Jim Henley writes:
Let me add, from my layman’s perspective, the arguments against “nationalizing the banks” seem entirely plausible, as do the arguments against declining to nationalize the banks. The only reasonable conclusion is that we’re screwed no matter what. But at bottom, it does seem absurd that the world’s governments should devote unlimited money over unbounded time to keeping trillions of dollars of bad loans from giving up pretenses.
This is definitely my fear. I think if you look at the Sweden situation, there’s good reason to think that what they did was the only reasonable course of action. I think it’s also true that if you look at the U.S. situation and compare us to Sweden, you can come up with a whole bunch of reasons to be skeptical that what worked well there will work well here. What you don’t come up with by doing this is with any better alternatives to a Swedish solution. It could be, in other words, that we’re just doomed either way. But even though I don’t think people should downplay the cost or feasibility concerns with a Swedish approach, insofar as the other approaches are unworkable, the best thing to do is still to really put our shoulders to the wheel and try to make a Swedish solution work.