If you kick a crisis can forward, without correcting for what caused the crisis (2008), then when you run out of kicks, the can will roll back on you, only so much worse.

Sir, you write “The view of the global economy can best be described as murky but unencouraging”, “More gloom gathers over the world economy” April 13.

Since I have never thought of murkiness as a great promoter of encouragement, I must say that “but” was a bit disconcerting to me, that is, unless I should read it as a source of blissful ignorance.

That said, you refer to what monetary and fiscal policymakers must do, but you leave out the bank regulators, those who most definitely helped cause the 2008 crisis.

Though with Basel III they have introduced a leverage ratio the fact remains that, on the margins, there where it most counts, the risk weighted capital requirements for banks are still distorting, perhaps more then ever, the allocation of bank credit to the real economy.

How can I explain it? Sir, if you fill a financial irrigation system with huge amounts of liquidity (QEs) and ultra low interest rates, and some of its most important canals are blocked with high risk weighted bank capital requirements, there can be no doubt that bad things will happen. 

In 2006 you published a letter I wrote that exposed “The long-term benefits of a hard landing”. Sir, you tell me, where would we be today if our decision makers had taken that route? 

@PerKurowski