November 07, 2009

Send Sigrid Rausing to speak to the Basel Committee

Sir your Life & Arts section carries an interview of Sigrid Rausing by Isabel Berwick, “Discreet charm of the super-rich”, November 7. In it Rausing declares “Risk avoidance is the real risk” and thereby proves herself to be a more worthy financial regulator that all those whose misguided risk avoidance pushed the financial system to search excessively for the triple-As. Look where that got us! The Basel Committee wimps, even after proven so wrong, are still incapable of understanding that their role is to develop prudent and intelligent regulations that support the risk-takers instead of building up a false sense of security that lulls and numbs investors and savers alike.

When in the interview we also read Rausing discuss how equality and human rights issues have been allowed to confuse the relations between employer and employee, clearly for the detriment of all, and then says “There’s got to be another way” she also shows an openness and willingness to changes and challenges that our current financial regulators, buried under their own paradigms, would benefit from.

Would it not be an incredible learning experience for the regulators of the Basel Committee to have to sit down, for at least an hour, and listen to the opinions of people totally unrelated to the financial sector, like Sigrid Rausing? With luck, that could help to get them out of their current incestuous thinking mode.

It suffices to read the recent report on financial regulations submitted to the G20 by the Financial Stability Board to know they do need it, urgently. The reports is all about stability and higher capital requirements, and nothing about how to finance the risk taking entrepreneurs who are the only ones really capable of giving us the real and sustainable jobs the world needs. As usual they don’t care an iota of what happens with the rest of the world as long as their banks are stable... and then they dare to talk to us about moral hazard?

Note: Most recent background material
A YouTube on the taxing of risks in the Home of the Brave
An article in Martin Wolf’s Economist Forum
My “conspiracy” site