Here's what Sweden did when their banking system collapsed:

[AZBlue]

Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks. Banks had to write down losses and issue warrants to the government.

That strategy held banks responsible and turned the government into an owner. When distressed assets were sold, the profits flowed to taxpayers, and the government was able to recoup more money later by selling its shares in the companies as well.

(snip)

Sweden spent 4 percent of its gross domestic product, or 65 billion kronor, the equivalent of $11.7 billion at the time, or $18.3 billion in today’s dollars, to rescue ailing banks. That is slightly less, proportionate to the national economy, than the $700 billion, or roughly 5 percent of gross domestic product, that the Bush administration estimates its own move will cost in the United States.

But the final cost to Sweden ended up being less than 2 percent of its G.D.P. Some officials say they believe it was closer to zero, depending on how certain rates of return are calculated.

(snip)

By the end of the crisis, the Swedish government had seized a vast portion of the banking sector, and the agency had mostly fulfilled its hard-nosed mandate to drain share capital before injecting cash. When markets stabilized, the Swedish state then reaped the benefits by taking the banks public again.

More money may yet come into official coffers. The government still owns 19.9 percent of Nordea, a Stockholm bank that was fully nationalized and is now a highly regarded giant in Scandinavia and the Baltic Sea region.

The politics of Sweden’s crisis management were similarly tough-minded, though much quieter.

Soon after the plan was announced, the Swedish government found that international confidence returned more quickly than expected, easing pressure on its currency and bringing money back into the country. The center-left opposition, while wary that the government might yet let the banks off the hook, made its points about penalizing shareholders privately.

http://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html?em

[nadinbrzezinski]

1. This is pretty much the model that Dodd and others are using

[sandnsea]

3. Many concessions have been made

I don't know that that information is making it to DU. hint hint. Nobody reads my posts.

[liberalmuse]

5. Could you provide a link?

What are these concessions that you speak of? I really want to know.

[sandnsea]

7. Here

Mr Frank listed some of the issues that he wanted the bail-out plan to address.

He said, ''We're going to get restrictions on CEO compensation.

''We're also doing proxy access, where you have these boards of directors that are immune to anybody.

''And we're going to give the shareholders the right to petition so they can elect the directors.

''Next we have in our Bill the right for people to invoke bankruptcy for their primary residence. Right now, you can for your vacation home, but not your primary residence ...

''Beyond that, we're giving them authority they didn't want, not just to buy paper, but to take shares in the company, that will, (a), give the dividends, and, (b), get warrants so the results of the companies become more profitable than they have been.

''The federal government gets extra help. We are also setting up contrary to what they request, a tough oversight board.

http://www.canberratimes.com.au/news/local/news/general/democrats-talk-up-bailout-compromise/1283254.aspx

[Flabbergasted]

18. This sounds hopeful...

[ooglymoogly]

58. Flabbergasted, that picture is hilarious. nt

[Kajsa]

60. Same here,

I wasn't expecting that hilarious dog
right now,

LOL. :)

[nadinbrzezinski]

9. We're in anger\denial territory... these days I feel I have been

sucked into a libertarian board

And to the credit of the MSM they are covering it anyhow

but it is as if people are simply not getting it

[rockymountaindem]

11. They don't want to

Regardless of the fact that the plan that was supposedly agreed to before McCain had to swoop in and mess it up was nothing like what Paulson proposed last week.

[nadinbrzezinski]

13. Pay attentiom to this place...never mind we have repeteadly

heard from Dodd and others... they are still fixed on the bush\paulson plan

They don't want to realize that things have since moved on

It is willful ignorance

[rockymountaindem]

15. It's not the first time it's happened

and it probably won't be the last.

[nadinbrzezinski]

16. I know...it is a form of almost religious thinking

It scares me to be honest

[Mojorabbit]

23. It want to cry when I am reading this board

and people saying let them all fail, bring it on.

[Realityhack]

47. I agree. People need to fucking read up on what is going on and why

WAY too many people here seem to think that no bailout would not affect them personally. It is downright frightening.

[defendandprotect]

55. Bush is pulling another "WMD" ...slow down on this ---

we need public hearings, debate, discussion --

capitalism has failed over and again --

we requre REMEDY and REREGULATION and RESPONSIBILITY taken -- not in a rush --

capitalism and democracy are not synonymous --

[Realityhack]

59. That is not entirely true.

Unlike WMD their actually IS a crisis here.
While the time scale isn't necessarily 'by Friday' it is very time sensitive. Months of debate would be a defacto no solution and would create havoc.
The DEMS are NOT buying into Bush's crap like they did with WMD. We are seeing a completely different package from them.

