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Thursday: Japan or Sweden?

Planet Money discusses the Swedish model of bank nationalization in its latest podcast.  In 1994, Sweden went through its own financial meltdown.  In some ways, it sounds similar to what is happening here in the US.  The economy heated up and people borrowed and spent like there was no tomorrow.  That short term thinking turned out to be a big part of the problem.  Banks took a lot of risks and found themselves on the brink of insolvency.  In the end, Sweden nationalized its biggest bank.  It was very painful for taxpayers but in the end, the bank was restructured and everthing is hunky dory.

It sounds like Sweden got a grip on their problem and correctly diagnosed it more quickly than Japan did.  As you may recall, Japan tinkered around the edges, stimulated the economy but didn’t nationalize the banks.  The banks held onto their toxic assets hoping that they would be worth something someday.  It wasn’t until the crisis had dragged on for almost a decade before Japan got tough with the banks and the economy started to turn around.  But Japan has been in the news again recently.  Their economy is suffering once again because there has been a drop in exports.  That’s to be expected in a global economic crisis but I’m getting the impression that Japan is a little more vulnerable because of its lost decade.  There is something intrinsically not quite right.

Our present course seems to be dangerously close to the Japanese model than the Swedish model.  Tim Geithner has been painfully vague about how much control of the banks the public will have.  Maybe that’s to keep the stock market from tanking. It’s also true that Sweden didn’t try to nationalize so many banks.  Our problem is on  a much bigger scale.  But it is disturbing that the Obama administration came into office with so much confidence and so little advanced planning.

The second part of the podcast features Paul Krugman taking reader questions.   Finally, Paul is asked what his favorite blogs are.  Alas, The Confluence is not among them.  I know, I know, it was probably just an oversight but I was hurt nonetheless.  Paul, Paul, what do we have to do to get your attention?

{{sigh}}

39 Responses

  1. Planing? Who needs planing when a bestest speech can solve any problem? I mean the financial crisis didn’t even happen until what, last September? There was a campaign to run, who had time for THAT?
    And meanwhile NYT finally notices that Obama is Jr.jr. At least a little bit….
    http://edgeoforever.wordpress.com/2009/02/19/meet-the-new-boss-same-as-the-old-boss/

  2. Japan or Sweden?

    Wasabi or Lutefisk?

  3. Wasabi. No question.

    Or CHEEK-en in the BAS-ket. PUT the CHEEK-en in the BAS-ket. COME along LEETLE CHEEK-en, GET in the BAS-ket. Bork! Bork! Bork!

  4. OT – I was making an insomniac tour of the blogosphere and discovered a thread at a medium-large Koolaid blog (that shall remain nameless)discussing PUMA.

    Their consensus was that PUMA is just a handful of irrelevant bitter knitters and racist Republican ratf**kers. I found two things about it ironic:

    1. It was easily the longest thread on the front page of that blog.

    2. Their threads average fewer comments than ours.

  5. Bork! Bork! Bork!

    That sounds like a hare-lip dog

  6. I’m really not allowed to do anything pre-coffee so I’ll just wave for now (waving)

  7. If Krugman was aware of the Confluence he would be a fan.

  8. If Krugman was aware of the Confluence he would be a fan.

    It would be a mutual admiration society

  9. Someone ought to email Krugman a link to one of dakinikat’s posts.

  10. My dad used to love the Swedish Chef!

    And even though lutefisk is my cultural heritage, yeah, wasabi is better.

  11. His Nibs is on his way to Canada today! Those lucky, lucky people are going to get their chance to wave and cry as well.

  12. My ex in laws were from Sweden. What fantastic cooks! I could never pronounce the names of the dishes they served but the food was delicious. My ex mother in law knew her way around a recipe and never used a book.

  13. Bork is the name of a conservative judge who did not make it to the supreme court.

    When someone says Sweden, I think Abba, then Volvo, then really high tax rate. Over 50% of GDP, twice as high as the US. An educated, skilled workforce with a big emphasis on technology, a small population base (about size of NYC), voila, a relatively wealthy social welfare state. Some banks here in the US may become fully nationalized. But the US is very different from Sweden. It’s great learning from other countries, but since when do we just copy what they’re doing.

