If I try to summarize a program, the norwegian government:
And since the cost to the state was so relatively low, and the state is per definition the last security net for the financial sector, it seems to make sense to choose an option which is likely to lower the final cost to the tax player, even if it means wiping out private stock owners.
On top of the socioeconomic cost, when the focus is on bailing out the owners, the "moral hazard" element to investing in finances goes out of the window. You end up with a system where investors and bank executives in the biggest financial institutions know that they get bailed out if they mess things up again.
Meaning that it will pay for them to do this again, since they will keep their gains, gobble up the competition and get a government bailout for their trouble. A la Goldman Sachs.
I agree with Jerome on this one. Nationalise the lot. Strict salary and bonus caps would also be nice.
I was more thinking about the differences in how the managment was performed, like:
A separate entity to manage and recover non-performing loans -an asset management company or a "bad bank"-was not set up. This was different from the crisis resolution in many other countries (Sweden, Finland, the S&L crisis in the US, and several Asian countries) where government funded asset management companies were used.
This is harder to evaluate, and as you say there where differences in external factors between the countries. (Most notably Finland lost lots of its exports when the Soviet Union collapsed.) A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!
Separating the troubled assets from their originators seems to me to be another easy way of socialising losses and privatising profits.
As Securum took over the bad assets of the banks already taken over by the governement, I do not see how this applies?
Who benefited from selling its assets at the beginning of a long boom market?
Obviously, primarily those that had the resources to buy it up. But who knew that it was going to be a long boom market when they sold it off? A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!
By separating the bad assets and putting bankers in control of them, there was strong institutional pressure to sell the assets off as soon as the economy started turning around.
The fact that they couldn't know that the boom would be so long does not excuse them for selling state assets at the absolute beginning of it. And economy is not all alchemy. It is possible to draw up general trend lines.
