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S U B S C R I B E
Tuesday, 21 September, 2010
Nobel winner on world economy: 'terrible'
Joseph Stiglitz, holder of the Nobel Prize for Economics and former chief economist at the World Bank, says without strict financial regulation we risk another global economic meltdown. He is critical of recent measures such as the Basel III accords, saying they are too weak. Stiglitz has been speaking in Zürich, where WRS’s Tony Ganzer caught up with him:
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Comments
Total comments: 2 | Add to the discussion.
People r againstt raising taxes. But with US Giv deficit, shudnt Rich with higher savings and savings be taxed more now so that Govt cud finance Productive “work yielding,Expansionary, Productivity enhancing” Infra?
Basel III is not weak… it is irrelevant. And they are just “Razzle Dazzle ’em, Razzle Bazzle III ’em” us, with the assistance of experts who have never even read the regulations… such like Stiglitz.
What really detonated this crisis? The fact that because of the risk-weights the banks needed only to hold 20% of the basic capital requirements when investing in triple-A rated securities backed by the lousily awarded mortgages to the subprime sector. Would it have happened if the risk-weight for those investments had been 100%? Of course not!
And so the fact that the risk-weights are now not even mentioned in Basel III points to its absolute irrelevance… except for that the higher, the better, the stronger the basic capital requirements for banks are, the bigger is the regressive discrimination produced by its arbitrary risk-weights.
Per Kurowski A former Executive Director at the World Bank (2002-2004)
ps. Let me slip in a brief lesson on how bank regulators have become so fixated on seeing the gorilla in the room that they completely lost track of the ball. http://bit.ly/c66DLp http://subprimeregulations.blogspot.com/
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