    RD, that “not completely right” feeling that you have about Japan may relate to it not expecting or even maybe needing to grow as fast as the US. Their population is shrinking. It has by far the oldest median workforce in Asia. Compared to most other developed economies, income is very evenly distributed, and culturally the people have a more socialist mindset than anywhere else in the region, including China. Japan is dealing with a lot of economic dislocations right now. They might come out the other side with a smaller overall economy, and not mind.

  14. oddly enough, Ford motor company own Volvo

  15. oh, I mentioned this on another thread but if you can find a repeat of Charlie Rose’s show last night it was great — Roubini, Mishkin, and Zandir were on discussing everything, it was a great conversation. There was also a very bright woman that writes for fortune although I don’t think she was an economist

  16. When someone says Sweden, I think Abba, then Volvo, then really high tax rate.

    I think Bikini Team

  17. Meatballs.

  18. I think buxom blonde, or is that Germany?

  19. I suppose Obama missed studying up on Japan and Sweden since it has nothing to do with Lincoln.

  20. myiq2xu, on February 19th, 2009 at 9:14 am Said:

    When someone says Sweden, I think Abba, then Volvo, then really high tax rate.

    I think Bikini Team

    I think VODKA, I’m a lush.

  21. I think haven for women that don’t want to shave their legs or underarms

  22. Ingrid Bergman.

  23. Not related to Ingmar Bergman, who made really depressing films.

  24. SM: Good morning! I was just thinking of you.

  25. Saab is also Swedish and has kind of a Mother Jonesy lefty image.

  26. The Bikini Team brings beer

  27. The BO & Co plan is bread and circuses ….without the bread.

    And are they just noticing Barry is W jr? One can see why the Upper Crust and thier press love him so much. He’s baby Bush My question is, are they going to buy him a phony ranch too , or is BO too much a rolling stone?

  28. We remember the bikini team but don’t remember the brand of beer. See that’s not effective advertising.

  29. We remember the bikini team but don’t remember the brand of beer.

    Old Milwaukee – the beer that made Wisconsin sick

  30. New thread up

  31. Speaking of the Swedes, someone recently sent me an amazing link. If you think that you (or your parents if you’re a young’un) had some bad hair styles and clothing fashions in the 1970s, trust me– no one holds a candle to Swedish Dance Bands of the 1970s!

  32. GOOD MORNING PAT!!!!!!!!!!!!!!!

  33. Wow Pat- ♥ Swedish ♥

    He must have been really good looking ♥♥♥♥♥♥

    (Italians have a thing about Swedes)

  34. I’ll just pipe in to defend my ancestry — my maternal grandmother was Swedish. We can trace our line back to the late 1600s.

    My love and I went there about 4 years ago. The country is beautiful, the people are absolutely some of the warmest, friendliest I have ever met. Yes the taxation is high but infrastructure was excellent, healthcare for all, high levels of education. Energy independence is a main focus.

    Sweden rocks!

  35. And you got to eat all that fantastic Swedish food at your MIL’s.

    Do your kids have those Swedish good looks?

  36. We’ve linked to Krugman plenty of times. I’m sure he knows of us and has probably stopped by to check the place out. Of course, he would never admit to visiting a PUMA site. He’s already been attacked by the Obots for even criticizing their messiah.

  37. I also believe that Krugman reads Anglachel. He seems to also know most of the same major bloggers she loves.

  38. i love swedish meatballs…

  39. Disenfranchised: anglachel doesn’t like us. She thinks we’re a bunch of racists because dakinikat had the nerve to criticize the way fannie MAE and freddie mac were run. Some ijit at corrente thought she meant that the maes shouldn’t have lent money to poor people when she really meant they should have had better self control. Not at all the same thing but such was the poisonous atmosphere last year.

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