July 17, 2009

Safer does not mean less risk

Sir Martin Wolf in “Adapting to mediocre prospects” July 17 writes that the UK “must start by making finance safer”. Has he not learned anything? It was exactly doing this that the regulators, with their minimum capital requirements based on risk and the appointment of official risk surveyors, the credit rating agencies, led the world massively into the safest assets, houses, the safest country, the USA and the safest instruments, the triple-A rated securities.

If you want to get out of this crisis, even settling for mediocre objectives, the financial world has to learn to embrace the right risks and learn to avoid the unsafe safeness