Author Topic: how Sweden dealt with financial crisis  (Read 3101 times)

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Lanya

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kimba1

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Re: how Sweden dealt with financial crisis
« Reply #1 on: September 28, 2008, 12:34:18 AM »
dammit
I guess again I`m going to ask a stupid question
how is this a bad idea(the article)
I think it has some merit to it.
but i also think we never of should of gotten to this point  also.
let the insult begin,but please answer the question

Plane

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Re: how Sweden dealt with financial crisis
« Reply #2 on: September 28, 2008, 12:35:07 AM »
Quote
"Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks. Banks had to write down losses and issue warrants to the government.

That strategy held banks responsible and turned the government into an owner. When distressed assets were sold, the profits flowed to taxpayers, and the government was able to recoup more money later by selling its shares in the companies as well. "


I like it.

But I think these ideas are on the table , didn't AIG give up some ownership to the government?

Amianthus

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Re: how Sweden dealt with financial crisis
« Reply #3 on: September 28, 2008, 12:39:23 AM »
But I think these ideas are on the table , didn't AIG give up some ownership to the government?

The deal was 79.something% (nearly 80%) control of the company was ceded to the US government, in exchange for the loan. The government gives this control back as the loan is repaid.
Do not anticipate trouble, or worry about what may never happen. Keep in the sunlight. (Benjamin Franklin)

Lanya

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Re: how Sweden dealt with financial crisis
« Reply #4 on: September 28, 2008, 02:10:35 AM »
dammit
I guess again I`m going to ask a stupid question
how is this a bad idea(the article)
I think it has some merit to it.
but i also think we never of should of gotten to this point  also.
let the insult begin,but please answer the question


kimba,
you are asking the wrong person. I truly have so little knowledge of this area I won't even begin to guess.  It is something I've read some economists writing about, and they seem to have foretold a lot of this crisis, so I guess they know something.   
Brad De Long, an economist who writes a blog, is quoted in this:
Is Nationalization The Answer?
09.27.08 -- 9:15PM
By Josh Marshall

Brad DeLong says it's a better option than the Paulson model bailout. (And it did seem to work out pretty well for the Swedes when they got into a somewhat similar situation.)

I'm curious what Krugman thinks.

Late Update: This Krugman post from this morning suggests to me that he may think something like the Swedish model makes more sense but that the politics won't work and that given the severity of the crisis the not-as-terrible Dodd-Frank proposal is likely the way to go.
go here for the links.
http://talkingpointsmemo.com/archives/220360.php
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kimba1

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Re: how Sweden dealt with financial crisis
« Reply #5 on: September 28, 2008, 11:46:52 PM »
that`s ok
the reason I expected some insults is usually when any idea from outside the united states is presented I tend to see slamming on the issue and i got too anxious to see a response to your post.
sadly nobody had any real problem.
kinda happy people don`t have a problem with this article,but I wanted a little tussle also