Basel rules favor building “safe” basements for children to live with parents over financing “risky” job creation

Sir, Chris Watling writes “High house prices contribute to one of society’s great divides: that is between the haves and the have nots; between the older property-owning generation and younger renters unable to get on to the property ladder… Banks [when financing houses] now require substantially less capital than would have been required before Basel I and one-eighth of the capital required versus a corporate loan.” “Blame Basel capital rules for the UK’s house price bonanza” June 15.

Absolutely! The Basel Committee’s risk weighted capital requirements helps finance the “safe” basements where kids without jobs can live with their parents, but not the “risky” SMEs or entrepreneurs that could give the kids the jobs that could help them afford to buy a house… and less so at the current high credit inflated prices of houses.

How many letters have I written to you about the distortions in the allocation of bank credit to the real economy these regulations cause? Here are just some quite similar to this one. http://teawithft.blogspot.com/search/label/basements

Sir, you define yourself as “Without fear and without favour”… but the way you have silenced my arguments, only shows you running scared by some of your prima donnas with weak egos.

@PerKurowski

P.S. Washington Post. December 2018: “Affordable homes or houses as investment/retirement assets?”

FT is not covering itself in much glory either

Sir, in “Nursery politics and Libor fixing” July 7 you urge politicians to “ensure that credit flows to the real economy” and yet you refuse to advance my argument that the “real economy” cannot be advanced by capital requirements based on perceived risks, since these have nothing to do with it.

You cry out for politicians to engage in “serious debate” and not act “little more than a pair of bickering schoolchildren”, and yet you feel yourself authorized to silence one of the very few voices you know alerted about the crisis, even in FT, just because that could hurt some weak egos of some FT prima-donnas.