Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Michael Hudson develops his view in a longer article in Counterpunch. The first part is more or les the FT article, but there is much more to read:

The Specter of Debt Revolt Is Haunting Europe
Why Iceland and Latvia Won't (and Can't) Pay for the Kleptocrats' Ripoffs - Michael Hudson

Neither Britain nor Holland, neither the EU nor IMF have provided a scenario for just how Iceland is supposed to pay the debts that are being claimed. How much will personal income and living standards have to fall? What government programs must be cut back? How many defaults on domestic mortgages and personal debts will result, and how much unemployment? How much emigration will occur? The models being employed treat these dimensions of the economic problem as "externalities," but they are central to how the economic system works in practice.

The question is whether neoliberal ideology will give way to economic reality, or whether economic policy will retain the blinders that typically characterize short-term creditor-oriented policies? What is blocking a more reasonable pro-growth policy, Ms. Joly observed, is that "the Swedish presidency of the EU does not seem to be in a hurry to improve regulation of the financial sectors, and the committees with an economic focus in the Parliament are, more than ever, dominated by liberals, particularly British liberals." So Europe continues to impose a shortsighted economic ideology. Therefore, she concluded: "Mr. Brown is wrong when he says that he and his government have no responsibility in the matter. Firstly, Mr. Brown has a moral responsibility, having been one of the main proponents of this model which we can now see has gone up the spout.

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Wed Aug 19th, 2009 at 08:37:46 AM EST
"the Swedish presidency of the EU does not seem to be in a hurry to improve regulation of the financial sectors

I would be very surprised if they had acted to regulate. So far the most visible action the swedish government has taken was in the Carnegie-affair:

Carnegie Investment Bank - Wikipedia, the free encyclopedia

In the wake of the Economic crisis of 2008 and to avoid bancruptcy Carnegie Investment Bank AB was taken over by the Swedish National Debt Office on November 10, 2008. The largest shareholders at the time was Böös & Enblad AB (9,2%), Moderna Finance AB (6,4%) and Harris Associates fonder (5,3%). In May 2009, the private equity company Altor and the investment company Bure acquire Carnegie Investment Bank AB. The ambition is to re-establish Carnegie as the leading independent investment bank in the Nordic region.[1][2] The bank had broken the law by lending too much money to one customer, property magnate Maths O. Sundqvist.[3]

Carnegie was the favourite bank for the present government when it came to organising sales of governmentally owned companies, so it was not surprising that they leaped in to save this investment company. In contrast they have clearly declared that saving Volvo or Saab by nationalisation is out of the picture.

So they seem stuck in the same frame of finance=important, production=not important as their anglo counterparts. And important of course means that it must have its freedom, not be regulated and so on...

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

by A swedish kind of death on Wed Aug 19th, 2009 at 03:36:15 PM EST
[ Parent ]
I can't say I agree with this. Carnegie is a bank, and hence as Migeru said, special. They shareholders have lost everything, and while I'm not sure I don't think the creditors got much either.

When it comes to the cars, Volvo will probably survive. They make pretty good cars in an internatonal comparison and will get new owners of one kind or the other.

SAAB on the other hand is probably the shittiest auto manufacturer outside North America. There is really nothing worth saving in that company, except the technology portfolio (and even there SAAB has mainly gone for stupid ethanol). Currently the government is playing its part in the theater with the Koenigsegg front, which seems interested solely in plundering the public coffers, and the government only interested in not paying out any money to a doomed company or corporate plunderers, while neither being seen as the one which gave SAAB the mercy bullet.

And after all, Sweden does have to much of its economy focused on vehicle manufacturing (only Slovakia and Germany ahve more). Even if SAAB goes down, we'll still have Volvo PV, Volvo Trucks and Scania Trucks. Those truck companies are world class. The auto companies are not.

In a globalized economy with free capital flows we must play to our absolute advantages, not waste energy on saving industries were we won't be number one.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Thu Aug 20th, 2009 at 02:59:10 PM EST
[ Parent ]
First, I am delighted and a bit surprised that they are not handing over big loads of cash to anyone that promises to save SAAB. I am not advocating a particular action there, but the passive attitude in that case is clearly contrasted with the active attitude in the case of Carnegie.

And banks are special, but Carnegie was and is the typical kind of noxious bank that should be regulated away.

Carnegie Investment Bank - Wikipedia, the free encyclopedia

Carnegie Investment Bank AB is a Swedish company which specialises in stockbroking, investment banking and asset management.

