What we have is not by a long shot economic liberalism, it is much more statism, and of the crony kind.

Sir, Martin Wolf refers to Yascha Mounk of Harvard University arguing “that undemocratic liberalism, notably economic liberalism, largely explains the rise of illiberal democracy: ‘vast swaths of policy have been cordoned off from democratic contestation’, [carried out] by international agreements created by secretive negotiations carried out inside remote institutions.” “Saving liberal democracy from the extremes” September 25.

Hold it there! The Basel Committee for Banking Regulations, with Basel I of 1998 decided, without any real public consultation, that the risk weights for those risk weighted capital requirements it itself concocted, were to be 0% the sovereign and 100% the citizens. What has to do with “economic liberalism”? Nothing! To me it is pure unabridged statism… that is unless it is derived from pure unabridged stupidity.

Ignoring that allows Wolf to opine, “What is true is that poorly managed economic liberalism helped destabilise politics… and to argue, “Elites must promote a little less liberalism” 

Again, no! Mr. Wolf (for the umpteenth time), we are not living a time of “poorly managed liberalism”, we are living thru times of expertly camouflaged statism, that which is so beneficial to the redistribution profiteers and to those of the private sector who love to engage in crony statism.

Sir, all journalists, even those considered its elite, have a duty to denounce that; less they might be accused of covering it up. I mean should not journalists be the citizens’ frontline for any “democratic contestation”? 

How many times have I asked Martin Wolf to use his influence to ask the regulators: “Why do you want bank to hold more capital against what’s perceived as risky and is therefore less dangerous to our bank system, than what is perceived as safe and that, precisely because of that, becomes so much more dangerous to it? Hundreds? Has he dared to ask it? Not that I know Sir. Though perhaps he just did not like the answer or the non-answer 

@PerKurowski

The 1988 Basel Accord decided on these risk weights: sovereign 0% and citizens 100%... and so bye, bye liberalism!

Sir, Tony Barber writes that “Illiberalism takes root in Europe’s fertile centre” May 14.

Forget it! True liberalism has been long gone in Europe, and in most of the western world.

That is because liberalism is totally incompatible with regulations that hold that for the purposes of setting the capital requirements for banks, the sovereign has a zero percent risk weight while the citizen, he who gives the sovereign its strength, has a 100 percent risk weight… that is unless he is are rated below BB-, because then his risk weight is 150 percent.

And that dangerously dumb bit of regulation, with its so single minded nanny like credit-risk aversion; which have banks no longer financing the risky future but only refinancing the “safer” past, little by little saps the strength of the real economy… little by little creates a climate in which anything can happen.

Just for a starter it provided all the incentives for banks lending too much to Greece, but that is not even discussed, we can’t have ordinary citizens doubting technocrats… can we?

@PerKurowski ©

The financial crisis 2007-08 should have dealt a fatal blow to bank regulations, not to economic liberalism.

Sir, Sir Samuel Brittan in “It is no time to give up on economic liberalization” December 21, writes about “the traumatic event… the financial crisis… 2007-08 administered a fatal blow to economic liberalism”. 

That is only because the amazingly distortive role of bank regulations in generating this crisis has been completely ignored, or silenced. If not, the financial crisis of 2007-08 would not have even remotely signified a fatal blow to economic liberalism, but would indeed have dealt a fatal blow to the crazy regulatory paradigms used by some overly wimpy bank regulators. 

The Basel Committee, primarily with Basel II, imposed on the banks capital requirements based on perceived risks which were already cleared for by the banks and the markets, and completely distorted the financial system. 

As a consequence banks were allowed to earn a much higher expected risk-adjusted return lending to “The Infallible” than when lending to “The Risky”. And, as anyone should be able to understand, at least if allowed to understand it or no other agenda stands in their way, that has absolutely nothing to do with the free markets that economic liberalism promotes.