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Distorting bank regulations makes a mockery out of rational capital allocation.
Monday, August 20, 2012 9:10
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Sir, John Authers quotes Andrew Smithers in that contemporary bonus culture has introduced a short-termism that is threatening the economy misallocating capital on the back of distorted profit statements, “Distorted profits make mockery of call for UStax cuts” August 20.
Indeed that is serious, but how it really impacts a market that looks a lot to the growth potential of future earnings is hard to tell. That said, what is really misallocating capital in our economy are bank regulations which so much favor what is officially perceived as not-risky, prominently the “infallible” sovereigns and discriminates against what is officially perceived as “risky”, like the small businesses and entrepreneurs.
Unfortunately from its refusal to address it, FT seemingly does not care about this issue.
2012-08-20 09:00:16
Source: http://teawithft.blogspot.com/2012/08/distorting-bank-regulations-makes.html
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