FT: Bullshit! Too many statist and government bureaucrats love the fatal nexus between banks and sovereigns.

Sir, you write: “untangling banks from their national sovereigns has been an EU policy goal ever since a fatal nexus of indebted states and shattered finance threatened the very existence of the single currency.” “ECB should not make a deal harder to reach” July 7.

Bullshit! The fatal nexus between sovereigns and banks was created in 1988 with the Basel Accord (Basel I) when it was decided that the risk-weight of OECD sovereigns was 0%, while the risk-weight for OECD private sectors was 100%. That fatal nexus, when modified in 2004 with Basel II, allowed banks for instance to lend to Greece until November 2009, against only 1.6 percent in capital.

What EU policy goal has stated the need and the will to shatter that fatal nexus? Sir, you must know that fatal nexus has not even been acknowledged… probably because there are too many government bureaucrats who just love and benefit from that statist pro-government nexus… and because newspapers like FT wished to keep mum on it.

@PerKurowski