1988 Basel Committee #BCBS eclipsed the Western World’s banking system
1988, Basel Committee’s risk weighted bank capital/equity requirements, eclipsed our economies, darkening these with risk aversion.
No one in the Western world, which for centuries had been empowered by its willingness to take risks, came out to see it.
1988, with bank capital/equity requirements that implied bureaucrats know better what to do with credit, for which repayment they’re not personally responsible for, than e.g., small businesses, our free-markets were eclipsed by sheer politics/communism. 😡
Many decades later, the regulators, having added thousands of complexities, and of course ten thousand of jobs for them and bank supervisors, they still obscure it all.
If “Wall Streeters and other analysts/lobbyists are piecing together the consequences of the 1.087 pages proposal that constitutes the finale of the global regulatory response to the 2008-09 financial crisis”, what tells us regulators have the faintest of what’s in there?
Finance and economics professors, journalists and alike, they don’t need protective glasses, since they don’t even want/dare to look at it.
Why do finance professors keep silence on that the risk weighted bank capital requirements distort the allocation of credit? 🤔
“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” Upton Sinclair Jr.
Why do Nobel Prize winners in Economics still keep silence on that the risk weighted bank capital requirements distort the allocation of credit? 🤔 They might be scared the Nobel Prize Committee will ask them to return the Prize and the money… since:
How can a heliocentric mind win a Prize in Economic Sciences in Memory of Alfred Nobel when he must be nominated by a geocentric central bank, Sveriges Riksbank.
But of course, some bankers love it (and others don’t)
The risk weighted bank capital requirements empowered dangerously creative capital-minimizing/ leverage-maximizing financial engineers; and sent the savvy loan officers home.
That has increased the risk for bank systems and has weakened the real economy.
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