Wolfgang Münchau has not earned the right to now appear as the one demanding “banks to take on more risk”

Sir, Wolfgang Münchau writes “One useful measure that would bring immediate benefits would be purchases of non-performing loans in the banking sector…. The objective should be not to protect bank profits but to get banks to take on more risk” “Eurozone woes demand a much bolder response” March 7.

And he also writes that he favors helicopter droppings over QEs because that “policy would bypass governments and the financial sector. The financial markets would hate it. There is nothing in it for them. But who cares?”

Is he wrong? Of course not! But who is he to now demand that kind of bold action?

Over the years Münchau has kept mum on all letters I sent reminding him of the dangers of credit risk aversion caused by the risk weighted capital requirements for banks, like one in 2007. And equally mum on the letters were I informed him that, because of such risk weighing, the liquidity provided by QEs did not reach where it was most needed by the real economy, like one in 2012

Here is but one example of my many letters to Wolfgang Münchau and that by the way suggests the capitalization he now speaks of.

Sir, you can find many many more letters to Münchau here:

And even though ideas can be dressed up in different words Münchau should be careful. “Never plagiarize. Always attribute” is a simple, clear statement in the Society of Professional Journalists Code of Ethics that leaves no room for ambiguity.

@PerKurowski ©

Yes, bad domestic credit regulations did the eurozone in

Sir, Martin Sandbu writes “the crisis in many euro countries has more to do with bad domestic credit regulations than with the capital imbalances between them… The bright side of this is that the euro is not as flawed as all that”, “Europe needs new fables as Dutch and Portuguese go off-script” August 19.

And he is absolutely correct because that is precisely what has been my thesis for many years now as you know. More than a year ago, when Sandbu was blaming the “crazy capital flows” I sent you, and him, a letter titled “Don´t kill the eurozone dream just because bank regulators failed” and with which I also included a copy of my earlier “Who did the eurozone in?” At that time though, Sandbu only accepted that “lax capital requirements” were just “a bit of the culprit.

And as recently as in June this year, I repeated to Sandbu the same argument in a letter titled “Europe, I am sorry, as long as credit cannot flow freely, you will not get out of the hole.”

PS. By the way, are you not supposed to reference who have earlier made to you the arguments you are making? Or are you only morally obliged to do so, when it relates to some PhD or to some of your inner circle. I mean, Martin Sandbu, the author of "Just Business: Arguments in Business Ethics" would appear as someone knowledgeable about these sort of issues.