March 31 but, the issue of undue influence in a democracy, goes much further than the simplistic 1% vs. the 99% debate.

For instance I hold the view that corporate taxes should be zero, since only citizens should be able to wield the influence of paying government bureaucrats their salaries.

And also that 1% too often seems to imply that all those in the 1%, like in the 99%, are alike which we know they aren’t. For instance you would not want to tax the wealthy in order to further benefit the oligarchy, or do you?

If the visible banks are not rationally regulated, there is no choice for the real economy than to run for the shadows.

Sir, the risk weight function which determines the current capital requirements for banks are based on two monumental mistakes.

The first mistake is that for reasons of simplification the Basel Committee oversimplified and decided that the expected unexpected losses of those perceived as safe will be much less than the expected unexpected losses of those perceived as “risky”. And that means that the perceptions of risks will either reward or punish… twice.

The second mistake is that the risk weights are “portfolio invariant” and which means these do not take account of the added risks of asset concentration, or the dissipation of risks by means of diversification. And that means that the risk of the banking system might be increasing exponentially, even while being reported as safer.

And all this leads to banks then earning higher risk-adjusted returns on equity when lending to the “safe” than when lending to the “risky”.

And the direct result is that those perceived as “safe” will have a subsidized access to bank credit, paid by negating the same to those perceived as “risky”.

And that guarantees banks will not be able to assist in helping the economy to get out of a secular stagnation, as alerted by Lawrence Summers in “Washington must not settle for secular stagnation”, or to avoid that weak destabilizing growth to which Edward Luce refers to in “Anglo-Saxon trumpeting will strike a hollow note” January 6.

And, while these regulatory discrimination against medium and small businesses, entrepreneurs and start ups remain in force, then Italy, instead of becoming more like Germany in order to prosper, as Wolfgang Münchau proposes in “What eurocrisis watchers should look for in 2014”, would do well becoming even more Italy and run into the shadows of its economía, finanza e banca sommersa.

2025: #AI – ChatGPT – Grok: “A leverage ratio or Basel’s risk weighted bank capital requirements. expulses banking into the “shadows”?

Brother you who do not have a dime, or a job, can you spare me a dime or a job, so that we can grow together?

Sir, I am not taking a position for or against a minimum wage but, when Edward Luce writes that increasing “it would inject a much-needed stimulus into the anemic recovery without involving a dollar of taxpayer money”, something definitely does not sound right, “Avoiding poverty pay is the tonic America needs”, December 2.

If the company ends up paying for it, then we might have less employment and that of course nobody wants. And so, if the taxpayer is not paying for it…who is going to pay for it? Could it perhaps be mostly those who are not taxpayers because they earn too little? And so, if a stimulus, is it not in fact a quite regressive one?

And then Luce mentions that these minimum wage increases will affect “sectors where the bulk of new jobs are being created” and which in fact would point to the plan as being somewhat suicidal.

Honestly I do not think America needs a recovery stimulated by an increase in the minimum wage and Luce would do himself a favor looking at how economies where there is no minimum wage are doing.

Do I have an alternative plan? No, but I would of course start by eliminating immediately the odious regulatory discrimination which makes it so much more difficult for those perceived as “risky” to access bank credit in competitive terms. The growth in America and in Europe has, as in their past, to be based upon risk-taking and not risk-avoidance.

God, make us daring!

PS. Sincerely it is also a bit surrealistic reading that Luce feels that the unions “have reasons to hate” Walmart, the largest employer in the USA, and all this operating on a 3 percent margin, in the poorer sectors of the real economy. Don't we wish we had such banks!

The debt-ceiling is just as much the debt-roof from which the US will need to climb down from.

Sir, Sir Samuel Brittan should really be commended for reminding us of what is also at stake when stating “The recent fiscal policy deadlocks we have seen in Washington are a price worth paying for proper checks and balances”, “A moderate outlook with the chance of a new crisis” October 18.

In many languages there is just one word for the ceiling and the roof, in Spanish “techo”. And that is why it might be so difficult to translate the nuances of a debate about the goodies of increasing a debt-ceiling, which is able to leave so much aside of the badies of raising a debt-roof, that from which the US, someday, sooner or later, will need to come down from.

And Edward Luce, in “It is stupid to believe that the Tea Party has no brain”, October 21 asks: “Can there be anything more idiotic than flirting with a voluntary sovereign default?” As a Latin American I would have to answer “Yes!” to that. And that would be flirting with an involuntary sovereign default.

More capital-equity against what is least likely to pose a risk to the bank system is the pillar of Basel II and III

Sir, Edward Luce in “Betting on start-ups can revive a tired presidency” July 29 writes “the effective equity cushion at the largest US banks is between 4 and 6 per cent of their balance sheet. For the small Main Street banks that still make “character loans” – lending money to customers they know – that cushion is 9 per cent. In other words, US regulators are twice as strict with those banks that are least likely to pose a risk to the system.”

That is not a US problem only as in Europe it is even worse. The Basel Committee is in this respect much worse than the US Federal Reserve, FDIC and the Office of the Comptroller of the Currency. The pillar of Basel II and III bank regulations are capital requirements based on perceived risk, which precisely forces bank to hold more capital-equity for what is perceived as risky and is therefore not that risky.

This is the problem that I have written about the Financial Times more than a thousand letters but which you have ignored, presumably because someone did not like something I wrote and decided I should be ignored-censored.

Regulators did not trust the market and imposed their own judgments on the banks.

Sir, having Lunch with FT´s Edward Luce, April 6, Michael Sandel, when discussing his book “What Money Can’t Buy: The Moral Limits of Markets” says:“Right at the heart of the market is the idea that if two consenting adults have a deal, there is no need for others to figure out whether they valued that exchange properly. It’s the non-judgmental appeal of market reasoning that I think helped deepen its hold on public life and made it more than just an economic tool; it has elevated it into an unspoken public philosophy of everything”.

"Everything"? sorry, that is not true. Had it been, we would most certainly not be having the current crisis. You see the bank regulators, they did not trust the deals the consenting adult of bankers and borrowers did, and so they imposed their own judgments.

To make sure there was not too much risk-taking going on, they designed capital requirements which allow banks to make a much higher expected risk-adjusted return on equity when doing business with “The Infallible”, than when engaging with “The Risky”.

And of course, under such distorted conditions, banks are overdosing on sovereigns, AAA rated constructions and what else is officially considered safe-haven, and lending too little to “risky” small businesses and entrepreneurs the real forces of the real economy.

Edward Luce most splendidly comments: “There is a thin line between promoting virtue and practicing tyranny.” And I would say that line might be crossed by even trying to define what the virtues should be.

Sir, the arrogance of bank regulators believing they could substitute for the market is just unbelievable. And Sir, excuse me for saying it, but the foolishness of so many, including FT, to believe they can, is just astonishing.