January 27, 2019

The Blue Monday fiction is nothing when compared to Basel Committee’s risk weighted capital requirements fiction.

Sir, Tim Harford writes, “Given that it is pure fiction, the “Blue Monday” meme is showing surprising longevity”, and he asks “Why do such ideas endure? What do they tell us about our attitude to science, evidence or the truth itself?” “The pseudoscience of Blue Monday hits trust” January 26.

But really, what’s the significance of some falling for an innocous Blue Monday fiction, when compared to that fiction that what's perceived as risky is more dangerous to our bank systems than what's perceived as safe? 

The first one might cause some to travel on not a really adequate date for them, the latter, when translated into risk weighted bank capital requirements for banks, distorts the allocation of credit to the real economy; only guaranteeing especially large crises, because of especially large bank exposures to something perceived as especially safe that turns out to be especially risky, held against especially little bank capital.

Harford refers to Onora O’Neill in that “we should be aiming for a better ability to trust what is trustworthy and to mistrust what is not”. In the case of journalists he says that “the non-experts among us could do more to keep ourselves well-informed.”

Since the information on bank regulations is out there readily available for anyone who cares to look at it, that should suffice to answer his question on whether “we should be more trusting, or more sceptical?”

Sir, Skepticism 101 courses are much needed. May I humbly suggest you and Harford could benefit from taking one of these?