FT, when favoring bold action, why not begin by asking Mario Draghi and other bank regulators to resign?
Sir I refer to Claire Jones’ “Draghi reputation on line over recovery pledge” and your own “ECB’s greatest risk is the danger of doing nothing” March 8.
What can I say? Mario Draghi belongs to that bunch of bank regulators who believe that something rated below BB-, that which ranges from “highly speculative”, through “extremely speculative” and up to “default imminent”, is much more dangerous to banks than what is perceived as safe. Does that not say it all? As a regulator who with the risk weighted capital requirements for banks evidences that belief, he simply does not know what he is doing.
Now “ECB views its shift below zero interest rates as a complement to its quantitative easing program. Both policies, it says, force banks and investors to buy riskier assets to compensate for the costs of negative rates.” So Draghi now wants to “Force banks and investors to buy riskier assets”, while leaving intact the regulatory incentives against that? It is just so dumb!
You cite Draghi with “they warn us about the side-effects and risks of what we’re doing. But what I never hear them discuss is the risks of doing nothing.”, and you opine that “Not only are the risks of inaction greater than the risks of action, but that balance has also continued to tilt in favour of doing more.”
I fully agree, so why not begin with a general change of all bank regulators that had anything to do with that fatal systemic error in Basel I, II and III that no one discusses. They did the Eurozone in!
@PerKurowski ©
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