Wolf, the Basel Committee has been much more dangerously bold and dumb than either Modi or Trump, at least until now

Sir, Martin Wolf writes about Narendra Modi’s, the prime minister of India, demonetization of the Rs500 and Rs1,000 notes. Wolf says: “In its boldness…makes everything that US President Donald Trump has done so far look trivial” “India’s bold experiment with cash”, February 22.

Indeed, but why is not Martin Wolf capable of saying the same about those who with incredible hubris introduced the credit-allocation distorting risk weighted capital requirements for banks?

Sir, imagine, that was so statist that it assigned the sovereign a risk weight of 0% while hitting us “We the People” with 100%

Sir, imagine, that was so utterly dumb that it assigned the dangerous AAA rated a risk weight of 20% while hitting the so innocuous below BB- rated with 150%.

Of course that has caused what is perceived, decreed or concocted as very safe to dangerously receive too much bank credit.

Of course that has caused dangerously for the real economy, millions of “risky” SMEs and entrepreneurs being denied access to fairly small loans.

Sir, it is clear that the Basel Committee for Banking Supervision has been much more dangerously bold and dumb than either Modi or Trump, at least until now.

Or is it that Martin Wolf, for reasons unknown to me, does not agree with my assessment?

PS. I just returned from Sweden. There they have now recalled old coins and issued new ones that do not work for paying parking or using any other coin based equipment. And Venezuela is also suffering from even worse currency changing craziness. Is it a contagious virus? Who can we trace it to? 

@PerKurowski

If Britain had applied current bank regulations when it was developing, it might even have found itself below India

Sir, you write: “Even if one puts to one side doubts about India’s economic statistics, private investment remains weak. The government has rightly emphasized improved administration, faster decision-making and greater ease of doing business” and you quote Eswar Prasad of Cornell University ideas with “Markets for land and capital remain distorted. Several public sector banks are in dire shape. They need recapitalization and radical reform”, “Modi fails to exploit India’s great opportunity” April 4.

But again you fail to mention the fact that the Basel Committee’s credit risk weighted capital requirements for banks, which by favoring “the safe” disfavor “the risky”, is as anti-development and pro-inequality as can be.

Do you really think that allowing banks to earn higher expected risk adjusted returns on equity with “the safe” than with “the risky” is the way to go for a country that has not reached sufficient altitude climbing the mountain of development?

And it is not that these bank regulations keep you high up, they also impose a fast descent. With it Britain has expelled its spirited and adventurous risk taking and embraced the risk aversion of the scared.

Hello India, we, Britain, will soon catch up with you, while climbing down.

When the Bible says “But the meek will inherit the land and enjoy peace and prosperity” I am sure it was not to excessive risk-adverseness it was referring.

God make us daring!

@PerKurowski ©

COP21 Paris, do not let a divisive rich-poor political discourse take over the climate change debate, like in Copenhagen.

Sir, Narendra Modi is walking on a very fine and dangerous line between the “it is all humans’ obligation to encounter any global threat that could result from affecting the environment of our planet” and it is the responsibility of the rich. “Do not let the lifestyles of the rich world deny the dreams of the rest” November 30.

Of course, when it comes to assigning financial resources to mitigate or combat climate change, the rich countries have more to give. But I would always hold that the starting point of all these efforts must be that the poor and the rich, as humans, have an equal right to participate in fighting anything that threatens humanity… and that the right and duties of the poor are not lesser because they are poor.

Let not a divisive rich-poor political discourse take over the climate change debate, like in Copenhagen.

PS. Narendra Modi would benefit from understanding that bank regulators' credit risk aversion is much worse for the opportunities of India to develop than any coal aversion by self appointed climate change regulators.

PS. You want to see some real anti-climate change action? Throw out credit risk capital requirements for banks and adopt SDG weighted capital requirements for banks.

PS. And a renewed warning. If anything like a Basel Committee for Banking Supervision takes over the worldwide regulation on climate change… we are toast.

@PerKurowski ©