Quote of the day
We are in fact slowly turning Japanese, awaiting the next recession (and the next and the next).
That’s Barry Ritholz discussing how the bank bailouts (led by Paulson, Geithner et al) have likely doomed the US economy to sub-par growth for many many years. His post presents what is increasingly seen as the avenue that should have been taken instead – as they did in Sweden, the government should have taken over the major failing banks, leaving shareholders and bondholders (and not taxpayers) holding the bag.
Barry seems to forget however that, at the time, this approach was rejected out of hand by the political class and the public as well. “Don’t nationalize the banks” was the rallying cry. But the approach the Swedish government took was just that. And today their economy is well past the crisis and a healthy privatized banking system has re-emerged.Tags: Banks