The risk-aversion in risk-weighted capital requirements for banks’ dooms our economies to a slow but certain decline

Janan Ganesh writes: “There is such a thing as bad stability. Gradual decline is its most insidious form… It is the toll paid in decades, not moments, that promises the worst”, “Britain faces a stable path of relative decline”, September 5.

Sir, what can I say? Except for… that does not apply exclusively to Britain.

I have sent you literally thousands of letters reminding you of that risk-taking is the oxygen of any development… and that we in the Western world progressed, among other, because we knew that in our churches we had to implore “God make us daring!”

As well as literally thousand of letters explaining how current risk weighted capital requirements stops banks from financing the riskier future, keeping these to only refinancing the safer present.

Just as an example, in Martin Wolf’s Economist Forum, on October 9, 2009, I published an article titled “Please free us from imprudent risk-aversion and give us some prudent risk-taking” It ended with:

“Dear baby-boomers, there is a world out there that needs a whole lot of risk-taking in order to stand a chance of a better future; a world which does not want to lay down and die in tranquility, just yet.”

Sir, when will you, without fear and without favor, dare to recognize this?

@PerKurowski

Is there something like a “not with the banks in my backyard” syndrome that blinds?

Sir, Tim Harford discusses “How to manage industrial decline” April 23.

In my mind the golden rule is that the sooner you find its substitutes, the less you have to go through the convulsions of managing it.

But how on earth do we explore new opportunities when bank regulators have decided to deny explorers like SMEs and entrepreneurs fair access to bank credit, just on account that these are risky?

It is truly hard for me to understand how who has written “Adapt… why success always starts with failure” is not up in arms against the risk weighted capital requirements for banks.

Could it be some “not with my banks in my backyard” syndrome? NWMBIMBY?

As for the “give them money… a topic for next week” I sure hope to see something about a Universal Basic Income scheme… I mean we have more than enough redistribution profiteers.

@PerKurowski ©