The Basel Committee, with its bank regulations, represents a dangerous cult gone mainstream.

Sir, Douglas Coupland writes: “When it comes to the sharing of an ethos, history shows us that the more irrational a shared belief is, the better. The underpinning maths of cultism is that when two people with self-perceived marginalised views meet, they mutually reinforce these beliefs, ratcheting up the craziness until you have a pair of full-blown nutcases” “WE ARE DATA-The future of machine intelligence” July 18.

That, for us the truly rational, describes indeed the real great danger of the Internet; but also of course, for some lonely brain nuts, its real advantages. Before it could take you a lifetime to find a likeminded nut… now you are almost guaranteed to find plenty of them, in seconds, with only a couple of few searches. And, if not, you can always support yourself by using aliases.

But that said, if we include in cultism the following definition: “A usually nonscientific method or regimen claimed by its originator to have exclusive or exceptional power in curing a particular disease.”, then we should never forget that cultism can extend much further than to people with “self-perceived marginalised views”

Take for instance the Basel Committee: Its members designed a totally nonscientific method they thought could contain bank crisis, and managed to impose it worldwide. In other words they made a cult go mainstream… and clearly that has to be more dangerous than any cult exercised on the web.

“Unscientific”? Of course! They based their capital requirements for banks not on empirical evidence about what has caused all major bank crises in history, which is always excessive exposures to something erroneously perceived as safe; but on the perceived credit risks of banks assets, as if the banker was totally oblivious of these perceptions.

“Unscientific”? Of course! To figure out an estimate for the unexpected losses for which they should require banks to hold at least some capital, they used as a proxy the expected losses… entirely ignoring that the potential of unexpected losses for banks that an asset can cause, is always higher the safer that asset is perceived.

@PerKurowski