Though there are free-kicks in football most time the ball is in a much confused play.

Sir, John Kay in “Don´t expect the markets to bend it like Beckham” December 29, correctly points out that in the market it is not really the expertise of the expert that counts but the interaction of the experts, and I would say the myriad of non-experts often believing themselves experts.

This is precisely what the Basel Committee completely ignored when they calibrated the capital requirements based on risk of defaults. They appointed as their experts the credit rating agencies but completely forgot that what really imported were not the ratings as such but the way banks would respond to such ratings and to the resulting capital requirements… in the midst of a confused game.

We have a poor illusion of a committee working on an illusion and us believing their illusions.

Sir, John Kay writes “The notion that a committee can finely calibrate the risk associated with a variety of asset classes, many instruments, and a wide range of institutions on a basis which is at once objective and economic meaningful, is an illusion.”, “Even Middle England should spare a thought for Modigliani-Miller.” December 15. Hear, hear! …that is the sole truth about the Basel Committee for Banking Supervision.

But when on top of that, the Basel Committee also decides that the only risk for which it will calibrate is the truly innocuous risk of default (probably just trying to save itself from the job it should be doing, that of making the defaults run as smooth as possible); and on top of that does it without considering the risk-premiums charged in the market precisely to clear such default risks, then what we end up with is a poor illusion of a committee working on an illusion… and unfortunately a world of politicians, academicians, financial experts, and financial journalists believing in their illusions. Isn´t that a sad state of affairs?