Author: Karl Whelan

Lessons from Sweden

I linked last weekend to former Swedish Finance Minister’s Bo Lundgren’s appearance on the Marian Finucane show.

Lundgren also appeared recently before the TARP Congressional Oversight Committee, chaired by Harvard Law Professor Elizabeth Warren and his written testimony was the basis for the section on Sweden in the committee’s latest report. Here’s a webpage containing the written testimony of Lundgren and three other experts on other banking crises (Great Depression, 1980s S&L and 1990’s Japan) who all appeared before the committee at the same time.

The webpage also has full video of this meeting. The experts delivered short verbal testimony (Lundgren’s starts about 14 minutes in) and about 40 minutes in there is a question and answer session. Prof. Warren’s opening line of questioning about arguments against nationalisation was of particular interest to yours truly but the whole session is really useful.

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Arguments Against Nationalisation, Part 5: Lack of Government Expertise

[Last in Series …. For Now]

Speaking with Myles Dungan on RTE radio on Thursday, Minister Eamon Ryan put forward the following argument against nationalisation:

You have to run the whole bank, the system, from Merrion Street … And there’s no ability, I believe, in the Department of Finance to run six banks at the one time … They [the Department of Finance] recognise that you don’t just suddenly start running six banks. And you can’t do it in a very transparent way.

I think the Minister raises a fair concern here, so I thought I’d throw this one out there as my final (for now) post on this.

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Financial Crisis Reading

The financial crisis has been going on long enough now that we are starting to see a lot of serious research and policy papers addressing the various issues that the crisis has raised.

This material may be a bit more complicated than most of the reports this blog usually links to but I think some of our readers may appreciate getting a sense of the stuff that we’re reading in trying to understand what’s going on and where we should be heading.

So, here’s some stuff I’ve been reading in between my nationalisation blogging …

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Arguments Against Nationalisation, Part 4: Continuous Stock Market Listing

Peter Bacon’s final argument against nationalisation in his Morning Ireland interview was the following:

Also, if you nationalise the bank, it’s gone. If the bank remains there, even if it comes to pass that in some cases there is majority ownership by the government, by the taxpayer, there will be a quotation on the Irish and London stock exchanges. There will be a price every day that bank shares will trade at and that will provide taxpayers with an exit mechanism out of their ownership of the banks in due course.

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Arguments Against Nationalisation, Part 3: Transparency

Peter Bacon outlined two other arguments against nationalisation in his Morning Ireland interview. The first related to the question of transparency:

You nationalise it and then you would still have to deal with it. You would be dealing with it behind closed doors. People have screamed “let’s have transparency with this”. The only place you will find transparency is if you do this in the open market.

Given the amount of public money at stake, I couldn’t agree more with Dr. Bacon that transparency is essential. However, I disagree with him regarding the levels of transparency that would prevail under nationalisation relative to his NAMA plan.

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