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Sir, Martin Wolf holds that “America owes a lot to Bernanke” June 5, and indeed I would agree with him, in the sense that one could owe gratitude to someone who unwittingly has lit a fire and hangs around to try to put it out.

The regulatory establishment to which Ben Bernanke, and sometimes also Martin Wolf holds he belongs to, instead of allowing the credits of the banking system to flow freely, imposed the use of an irrigation system with channels whose depths depended on the risk perceived. And of course, as should have been expected, what is perceived as absolutely safe and has much deeper and wide channels, is drowning in credit, and what is perceived as risky, irrigated with narrow and shallow channels, runs dry.

And the reason America is better off than Europe is that it implemented less of the Basel II’s more pronounce depth and width differences between channels.

Europe’s and America’s economies would have been so much better off if their central banks had used a free flying helicopter to drop money on the economy, or, even much better, if the banks had been freed from the distortions the capital requirements based on perceived risk create.

PS. Sir, just to let you know, I am not copying Martin Wolf with this, since he has asked me not to send him any more comments related to “capital requirements for banks based on perceived risk”… he already knows it all… at least so he thinks.