Is the economic establishment really dumb or, much worse, playing dumb and conspiring? Draghinomics or Drachulanomics?

Sir when I read “Economists hail birth of ‘Draghinomics” September 7, and see the photo included, I know the establishment is circling the wagons, as all whose members therein referred to are, by defending Mario Draghi, only defending themselves.

The pillar of current bank regulations is, as you should know, the credit risk-weighted capital requirements, which allow bank to earn much higher credit risk adjusted returns on equity when lending to what is perceived, ex ante, as absolutely safe, than on what is perceived, ex ante, as risky. And that stops bank credit from flowing freely and fairly to all the medium and small business, entrepreneurs and start-ups. And anyone who does not understand that the economy cannot move forward without that type of credit has never walked on Main Street.

To therefore speak well of any sort of injection of liquidity in Europe, whether by governments or the ECB, before removing that huge unsurpassable boulder that hinders banks from allocating credit efficiently to the economy, is pure dangerous nonsense.

Yes, the establishment dutifully speaks about needed “structural reforms”, but it never includes a reference to the above, to what the economy most needs.

I do not know really know whether the Establishment is truly dumb and doesn’t get it, or is just making out to be dumb. For their sake I pray it is the first, because the second option would make them co-conspirators against the chances of our young ones being able to access the new generation of jobs, which only the financing with reasoned audacity, or intelligent risk-taking, can provide for.

With respect to the future being sucked out by regulatory risk aversion, and remembering that Mario Draghi was for years the chair of the Financial Stability Board, we might perhaps better talk about “Drachulanomics”.