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Some economists have mentioned Sweden's solution to its banking crisis in 1992. See Nouriel Roubini's "Lessons from Sweden's Financial Crisis of the Early 1990s". Would it work here?
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Re: Would Sweden's banking solution work in the U.S.?
Engdahl wrote about it
As respected economist, Nouriel Roubini pointed out, in almost every case of recent banking crises in which emergency action was needed to save the financial system, the most economical (to taxpayers) method was to have the Government, as in Sweden or Finland in the early 1990’s, nationalize the troubled banks, take over their management and assets, and inject public capital to recapitalize the banks to allow them to continue doing business, lending to normal clients. In the Swedish case, the Government held the assets, mostly real estate, for several years until the economy again improved at which point they could sell them onto the market and the banks could gradially buy the state ownership shares back into private hands. In the Swedish case the end cost to taxpayers was estimated to have been almost nil. The state never did as Paulson proposed, to buy the toxic waste of the banks, leaving them to get off free from their follies of securitization and speculation abuses.
Paulson’s plan, the one essentially rejected on September 29 by the House of Representatives, would have done nothing to recapitalize the troubled banks. That recapitalization could cost an added hundreds of billions on top of the $700 billion toxic waste disposal.
Serious conservative banker friends I know who went through the Scandinavian crisis of the 1990’s are scratching their head trying to imagine how crass the Paulson TARP scheme was. That crass and politically obvious bailout of Wall Street by the taxpayers, what some refer to as ‘Bankers’ Socialism—socialize the costs of failure onto the public, and privatize the profits to the bankers—is a major factor behind the defeat of the TARP compromise version.
http://www.globalresearch.ca/index.p...t=va&aid=10392 -
Re: Would Sweden's banking solution work in the U.S.?
D-Mack,
Thank you for the interesting link to Engdahl's article. On a related note, there is a blow-by-blow account of the repeal of Glass-Steagall at the PBS site.
http://www.pbs.org/wgbh/pages/frontl...ll/demise.htmlComment
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