the swedish solution
This morning's NY Times has a column by Gail Collins in which she describes what the Swedes did with their banks' toxic assets, the so-called collateralized debt obligations that Alan Greenspan admits he does not understand.
First, they nationalized the banks that own them. Then they hired unemployed bond brokers and charged them with reviewing these toxic assets, figuring out what they were worth, if anything, and selling them on the open market. Problem solved, or at least a giant step toward solution.
There are all kinds of Wall Street types walking the pavement these days, and they could be employed for a fraction of the excessive salaries they used to earn.
So why don't we follow their example?
Answers: (1) We never do what they do in Sweden. (2) There is a deep fear that the size of the CDO debacle is so huge it would have even more destructive effects on the markets worldwide if the extent of the problem were verified and made public. (3) Winston Churchill was right when he said that Americans can be counted on to do the right thing, after they've tried everything else.
We may be coming close to another big crumble. So keep your seatbelts on.