[defendandprotect]

61. They ignored ALL of this -- mortgage lending, speculation ...

Governors wanted to deal with it in 2003 --

Bush stopped them --!! See: Elliot Spitzer on this

Paulson, alone, has $700 million interest in Goldman --

FDR handled it differently -- we can as well --

Again Wall St has to bail out Wall St --

Unregulated capitalism is merely organized crime --

We can & should assist those with mortgage problems with restructuring --

should have already been done --

[Realityhack]

66. Are you under the impression that the Dems support Paulson's plan?

They don't.
And 'Wall St bailing out Wall St' isn't how things work. 'Wall St.' isn't an origination.

Absolutely this should have been addressed earlier. However, that is now irrelevant.
Yes some people who don't deserve it will benefit. This is also largely irrelevant.

The issue is how to proceed from here now that we are in the mess. Just like Iraq it doesn't matter one bit that we shouldn't have gotten where we are... what matters is how we get out with the least possible pain for the average American.

Should the 'bail out' be coupled with fixing the long term systemic problems? Of course. This is exactly what the Democrats are looking to do.

Not taking action and leaving it all to free markets is what created the crisis. It definitely will not solve itself and if not fixed will be devastating to the average American.

[defendandprotect]

72. Are you trying to suggest Paulson isn't pushingbfor bail-out ...??

It doesn't matter whose plan -- bail out by citizens of

elite capitalists is wrong way to go --


Wall St can & should bail itself out --

surcharges on daily trades -- over 300 million every day --

and immediate Re-REGULATION and other remedies are compulsory --


Neither is it "irrevelant" to those who have been victimized by corrupt

corporations like Ameriquest - losing their homes - and those others

threatened by these criminal practices ...

This is similar to Iraq ONLY in Bush building false fear, "shock & awe" --


What matters is that you begin to understand that knocking over the

Treasury is a sure way to destroy democracy --

No one suggests there should be no action ..

We need plenty of action of the right kind --

Capitalism & democracy are not synomous ...

Capitalism is a ridiculous "King of the Hill System" ...

designed to move the nation's wealth/assets from the many to the few --

Wake up --








Are you under the impression that the Dems support Paulson's plan?
They don't.
And 'Wall St bailing out Wall St' isn't how things work. 'Wall St.' isn't an origination.

Absolutely this should have been addressed earlier. However, that is now irrelevant.
Yes some people who don't deserve it will benefit. This is also largely irrelevant.

The issue is how to proceed from here now that we are in the mess. Just like Iraq it doesn't matter one bit that we shouldn't have gotten where we are... what matters is how we get out with the least possible pain for the average American.

Should the 'bail out' be coupled with fixing the long term systemic problems? Of course. This is exactly what the Democrats are looking to do.

Not taking action and leaving it all to free markets is what created the crisis. It definitely will not solve itself and if not fixed will be devastating to the average American.

[redqueen]

40. SO well said... it's like a libertarian board on this issue. (nt)

[SmokingJacket]

48. It's really, really hard to know what to believe.

I am pretty smart and pretty open-minded, but sheesh, the conflicting info I've received! I've had no economics education, but I wonder if that would even make a difference, as I've heard different stuff from equally smart economists.

After what people have been through the last eight years, you can't blame them for wanting to tune out.

[SmokingJacket]

46. If it's not getting to DU, it's not getting to the rest of America

Though I have no idea what to believe, the Dodd plan (NOT the Paulson plan) sounds somewhat reasonable to me. But I don't think most of the US has made a distinction.

Meaning, even it's a basically sound plan, it will be POLITICALLY dangerous without getting the Rs on board...

[ColbertWatcher]

2. k+r, old school. n/t

[tuvor]

4. arendt posted something similar about Norway in 1988 a couple of days ago...

Why the Norwegian Bank Crisis of 1988 is Important!
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=389&topic_id=4059977

[Greyhound]

45. Norway's final cost .8% of GDP with a solid foundation on which to rebuild. n/t

[Lex]

6. So should we follow this model then?

Even though I don't know much about things technically, I do think something needs to be done because I do think they've fucked up things but good---but it needs to be done so that we the taxpayers actually get benefits in the long run.

[nadinbrzezinski]

10. This is exactly what the dems are pushing. the Paulson\bush

plan is long dead and buried

[dkofos]

44. Until bush gets out his magic signing statement pen.

[Quantess]

14. I wish! It's too late in the game for our outcome to turn out anything near Sweden's.

First of all, Sweden would never have allowed this much deregulation of financial institutions. Secondly, their country is the size of California but with fewer people, so they can take control of problems a lot faster.

But I agree, we need to ask more than the shitty outcome held before us, as though it's somehow going to be good for us.
It isn't. It's a scam.

[nadinbrzezinski]

17. You do know that plan was based on the US of 1931?

[Quantess]

21. Actually, I think Sweden was enamored by Reagan of the 1980s.

Sweden deregulated their financial institutions when Reagan did, although Sweden was more moderate.

Where does 1931 come into play?

[nadinbrzezinski]

22. The rescue plan was based on what we did in 1931

to get out of the depresionn

[Quantess]

25. nadinbrzezinski- I know you have learned English as a 2nd language

But, your reply doesn't give me a lot to go on.
We-who? 1931-what?
Sorry, but I don't know what you're talking about.

