Influential columnists, like Martin Wolf, are much more responsible for current state of economies than Donald Trump

Sir, Martin Wolf sneers disgustedly, with besserwisser gusto, at what president elect Trump has been proposing in order to tackle current difficulties, and in many cases brand new economic circumstances. “Trump’s false promises to his supporters” November 15.

Many, not all, of Wolf’s warnings are indeed very correct, though I must say his own lately what-to-do instead main suggestion, is not much convincing either. 

For governments to take advantage of low interest rates, to invest in infrastructure, is based on the premise that the interest rates are not low because of artificialities, like regulatory subsidies and QEs; and that the government is capable to embark efficiently on a major infrastructure constructions. Both those premises seem quite doubtful.

For instance last week Olivier Blanchard, the previous Chief Economist at IMF, when referring to my argument that current capital requirements for banks are lowering the interest rates of public debt, answered that the possibility of that needed to be researched, and, if true, the first order of business must be to eliminate the distortions.

I would of course also ask Martin Wolf how much he himself would be willing to invest in long term public debt at current rates… or is that supposed to be done solely by pension funds, insurance companies or profit-squeezed banks desperate for any solution that would keep them out of jail if events turn really sour?

Sir, Mr. Wolf would do well remembering that as a very influential columnist he is, until now at least, much more responsible for whatever conditions the world economies find themselves in than president elect Donald Trump. Where was Wolf in 1988 when the Basel Accord decided that the risk-weight of the Sovereign was 0% and that of We the People 100%? Where was Wolf in 2004 when Basel II assigned amazing much importance to the criteria of some very few human fallible credit rating agencies? And those questions are just for starters?

PS. What would I do? I would grandfather all current capital requirements for banks’ current assets, and then eliminate all distortions that stand in the way of SMEs and entrepreneurs having equal to all access to bank credit, foremost those that favor the government but also including those that favor the financing of houses. And then I would sit down and do nothing for six months, except of course trying to reach approval for a Universal Basic Income scheme that could benefit working and not working citizens.

@PerKurowski

It was more comfy to ignore the warnings

Sir Samuel Brittan in Economists shuffle the deckchairs August 7, quotes a letter to Her Majesty written by Professors Tim Besley and Peter Hennessy stating “many people did foresee the crisis” but clarifying that “no one foresaw the form it would take and its timing, onset and ferocity”. This sure sounds to me as a lame excuse for inaction, like a mother having been warned of the dangers of leaving her child alone at the side of the road complaining that no one told her exactly when and where and by whom her child would be overrun.

Indeed plenty of persons warned about the dangers in quite clear term and I myself wrote in a letter published by FT in January 2003 saying that “Everyone knows that, sooner or later, the ratings issued by the credit agencies are just a new breed of systemic error to be propagated at modern speeds.”

If there is an explanation for why the warning were unheeded it is because of too much utterly misplaced solidarity among peers and the fact that we allowed our financial regulations to be captured by a small group of fanatics in Basel.

FT’s vision seems somewhat failing too

Sir in your special edition of “How gamblers broke the bank”, December 16, you make a reference to the Financial Times “groundbreaking reporting on the credit rating agencies”. For someone who has written about 200 letters to the Financial Times on the subject of the credit rating agencies and most of these complaining about how the FT was understating their responsibility and of those who empowered them a guides on risk leading us to this mother of all financial crisis, I would be interested in understanding better what “groundbreaking” signifies to you.

On the contrary may I ask where were FT and all the "world's most influential economists" when they were needed to alert that allowing the financial regulators to impose the credit rating agencies on the markets was pure madness since "Everyone knows that, sooner or later, the ratings issued by the credit agencies are just a new breed of systemic errors, about to be propagated at modern speeds"? The last quote is from a letter published in FT on May 11, 2003 and written by someone unfortunately considered by FT not sufficiently influential, namely me.

Between January 2003 and September 2006, out of 138 letters to the editor you published 15. But then you censored me, and of the next 635 letters you published none, and the only explanation provided was that I wrote too many letters. In this respect I submit that it is not only the economic forecasters’ vision that is failing but yours as well, as a consequence of you having decided ex-ante who you want to read.