The recently proposed financial regulatory reform speaks about more stringent capital requirements but conserves the principle of “risk-based regulatory capital requirements” and so the New Foundation builds upon the most fundamental flaw of the current system.
Regulators have no business discriminating among risks since by doing so they alter the risks and make it more difficult for the normal risk allocation mechanism in the markets to function.
High risks could be negligible risks when managed by the appropriate agents while perceived low risks could be the most dangerous ones if the fall in the wrong hands.
Regulators have no business discriminating among risks since by doing so they alter the risks and make it more difficult for the normal risk allocation mechanism in the markets to function.
High risks could be negligible risks when managed by the appropriate agents while perceived low risks could be the most dangerous ones if the fall in the wrong hands.
And so it looks like Carlos Molotov Pavlov is still in control!
