Thursday, 16 October 2008

On Living in the First Days of the Swedish Empire

Even Switzerland is on board it seems: the whole world has turned Swedish. To recap: the Swedish solution is to take failing banks into full or partial public ownership, re-capitalise them and then, when market conditions allow, sell off the government's stake ideally at a profit but certainly without any loss to the tax payer. There are national variations around all this, naturally. American nobel prize winners seem to be queuing up to tell us how dodgy the Bush/Paulson variant is. But the general outline is clear.

The British banks are having a little problem with this, as you might expect. They are the Bourbons of the capitalist world - arrogant, stupid and without the capacity to see themselves as others see them. I think they'd be demanding their bonuses and share dividends even if the cart was coming to take them to the guillotine...

But this new Swedish consensus might not last. I don't say this because stock markets continue to fall - all that would mean, if it goes on, is that we'd all become even more Swedish, in the sense that governments would have to go for full, rather than partial nationalisation. (Did I really just use the dismissive phrase 'all that would mean' in that last sentence? Christ, I am becoming blaise about global capitalist crises...). To some extent the national Treasuries, and certainly the IMF, have contingency plans for this, even if they passionately wish to avoid it.

No - it's the bit about selling the banks back to the private sector and getting at least a break even price that I'm beginning to have doubts about.Or at least doubts about it happening in the medium term. John Ross gives us this splendid graph: the Dow didn't recover its September 1929 value until September 1954: 25 years later.

So perhaps the one recession proof activity to get involved in might be Swedish language evening classes.

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