Sweden’s Fix for Banks: Nationalize Them

[groovedaddy]

The Swedes have a simple message to the Americans: Bite the bullet and nationalize.

Officials in Washington are trying to figure out how to shore up American banks that once ruled the financial world but now seem to weaken by the day, despite receiving hundreds of billions of dollars in government aid.

With Sweden’s banks effectively bankrupt in the early 1990s, a center-right government pulled off a rapid recovery that led to taxpayers making money in the long run.

Former government officials in Sweden, many of whom come from the market-oriented end of the political spectrum, say the only way to solve the crisis in the United States is for the government to be prepared to temporarily take full ownership of the banks.

Sweden placed its banks with troubled assets into a so-called bad bank, where they could be held and then sold over time when market and economic conditions improved. In the meantime, it used taxpayer money to provide enough capital to allow banks to resume normal lending.

In the process, Sweden wiped out existing shareholders.

http://www.nytimes.com/2009/01/23/business/worldbusiness/23sweden.html?th&emc=th

[jwirr]

1. I'm for it but I can just hear the rw yelling "socialism".

[drm604]

2. I'm no expert

but on the surface this seems to make a lot of sense.

[Jkid]

3. Good idea!

Only problem is that the remaining banks will fight tooth and nail to prevent that from happening.

[Enthusiast]

4. Good, they will start to behave

responsibly. Look what they have done with the "bailout" money.