Saturday, March 21, 2009


My hero -- no, really:

It's nice to know that somebody in Washington is listening to him:

Bo Lundgren, the steely-eyed head of Sweden's National Debt office, ... yesterday [Thursday] outlined the Swedish solution to the Congressional Oversight Panel, which supervises the US administration's troubled asset relief programme.

"I am a market liberal. I was even called the nearest Sweden had every come to having a party one could call libertarian," said Mr Lundgren, the former head of the Moderate Party with links to the Conservatives.

This did not stop him nationalising two failing major banks in 1992: the already majority state-owned Nordbanken, and the privately owned Gota bank.

"In the case of a crisis, the state needs to be strong," he said. "If it decides to act, it should become an owner." ...

Alas, Team Obama isn't listening. Paul Krugman:

... the plan proposes to create funds in which private investors put in a small amount of their own money, and in return get large, non-recourse loans from the taxpayer, with which to buy bad -- I mean misunderstood -- assets....

But it's immediately obvious, if you think about it, that these funds will have skewed incentives. In effect, Treasury will be creating -- deliberately! -- the functional equivalent of Texas S&Ls in the 1980s: financial operations with very little capital but lots of government-guaranteed liabilities. For the private investors, this is an open invitation to play heads I win, tails the taxpayers lose. So sure, these investors will be ready to pay high prices for toxic waste. After all, the stuff might be worth something; and if it isn't, that's someone else's problem....

Right-wing politicians and non-governmental agitators are ginning up all sorts of little mini-insurgencies these days. Blue Dog Democrats are getting mainstream-media brownie points for threatening to slow up or stop the progressive parts of Obama's agenda. Sure wish we lefties could gin up a mini-insurgency of our own, against the continued cosseting of the financial sector.

I say: Nationalize 'em all. Let Krugman (or Lundgren) sort 'em out.

Can we at least make this nationalizer guy a bit of a household name? Maybe he could get some face time being interviewed by a nationally recognized journalist -- like, say, Jon Stewart?

(Lundgren article via Wonkette)

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