Amazing! Simon Kuper calls a zero risk weight of government and a 100 % for the private, a “right’s cult of free markets”

Sir, Simon Kuper writes: “the right’s cult of free markets was the last surviving big idea. Then the financial crisis of 2008 killed it off almost everywhere outside the US Republican party.” “Small ideas are better than big ones” October 24.

That is simply not true. If we are going to talk about the biggest current idea, and that has been applied on a global scale, I would say that is the credit-risk weighted capital requirements for banks, an idea concocted by the Basel Committee. And its origin, the Basel Accord in 1988, set the risk weights for loans to governments at zero percent while the risk weight for loans to the private sector were set at 100 percent.

That BIG IDEA, discriminating with regulations against the citizen and in favor of the state, has survived the financial crisis, and is still up and running strong in Basel III 

If anything, the Basel bank regulations should be called, the product of a “left’s cult of controlled markets”.

PS. Of course small ideas are always better than big dumb ideas. 

@PerKurowski ©

Is Iceland´s debtor´s prison different from Argentina´s?

Sir Jóhanna Sigurdadóttir’s “Iceland are angry but will make sacrifices” August 14, writes about the problem of trying to make good “hundreds of thousands of UK and Dutch savers” who lost their money when attracted by high interest rates they place their money in a private bank in Iceland. 

I can’t help to think about the hundreds of thousands of probably much less sophisticated small Italian savers that lost their savings in Argentina… and I wonder are there some standards for responsible behaviour? 

There is no debtor´s prison for individuals but is there a debtor´s prison for countries even when given home for jail? Would the world be better off with some global standards that apply to all countries? 

And what about all those who lost their money because they followed the advice of the credit rating agencies, those appointed as the official risk sentries by the financial regulator in Basel?