September 10, 2015

Who is to investigate how bank regulators manipulated markets in favor of US Treasury and similar sovereign debts?

In 1988, with the Basel Accord, bank regulators of the G20 countries decided that while the private sector should have a 100 percent risk weighing, their sovereigns, those represented by their bosses, the governments, were so safe so as to validate a zero percent risk weight.

That meant of course that, from that moment on, sovereigns have preferential access to bank credit… something that is of course paid by all those who do not count such preferential treatment.

Since de facto that also means regulators acted as if government bureaucrats could use bank credit more efficiently than the private sector, something that unless we are runaway statists or communists we know is absolutely false, the resulting distortion is also paid by future generations of unemployed.

And so, when compared to that manipulation, all the “potential manipulation of the US Treasury markets” referred to by Gina Chon and Martin Arnold” in “Probe into US Treasury markets” of September 10, is, excuse me, something like what is vulgarly known as chicken shit.