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Europeans on left and right ridicule U.S. money meltdown

They list greed and Greenspan among the culprits, and there are comparisons to . . . Albania. But amid the gloating, there is fear for financial systems in Britain, Spain, Italy and elsewhere.
By Sebastian Rotella and Janet Stobart, Los Angeles Times Staff Writers
1:59 PM PDT, September 19, 2008
LONDON -- It's a rare day when finance officials, leftist intellectuals and ordinary salespeople can agree on something. But the economic meltdown that wrought its wrath from Rome to Madrid to Berlin this week brought Europeans together in a harsh chorus of condemnation of the excess and disarray on Wall Street.

The economy minister of Italy's conservative and pro-U.S. government warned of nothing less than a systemic breakdown. Giulio Tremonti excoriated the "voracious selfishness" of speculators and "stupid sluggishness" of regulators. And he singled out Alan Greenspan, the former chairman of the U.S. Federal Reserve, with startling scorn.

"Greenspan was considered a master," Tremonti declared. "Now we must ask ourselves whether he is not, after [Osama] bin Laden, the man who hurt America the most. . . . It is clear that what is happening is a disease. It is not the failure of a bank, but the failure of a system. Until a few days ago, very few were willing to realize the intensity and the dramatic nature of the crisis."

In an interview Thursday in the Italian newspaper Corriere della Sera, Tremonti drew a comparison to corruption-ridden Albania in 1997, when a nationwide pyramid scheme cost hundreds of thousands of people their savings and ignited anarchic civil conflict.

"The system is collapsing, exactly like the Albanian pyramids collapsed," Tremonti said. "The idea is gaining ground that the way out of the crisis is mainly with large public investments. . . . The return of rules is accompanied by a return of the public sector."

On the other end of the political spectrum, among leftists who have long predicted calamity for what they call the "savage neoliberal capitalism" of Wall Street, there were gleeful allusions to the stock market crash of 1929.

"Between the dread of a world in the midst of collapsing and the shiver of pleasure that finally something serious is happening to the kingdom of liberalism, how to orient oneself?" Eric Aeschimann wrote Thursday in the newspaper Liberation, a voice of French intellectuals whose disdain for capitalism persists in the 21st century.

Expressing nostalgia for "the good old days when bankers jumped out of windows," Aeschimann condemned as "extortion" the rescue of U.S. corporate giants by the very state that free-marketeers resent.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Sep 19th, 2008 at 05:29:12 PM EST
[ Parent ]
Tremoni is a major-league asshole, hardly representative of even the European right.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Fri Sep 19th, 2008 at 05:34:36 PM EST
[ Parent ]
Too irate to be coherent.

This bailout is beyond anything even remotely intelligent.  The buggers stole their way up, stole their way down, and are now getting trillions to save their butts so they can steal some more.

And the average American just says, "D'oh?"

I wish I'd moved to Sweden back when I had the chance.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Fri Sep 19th, 2008 at 05:57:03 PM EST
[ Parent ]
And miss all this fun?  Com'on.  This little choo-choo has only started to roll.  I'm waiting for villagers with torches/pitchforks outside of mansions.

Food/gas shortages.  That's the ticket.

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Fri Sep 19th, 2008 at 06:19:19 PM EST
[ Parent ]
You go Twank! We'll be behind you all the way.  All the way behind you. :-/

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Sep 19th, 2008 at 07:39:29 PM EST
[ Parent ]
Hang in there Geez.  You know how Maryscott O'Connor likes to rant?  I'm into fixin' shit.  And I got NOTHING to lose!

They tried to assimilate me. They failed.
by THE Twank (yatta blah blah @ blah.com) on Sat Sep 20th, 2008 at 05:30:39 AM EST
[ Parent ]
Oh the irony! We had exactly this kind of bailout 15 years ago in Sweden, and it worked well. ;)

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Sat Sep 20th, 2008 at 08:38:19 AM EST
[ Parent ]
Exactly the same?

IIRC, the swedish bailout consisted mainly of two things: an unlimited guarantee for bankcustomers to prevent a run on the banks (later scaled back) and the government taking over Nordbanken and Gotabanken (later merged to Nordea and sold of). The banks cost quite some as the debts exceed the assets, though I think it was a bit different to what is happening now in the US.

Citing Grave Financial Threats, Officials Ready Massive Rescue

The plan involves using hundreds of billions of dollars in government funding to buy bad loans, leaving banks with more money and fewer problems, according to two sources familiar with what was said at the meeting.

The main difference would be that the swedish government took over assets and debts (stockholders got nothing, as the alternative would have been bankrupcy), while the US is proposing to take only the bad and leave the good.

Though I have to admit that my memory of the events are kind of sketchy, and I fail to find a good link to back up my memory.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Sat Sep 20th, 2008 at 10:15:06 AM EST
[ Parent ]
The Swedish government did indeed buy up huge amounts of bad loans to get it out of the hands of Nordbanken. A quarter of the entire credit portolio was taken by the new state owned company Securum.

The other banks just managed to avoid that fate, even if it was a close shave for SEB.

Solving the crisis in this way would very likely have been against EU regulations, but thankfully Sweden was not part of the EU then.

The subprime mortage crisis is almost a blue copy of what happened here in 1991-1994. Google "Securum".


The Swedish approach to the problem of tidying up after the banking crisis by transferring troubled debt to specialized asset management companies is often held up as an example for other countries to follow. The most unusual aspect of Securum was the great degree of independence given to the company, combined with the rather broad terms in which its assignment was formulated. The Swedish state, as owner, announced that the winding-up would be permitted to take considerable time and that it should proceed keeping the best interests of taxpayers in view. In all other respects, Securum's board and management were given a great deal of freedom in shaping the company's policies. Moreover, the board was dominated by experts, with representatives of the ministry and the political domain being a limited element.

    Furthermore, the legal structure chosen was such that Securum's operations were not subject to the laws applying to financial institutions, particularly not the constraints imposed by the regulatory framework of banking legislation. The company was also allocated sufficiently substantial equity that the risk of the management needing to return to the owner and ask for more funds was virtually non-existent. Consequently, the material prospects of independence were good.

In a happy twist of fate, the guy who was put in charge of the swiftly created authourity "The Bank Support Committee" (generally called the "Bank ER") is now the the chairman of the Bank of Sweden, and another key person, Bo Lundgren, then minister of taxation (and later chairman of the liberal-conservative party) is now the head of the Swedish Debt Office.  

So for once we have smart expereinced people in exactly the right place to deal with this crisis

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Sat Sep 20th, 2008 at 10:57:55 AM EST
[ Parent ]
The joke is on us since Market Fundamentalism remains alive and well in the European Commission and all our civil services, while the likelihood of stronger government control of the economy in the US is now relatively high.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Carrie (migeru at eurotrib dot com) on Sat Sep 20th, 2008 at 09:12:48 AM EST
[ Parent ]
Sadly, yes.

How long before we see the FT, the Econo, and random EUreaucrats touting the bailouts as proof of the robustness of free market fundamentalism?

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sat Sep 20th, 2008 at 09:23:14 AM EST
[ Parent ]


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