Republicans Say, 'Imitate Sweden'

By Randall Hoven

Apparently, we have only two choices of what to do with bad banks: keep giving them government money forever, or let the government nationalize them. This is all explained in the Financial Times.

The choice of writing government checks to failed banks is the "Japanese model." Ooh, bad. The choice of nationalizing them is the "Swedish model." Mmmm, good. So good, in fact, that Republicans Lindsay Graham and John McCain favor it, as well as Barack Obama.

"You should not get caught up on a word [nationalisation]," [Graham] told the Financial Times in an interview. "I would argue that we cannot be ideologically a little bit pregnant. It doesn't matter what you call it, but we can't keep on funding these zombie banks [without gaining public control]. That's what the Japanese did."

"Barack Obama, the president, who has tried to avoid panicking lawmakers and markets by entertaining the idea, has recently moved more towards what he calls the ‘Swedish model' -- an approach backed strongly by Mr Graham.

"Senior administration officials acknowledge that the financial rescue plan unveiled by Tim Geithner, Treasury secretary, last week could result in the temporary nationalisation of some weak banks.

"They [the Japanese] sort of papered things over,' Mr Obama said. ‘They never really bit the bullet... and so you never got credit flowing the way it should have, and the bad assets in their system just corroded the economy for a long period of time."

And then, like a bad virus or something, "bad assets" choke off the "credit flow," making the banks "zombies" and then "corroding" the entire economy. It's an economic Night of the Living Dead! Thank goodness we have a genius in the White House who understands this so well, and can put it in terms us commoners can understand.

"Bad", "zombie", "corrode" - I get it! And only a government can render "bad" assets corrosion-free. Our government is a sort of asset sterilizer. Bad assets go in; harmless assets come out. No corrosion. No zombies. Tim Geithner, zombie killer. And credit flows again, like milk and honey.

Although I do have another idea, a third choice. That is, a choice beyond giving money to zombie banks forever or nationalizing them. How about we let them go out of business. And their "bad assets" go with them. We could all this the "American model."

Imagine that. Here's how my complicated plan would work. A bank that can't pay its bills would go broke. A good bank would buy its "good assets." We would sterilize those bad assets by writing them off, and value the worth of a bank by subtracting them from its assets.

Change the plus to a minus, and "bad" to "good"! We can reanimate dead banks! It ... could .... work! Igor, prepare the laboratory!