July 19, 2013

We need self sustainable jobs not just “Brother, can you lend me a job?” jobs

Sir, that a bank is required to hold more capital against a loan to a small or medium business than against a loan to the state or to the AAAristocracy, and as a result earns much less expected risk adjusted returns on its equity when lending to “The Risky” than when lending to “The Infallible”, is utterly absurd in terms of bank credit helping out with the creation of jobs.

Though the US is not as bad as Europe discriminating the access to bank credit against those perceived as risky, that is something Jack Lew should concern himself more with instead of issuing self-congratulatory statement about the generation of jobs which, considering the fiscal deficit and the quantitative easing programs in the US, could only be labeled as borrowed jobs, “Put job creation at the heart of the global recovery” July 19.

By the way those bank regulations are also absurd from the perspective of the safety of our banks, since no major crises have ever resulted from excessive exposures to “The Risky”, these have always resulted from excessive exposures to what turned out to be not a real member of “The Infallible”.