Remember the crucial notion of the Glass-Steagall Act

In the nineteenth and early twentieth centuries, bankers and brokers were sometimes indistinguishable. Then, in the Great Depression after 1929, Congress examined the mixing of the "commercial" and "investment" banking industries that occurred in the 1920s. Hearings revealed conflicts of interest and fraud in some banking institutions' securities activities. A formidable barrier to the mixing of these activities was then set up by the Glass Steagall Act.

While stockholders were wiped out, did not managment by and large stay? As I remember it, the CEO was the only one who had to go and he was replaced by his right hand. So they saved the managment and the careers of the upper echelon in the company. Probably people they had good relations to as this was the go-to bank for privatisations.

Anyway, my critique was mainly centered on handling this crises in a way that did not show any realisation of the systematic problems. Thus, I do not think any such action should be expected during the swedish presidency.

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

by A swedish kind of death on Thu Aug 20th, 2009 at 03:28:12 PM EST
[ Parent ]
Since I have some emotional investment in Saab. having grown up with the cars, I thought about it, and I think you could probably make Saab work if you dropped the models other than the 9-3 and the factories other than Trolhattan, and focused a lot more on the finishing.

Also, Saab was erratic and then GM made it crappy.

by nanne (zwaerdenmaecker@gmail.com) on Thu Aug 20th, 2009 at 07:25:28 PM EST
[ Parent ]
But cars are going to be a declining market over the next few decades. So consolidating production into fewer companies makes sense.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Aug 21st, 2009 at 02:11:12 AM EST
[ Parent ]
I'm not sure that this necessarily follows. The car market is rather consolidated as it is, and this follows more from the type of product it makes than its size and whether it is growing or shrinking. Some capacity has to disappear, of course, but Saab has always been a niche manufacturer.

Anyway, I think that they could do OK on a model like Mini, by making one car and putting some effort in it instead of putting their brand on different crappy GM platforms.

by nanne (zwaerdenmaecker@gmail.com) on Fri Aug 21st, 2009 at 04:36:00 AM EST
[ Parent ]
To reach profitability SAAB must increase their volume to levels they didn't even reach before the recession. They haven't made a profit in twenty years. During the last twenty years thet have constantly been subsidised by GM, and before that by truck and arms sales.

In the car industry someone must be culled, and SAAB is a prime candidate.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Fri Aug 21st, 2009 at 05:49:38 AM EST
[ Parent ]
The last 20 years coincide perfectly with the period of GM ownership and the resulting poor management decisions.

What Saab would need to do is look on the long term and start developing its own customised platform again instead of making somewhat fancier Opel Vectras and Insignias with poor finishing.

Besides, Saab doesn't have the capacity that needs to be cut. They only make 100,000 cars a year, and that's a target they could stick to, getting profitability by better pricing for cars with a higher standard.

by nanne (zwaerdenmaecker@gmail.com) on Fri Aug 21st, 2009 at 06:52:11 AM EST
[ Parent ]
The company didn't make money before GM either. It was supported by the truck and arms manufacturing which has since been spun off. The Wallenbergs couldn't be happier, they got to keep the family silver while dumping the autos on the unsuspecting Americans.

100.000 cars is not enough at the prices they take today. They need 150.000-200.000 and they won't get that. The alternative is raising prices, but there's no way anyone would choose a SAAB when they could get a Lexus, BMW or Mercedes for the same price. No way.

There is a huge global overcapacity and competition is razorsharp. The herd will be culled.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Fri Aug 21st, 2009 at 02:46:38 PM EST
[ Parent ]
I see that there are several Carnegie banks in Scandinavia.  Are these related to or derived from the US Carnegie fortune?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Aug 21st, 2009 at 01:47:58 PM EST
[ Parent ]
I believe it is a different branch of the same, originally scottish family.

David Carnegie (entrepreneur) - Wikipedia, the free encyclopedia

David Carnegie, Sr. (8 February 1772, Montrose, Angus - 10 January 1837) was a Scottish entrepreneur who founded D. Carnegie & Co. in Sweden, today known as Carnegie Investment Bank.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Fri Aug 21st, 2009 at 04:28:40 PM EST
[ Parent ]
Uhmm, perhaps his family was a poor relation.  According to the Wiki bio his father borrowed money to emigrate to the Allegheny area.  Andrew was born about two years before the time David Carnegie, Sr. died.  

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Aug 21st, 2009 at 09:46:43 PM EST
[ Parent ]


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