Monday, October 25, 2010

God make us daring!

A Swedish psalm 288 Text: F Kaan 1968 B G Hallqvist 1970

Gud, från ditt hus, vår tillflykt, du oss kallar
ut i en värld där stora risker väntar.
Ett med din värld, så vill du vi skall leva.
Gud, gör oss djärva!

“God, from your house, our refuge, you call us
out to a world where many risks await us.
As one with your world, you want us to live.

God make us daring!”

The parable of the talents

Pope John Paul II also reminded us that Jesus Christ invited the Apostle to "put out into the deep" for a catch: "Duc in altum". That is something regulators should remember when, with risk weighted capital requirements, wanting our banks to fish only from “safe” shores

A ship in harbor is safe, but that is not what ships are for.” John A Shedd.

And all for nothing! At the end of the day the current risk-weighted capital requirements for banks guarantees especially large bank crises, caused by especially large exposures to something ex ante perceived, decreed or concocted as especially safe, and which ex post turns into being especially risky, while being held against especially little capital.