Friday, April 24, 2015

Some links on BIS-2

I like conspiracy theories. I would not go as far as Putin is a pawn of bankers (via Transmissions) but they indicate the possibilities. In any case, various groups, institutions and states seem be to working in a way that is not to the benefit of the common man. Here are some links for my own reference about Basel Committee and Basel Accords.
Wikipedia says BIS and Basel Committee are different though based in the same building. It seems BIS has a supervisory role
Basel 1,2,3:
Role Japan financial crash around 1990 from Basel 1 (1988): (eiht percent capital requirements)

Per Kurowski, a former executive director of the World Bank, has written extensively about the Basel Accords 2 and 3 (2004, 2009).
In the simplified language of Dumb Ideas:
"By allowing banks to hold only 1.6 percent in capital when investing in triple-A rated securities (e.g. tranches of subprime mortgages) or lending to sovereigns (i.e. like Greece, Italy and Spain), the regulations implied an authorized leverage of 62.5 to 1.
At the same time, regulations require the banks to hold 8 percent in capital when lending to job creating small businesses and entrepreneurs, i.e. an authorized leverage of 12.5 to 1.
What we see then are the large organizations being very well funded and sitting on more than a trillion dollars in unused working capital, while small businesses and entrepreneurs find it difficult and expensive to get financing.
Banks don’t exist to avoid risk, he argues. They exist to take intelligent risks on behalf of society. The current regulations push banks in the wrong direction. Should we really be surprised that we have major economic problems and a lack of jobs?"
See also his Casino model here "The result will be too much betting on what’s perceived as safe, and too little betting on what perceived as risky; something that of course makes the financial sector and the economy unsustainable.
Unfortunately, the IMF, the Basel Committee, the Financial Stability Board; and experts like Lawrence Summers, Ben Bernanke, Paul Krugman, and Martin Wolf, none of them wants to acknowledge the risk-adverse distortions in the allocation of bank credit to the real economy, that the current bank regulations produce."

May be more, after I absorb these a bit.

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