Current bank regulators are closer to a Vladimir Putin type of regime, than to any possible Western world liberal idea.

Sir, I refer to Lionel Barber’s and Henry Foy’s interview with Vladimir Putin. ‘The liberal idea has become obsolete’ June 28.

Putin is quoted with that “the liberal idea” had “outlived its purpose”.

Sir, there are way too many interpretation of what is “the liberal idea” to know for cartain what is meant by it. That “liberal idea” flag is often waved for quite opposite positions, like more or less government intervention, to assure more or less personal freedoms… to guarantee more or less some human rights… and so on. I guess “liberal” is also something in the eye of the beholder. 

But to me my kind of “liberal idea” took a deep dive, in 1988, with the Basel Accord, one year before the fall of the Berlin wall. Because that accord, Basel I, introduced risk weighted bank capital requirements, which decreed a 0% risk weight to the debts of some friendly sovereigns, and 100% to citizens’ debts.

That de facto implied a belief that government bureaucrats know better what to do with credit they are not personally liable for, than for instance our entrepreneurs. That de facto has much more to do with a Vladimir Putin type of regime, than with any possible Western world liberal idea.

@PerKurowski

A “can-do spirit” is not based on dumb risk-avoidance but on a smart, even audacious, embracement of risk

Sir, Lionel Barber, from Washington writes “Wanted: a president to put can-do spirit back in the US” November 7. Absolutely, and that I believe is something the whole Europe also needs. 

Again, for the umpteenth time, few things can be so anathema to a “can-do spirit” than bank regulations which discriminates in favor of what the nation has got, the past, “The Infallible”, and against what the nation can get, the future, “The Risky” 

Currently banks are allowed to obtain much higher risk adjusted returns on equity when engaging with was is officially perceived as “not risky”, because that requires from them to hold much less capital than when lending to what is officially ex ante perceived as risky. That, basically instructs the banks, to stay away from what is risky, no matter what the risky, like small businesses and entrepreneurs can do. And if that is a spirit it can only be the “let’s enjoy what we did” 

America, Europe, a “can-do spirit” is not based on dumb risk-avoidance, but on a smart, even audacious, embracement of risk.

First step… Get rid of Fraulein Basel!

Zapatero is just another Rolly Polly Doll

Sir we read in you interview of Spanish leader José Luis Rodríguez Zapatero, “A legacy in limbo” April 12, that he is “ready to be judged on plans to take control of public finances”. Are they not amazing these Rolly Polly Dolls when they with so much bravura announce they are willing to be held accountable on how they get us out of the mess they helped to get us into? They do all sound and act like financial regulators.