Let’s call on the Ghosts of Economies Past, Present and Yet To Come, to illuminate our central banks and regulators.

Sir, Tim Harford showing good Christmas spirit praises both the miser deflationist and the spending inflationist. “In praise of Ebenezer Scrooge”, December 18.

Harford writes: “In a deep recession, one might be concerned that Scrooge was failing to support aggregate demand but in normal economic times the effect of his skinflintery was to ensure that everyone else was able to enjoy a little more.”

Does Harford mean by that that the messaging by the three Ghosts of Christmas needs to be harmonized with central bankers? I ask because I am not really sure central bankers have enough of an intelligent Christmas spirit to be able to cooperate.

For instance, with respect to bank regulations, by agreeing with that banks should be able to leverage more when lending to the “safe” than when lending to the “risky”, central banks don’t mind that the risk adjusted net margins paid by the safe, are worth much more than those same margins paid by the risky. I am absolutely sure Ebenezer Scrooge would never discriminate like that, he would always lend to whoever paid him the highest exorbitant credit risk adjusted rate, no matter who paid it.

Perhaps we need to invoke the Ghosts of Economies Past, Present and Future in order to enlighten our bank regulators that good economies are never ever the result of credit risk aversion since they always come as a result of embracing risk. Hopefully the risks taken by banks are based on reasoned audacity. But, even if that’s not the case, and some banks fail, it is still much better when bankers dare jump and finance the risky future, and do not stay in bed, like now, just refinancing the safer past… developing constipation, bedsores, weak bones and muscles and other illnesses, like that which produces a chronic lack of job for our young (and old).

Finally Harford does well reminding central bankers who think the economy will respond to their ultra-low interest rates and QEs, that Scrooge, when finally embracing the Christmas spirit, “didn’t waste his money on demonstrative extravagances for people whose desires he didn’t really understand.

@PerKurowski ©

Regulators are telling banks to behave​ ​meaner​ ​than Scrooge, and the Eurozone, and FT, seemingly don’t care.

Sir, John Plender writes that “The spirit of Scrooge hangs over the Eurozone” “Forgive the debt or earn the wrath of its victims” December 30. Forget it! It is much worse than that! Regulators are making Scrooge even meaner.

Can’t you hear how your bank regulators are telling your current Scrooge, in this case your banks: “No, no, no, do not lend to the risky small businesses and entrepreneurs, if you do we will smack you with higher capital requirements, so that you make lower returns on equity. But, if you to as we say, and stay away from what’s risky, and lend to infallible sovereigns, to the AAAristocracy and to the housing sector, then we will reward you with lower capital requirements, so that you can earn much better risk-adjusted returns on equity... and this way, we will all live for ever happy, with stable banks… until… après nous le deluge”.

I can bet Scrooge never discriminated against his borrowers that way. He lent to who pay him the highest risk-adjusted return per quid… not per risk-weighted quid.