Europe, Western world, there’s no future in having banks investing in what widows and orphans should invest.

Sir, James Macintosh, in Short View of February 5, writes of Eurozone bonds the following: “Buy with a negative yield and sell to the ECB at an even more negative yield when quantitative easing starts next month… The result is likely to be lower yields everywhere, and the mispricing of risk.”

Mispricing of risk? Of course, but what about that monstrous mispricing of risk provoked by bank regulators with their senseless and purposeless portfolio invariant credit risk weighted equity requirements for banks, presented to the general public as the risk-weighted capital requirements?

The mispricing that resulted from allowing banks to earn higher risk adjusted returns on equity on “safe” than on “risky” assets not caused the crisis but also blocks the road for getting out of it.

A dangerous extreme risk aversion has now banks investing in what should be the investments of widows and orphans. Sir, as you should be able to understand, unless you are likewise risk-adverse, that is no way to build future.