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European Tribune - LQD: Learning from the Swedish banking crisis
The Japanese credit crisis is usually cited as the benchmark for what not to do. But few cite Sweden's crisis as a template on what might actually work. ... the Swedish authorities realized early on that a banking crisis cannot be resolved until the problem is properly defined. That means assessing who the "bad" and "good" houses of issues are and be willing to allow the "bad houses" to fail (as an aside, "good houses" do not necessarily imply "big" houses).

Why should the Americans look to Sweden for an example?

Wikipedia: Emergency Banking Act

The Emergency Banking Act (also known as the Emergency Banking Relief Act) was an act of the United States Congress spearheaded by President Franklin D. Roosevelt during the Great Depression. It was passed on March 9, 1933. The act allowed a plan that would close down insolvent banks and reorganize and reopen those banks strong enough to survive.

On March 5, 1933, the day after Roosevelt's inauguration, he called a special session of Congress which instituted a mandatory four-day bank holiday. This act provided for the reopening of banks after federal inspectors had declared them to be financially secure.


Within 300 days of the act's passage, 5,000 banks had passed inspection and were reopened. Roughly two-thirds of U.S. banks quickly reopened under this act, and faith in banking institutions was somewhat restored.

Most banks were, in fact, allowed to reopen after the 4-day bank holiday.

The problem is Americans are not allowed to look at their own history and realize that the New Deal and Keynesianism work. And even if they were allowed they probably would wrinkle their nose and balk at the "Socialism".

It'd be nice if the battle were only against the right wingers, not half of the left on top of that — François in Paris

by Migeru (migeru at eurotrib dot com) on Tue Mar 18th, 2008 at 07:29:17 AM EST
Well, I hear you, but you may get an objection that financial systems have changed so much since then it may not be very good evidence.
Whereas Sweden, well, that was long after then end of Bretton Woods...

Anyway, your general point is true, you're not allowed to stand for what actually works in the US, or if you do you are no longer one of the "serious people".

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Tue Mar 18th, 2008 at 08:54:38 AM EST
[ Parent ]
Times Online: Which bank is going to follow the Bear?
However, Chris Whalen, of the Wall Street consultancy Institutional Risk Analytics, said ...

... that should the US Federal Reserve, the US Treasury and the Securities and Exchange Commission not devise a broad rescue plan to address the credit turmoil on Wall Street this weekend, "I would not be surprised to see an emergency bank holiday announced. That hasn't happened since Roosevelt." During the Depression, 75 years ago almost to the day, Franklin Roosevelt declared a four-day bank holiday, which stemmed a frantic run on banks. Mr Whalen added that should banks such as Lehman continue to be unable to sell the billions of dollars of mortgage-backed securities held, they were doomed. He said: "Broker dealers have to be able to get rid of assets. If they are illiquid, they die."

It'd be nice if the battle were only against the right wingers, not half of the left on top of that — François in Paris
by Migeru (migeru at eurotrib dot com) on Tue Mar 18th, 2008 at 11:16:42 AM EST
[ Parent ]
History is for you pansies on the other side of the ocean.  The new season of American Idol is just getting ramped up, after all, and we all want to know more about this hooker Spitzer was forking five grand per hour over to.  Priorities.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Tue Mar 18th, 2008 at 09:31:52 AM EST
[ Parent ]


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