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		<title>Let’s Get Back Time and Space - November 2011</title>
		<description>Discussione Let’s Get Back Time and Space - November 2011</description>
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			<title>The Regulators were the ultimate risk assessors</title>
			<link>http://www.thegroupoflecce.org/gol/index.php?option=com_content&amp;view=article&amp;id=73:lets-get-back-time-and-space&amp;catid=39:communiques&amp;Itemid=76#comment-3</link>
			<description><![CDATA[Friends, the following sentence of yours: "But then: who values risk, today, in the so-called efficient capital markets? And if banks – the ultimate risk assessors – are willing to take risks blindly and transfer them to others who are ready to do the same – as they did unrestrainedly in the US and Europe – who is really concerned with valuing risks?" Evidences that, unfortunately, you have not yet understood what lies behind this crisis… let me explain it briefly. The bank regulators allowed the banks to leverage over 60 times their equity when investing in assets perceived as “not-risky” as for instance triple A rated securities collateralized with mortgages to the subprime sector and loans to Greece, Portugal, Italy and Spain. But they allowed the banks only to leverage 12 to 1 when lending to small businesses and entrepreneurs. This mean that the banks could earn 60 times on their equity the risk-adjusted margins of what was perceived as “not-risky” while only earn 12 times the same interest risk-adjusted margins on their capital when lending to those perceived as risky. As a result we have now those monumental excessive bank exposures to what was ex-ante officially perceived as not-risky, and turned out to be very risky, and an equally monumental lack of bank credit for anyone officially perceived by the regulators as “risky”. Therefore the cause of this crisis was that the regulators arrogantly took upon themselves to be the ultimate risk-manager for the world. By the way since you are Italians you migh reflect on that currently, if one Italian bank gives a loan to an Italian entrepreneur, it needs about 8 percent in capital but, if it lends it to a sovereign, like Germany or France it needs zero capital. PS. Here´s a video that explains a fraction of the stupidity of our bank regulations, in an apolitical red and blue! http://bit.ly/mQIHoi]]></description>
			<dc:creator>Per Kurowski</dc:creator>
			<pubDate>Mon, 31 Oct 2011 20:29:20 +0000</pubDate>
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