March 04, 2016

The biggest operational risk the real economy currently faces, are bank regulators who do not understand they distort

Sir, Lorenzo Bini Smaghi discusses the difficulties of quantitative easing to be of any use in the context of “the excess of savings over investments, at the global level but again particularly in Europe.” “If easing is not Europe’s answer, an alternative is elusive” March 4.

Once again, for the umpteenth time, I remind you that much investment is not taking place only as a consequence of the distortion in the allocation of bank credit to the real economy produced by the risk weighted capital requirements for banks. These hinder the access of SMEs and entreprenuers to bank credit, only because regulators perceive these as “risky”… as if bankers had no idea about that risk.

I repeat: Those perceived as “risky” are by that fact alone, ex post, made safer. Those perceived as “safe” are by that fact alone, ex post, made riskier. .

“The only thing necessary for the triumph of evil is for good men to do nothing” Edmund Burke

“The only thing necessary for bad regulations to reign, is for specialized media to keep mum about it” Per Kurowski

@PerKurowski ©