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HalfMooner
Dingaling
Philippines
15831 Posts |
 Posted - 04/04/2009 : 00:04:56
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This is a link to an article by Manav Tanneeru at CNN.com which looks at how Japan and Sweden addressed their own local economic slumps, which began in the early 1990's. I'm an utter economic layman, but even I could understand this article.
Neither situation was a precise mirror of what's going on today's meltdown, but there are some parallels. Both crises were brought on by easy money and real estate bubbles.
In Japan, the government response was timid and slow. The result was a lingering stagnation that the Japanese (who had been bragging of the "Japanese Century" to come) now call the "Lost Decade."
In Sweden, by contrast, a democratic Socialist government not shy about kicking ass in the private sector swiftly imposed strong rules and nationalized banks. (Once the crisis was over, Sweden reestablished them as private.)
From the article: "I think the big lesson is [not to] wait to make all the hard choices," Kingston said. "Bite the bullet at the outset and try to get it over with. It'll cost you a lot less in the end."
In March, the Obama administration detailed its plan to rescue U.S. banks. Since the announcement, a debate has begun over whether it is aggressive enough to help hasten an end to the banking crisis. Video Is the bank rescue plan working? »
"It is aggressive, but probably not enough. Think of it as a sizeable down payment on trying to strip out the toxic assets, which is a key step forward," Kingston said.
He said additional public funding may be necessary to further stabilize the banks, but the public mood may be against it.
"In Japan, too, there was a strong public reaction against the bailout that made politicians wary of doing what needed to be done, prolonging the problem," he said.
Some economists said the primary lesson from the two crises was the importance of maintaining confidence in the system. "There's no easy way to do this other than getting rid of the nonperforming loans from the system," Hoshi said.
Whatever the means used to rescue the banks -- whether it is nationalization or letting the free market decide their fate -- Rodriguez said the Japanese and Swedish crises showed clear, decisive action was key. |
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“Biology is just physics that has begun to smell bad.” —HalfMooner
Here's a link to Moonscape News, and one to its Archive. |
Edited by - HalfMooner on 04/04/2009 00:15:09
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"Japan, Sweden may offer economic recovery lesson"
