Do I have a question to The Shrink & The Sage!

Sir, The Shrink, Julian Baggini writes “It’s hard to give our environment the right importance. Sometimes we assign it too much weight, sometimes too little.” "How important is our environment?" October 18.

He and The Sage, Antonia Macaro, also request questions to be sent to them on their email. Boy, do I have one for them!

Bankers obviously look at the credit risks of a client, or of an investment, before deciding what risk premiums (interest rates), how much exposure they want to have t that risk and what other contractual clauses they need in order to serve their own interests as good as possible. And that makes perfectly good sense. If they did not, they should not be in banking.

But then, sort of surprisingly, bank regulators also require that the capital a bank is required to hold against different assets, are also based on the same perceived credit risks.

So here is the question: Shrink, Sage, do you think ex ante perceived credit risks are getting due importance, or are they getting too much importance? If the second, this would obviously distort the allocation of bank credit to the real economy, even if the credit risks were perfectly perceived.

And if the second, and given that The Sage writes “Just as the quality of a grape is rooted in the earth in which the vine grows, so 'the ground of our opinions' is the human environment in which we are raised”, the question is… can these regulators rectify or is rectifying way beyond their reach?

I am anxiously waiting to see their answers… if they are allowed to answer.

@PerKurowski ©