September 16, 2010

Lex woke up!

Sir the Lex Column "Basel Denominators" September 16 ends with: “Historically, true crisis are caused by assets perceived as low-risk that aren´t.”

That as you all must be aware of by now, has been one of the two main reasons for my criticism against the current regulatory paradigm that has been imposed by the Basel Committee on the banks… that of higher capital requirements on what is perceived as risky and lower for what is perceived as not risky, and that goes against everything that financial history teaches us.

Since realizing the above makes of course current bank regulations completely nonsensical it will be interesting to see how FT handles this issue from now on.

On my second reason for criticizing Basel you might want to go to the last post of Dominique Strauss-Kahn on the IMF blog.