So now Mario Draghi and Mark Carney want the huge tax on savings to be kept for a longer period

Sir, Michael Steen and Chris Giles, referring to declarations by Mario Draghi and Mark Carney, report that “Central Banks send clear signal on low interest rates” July 5.

So now these two gentlemen have publicly announced they think on behalf of the European Central Bank and the Bank of England respectively that the huge de-facto tax which low interest rates impose on savings signify, should be extended.

If only this tax could help, but, having with capital requirements based on perceived risk corked up the channels for bank credit to “The Risky”, like to small and medium businesses and entrepreneurs, it will not serve any useful purpose.

And did not Mario Draghi recently say “it is important to acknowledge that there are limits to what monetary policy can achieve”?

And now all us who worry that, as a consequence, the officially perceived safe-havens, “The Infallible”, will as a result become dangerously overpopulated, must take refuge in assets of almost any kind.

If the cost of a shirt goes up that is inflation and that is bad, while, if the price of assets, like a house or the P/E ratio of a stock, goes up, that is not inflation and that is held to be good. Sounds strange, eh?

Safe-haven Germany is doomed to become dangerously overpopulated with debt, sooner or later.

Sir, “Debt turbulence hits Germany” writes Michael Steen, January 16. 

Forget it, real debt turbulence is still ahead of Germany. With bank regulations that so outlandishly favor what is perceived as absolutely not risky, the safe-haven Germany will become dangerously overpopulated with debt, sooner or later, one way or another. Just like the AAA rated securities collateralized with mortgages to the subprime sector in the US, or just like Greece.

Mario Draghi is functionally incapable of understanding the “best fundamentals” for Europe.

Sir, Michael Steen reports “Draghi claims eurozone has ‘best fundamentals’” December 18.

Forget it! A former president of the Financial Stability Board, not of the Financial Usefulness Board mind you, and who most certainly thinks of discriminating in favor of “The Infallible” and against “The Risky” as a virtue is simply incapable of understanding the real “best fundamentals” of Europe?

With their capital requirements based on perceived risk and that effectively taxes all those without a top credit rating, and subsidizes those who got one, Draghi belongs to a baby-boomer generation of regulators characterized by wanting to keep it safe, in their life time, in the best “Après nous le déluge” style.

If Europe and the eurozone want to recover the possibilities of a bright future, instead of just trying desperately to slow its decay, then it needs bank regulators who can understand why we go to church and pray “God make us daring!”

Draghi is just desperately kicking the can down the road

Sir, Michael Steen ends his report “Draghi expands role in fight to save euro” November 1, quoting Jörg Krämer, Commerzbank’s chief economist saying “If there is a breakthrough, the history books will write about Draghi as the hero who gave the reforms time to work”. I truly cannot understand what fundamental reforms he refers to. 

What caused this crisis was that banks, by means of very low capital requirements, were given too large incentives to acquire huge exposures to “The Infallible”, like to Greece, triple-A rated and real estate, and therefore too large disincentives to lend to “The Risky”, like the small businesses and entrepreneurs. And¸ given that bank capital is becoming scarcer day by day, the distortions those capital requirements produce are only increasing. 

To save the euro, Europe and America alike, it is not enough to save the banks you must save the economy, and that is not done by discriminating against "The Risky". This Mr. Draghi seems not to have understood at all and so to me he is not saving anything, he is just desperately kicking the can down the road.

We need solutions not solely based on finance ministers and central-bankers

Sir, Michael Steen reports “All eyes and ears on Draghi over bond proposal” September 5.

Sincerely why should the solution to the current crisis come down exclusively from ministers of finance and central bankers? Especially when it was the bank regulators they appointed who messed it all up? 

Sincerely any solution, without major economic structural changes occurring, among other in bank regulations, will only be kicking the can further up the slippery slope.

We need to think urgently about how for instance manage to channel the private Greek savings, which luckily have not also been lost, into solutions more helpful than the buying of location-location-locations in London. 

On a recent Labor-With-No-Jobs-Day, I speculated about an idea that could be good for Europe, and for America to explore and here below is the link:

http://teawithft.blogspot.com/2012/09/theres-economic-war-raging-out-there.html