[nadinbrzezinski]

27. the 1931-34 plan to rescue the finance system

see All Things Considered...they interviewed the Sweedish Secreatary of Finance

[Name removed]

30. Deleted message

Message removed by moderator. Click here to review the message board rules.

[DCKit]

29. Franklin Delano Roosevelt and the steps he forced to weather the Depression.

Neither Congress or business wanted to go along and would not have, except the public demanded it. The Republicons have made crusade of undoing the laws and regulations put in place during those years - which has allowed this mess to happen.

[AZBlue]

26. Actually, they were in a very similar situation:

The Swedish crisis had strikingly similar origins to the American one, and its neighbors, Norway and Finland, were hobbled to the point of needing a government bailout to escape the morass as well.

Financial deregulation in the 1980s fed a frenzy of real estate lending by Sweden’s banks, which did not worry enough about whether the value of their collateral might evaporate in tougher times.

Property prices imploded. The bubble deflated fast in 1991 and 1992. A vain effort to defend Sweden’s currency, the krona, caused overnight interest rates to spike at one point to 500 percent. The Swedish economy contracted for two consecutive years after a long expansion, and unemployment, at 3 percent in 1990, quadrupled in three years.

After a series of bank failures and ad hoc solutions, the moment of truth arrived in September 1992, when the government of Prime Minister Carl Bildt decided it was time to clear the decks.

(there's more in the article too)

[Quantess]

28. Yes, a person can draw conclusions that would say "there are similarities".

Like the proverbial tempest in a teacup. Not to diminish the Scandinavian financial, at all. However, on the Global Market, the USA is potentially more damaging worldwide.

This really IS NOT SIMILAR AT ALL.

[Quantess]

31. If the exact timing had been right, then,

even the worst timing could have deflected victory.

[Naturalist]

8. GREAT POST

[nadinbrzezinski]

12. SHHH THIS IS THE DODD PLAN

[FKA MNChimpH8R]

19. Sounds like it to me.

Chris Dodd is one sharp SOB and is undoubtedly aware of the particulars of the Swedish solution.

[nadinbrzezinski]

20. Yes he is...noticed the crickets though

[redqueen]

35. Why SHH?

I'm missing humor, aren't I?

[Joe Chi Minh]

50. I think it's because even Social Democracy has been a big no-no in your country,

never mind Socialism or Communism.

[Jackpine Radical]

53. That's for sure.

Somehow, the right has managed to turn even "liberal" into a bad word, while a "socialist" label is the kiss of death. That's why all they have had to do to shut off debate about single-payer health plans is say "Socialized medicine" and the crickets come out. There is a whole mythological belief set here. Due to a massive and prolonged propaganda initiative by the right, people think that Social Security is in a mess, that Medicare (our medical plan for the elderly) and Medicaid are badly run, etc., and none of those things are true. Our government health programs are far more cost-efficient than the private sector; the retirement plan is slightly underfunded but could easily be fixed with some slight adjustments, etc. But the forces intent on taking everything away from the working people are undeterred by reality.

[Joe Chi Minh]

65. You know, when I was a youngster, I used to predict what sort of things the "wrong" would

do to us all, if people didn't wake up. But you know, the funny thing was, I don't think I could quite believe all of it in my heart. I think a part of me thought of it as slightly amusing hyperbole.

Had I had some idea of the true extent and depth of the wickedness of the people in charge - with people sleeping in the streets, for example - I don't know what it would have done to me, how I could have handled it. And of course, what we are now facing is a virtually total breakdown of society; a feral world where crime is not only the prerogative of the most powerful in our societies, but is extended to society at large, since they are accustomed to operating at the steet level in the same way as the country's leaders. Oddly enough this process of the democratisation of crime began some time ago now, but this will be a brutal acceleration of the process.

I don't know if you read this article posted on Joe Bageant's site, but it's fascinating, scary and witty, though not necessarily in qute that order:

http://www.energybulletin.net/node/23259

[wildbilln864]

24. k&r! I like it! nt

[OakCliffDem]

32. kick

[glitch]

33. K & R nt

[redqueen]

34. THANK YOU!

Jesus Christ it's like a loony bin in here this morning.

:wtf:

[earth mom]

36. I heard a snippet of news today that said the thugs don't want to do that because it invades

the privacy of the financial institutions in question.

Wish I could remember where I heard it, but it was a :wtf: moment because it proves to me that they don't want us peons to know what is REALLY going on on Wall Street or what is going on with OUR MONEY. :grr:

[Capn Sunshine]

37. waa waaa waaa

No one wants to clean it up, but the mess sis still there.

The clock is ticking though

[earth mom]

38. The people have a right to know how their money is being spent.

But hey feel free to give them ALL your money and investments with no questions asked. :eyes:

[redqueen]

39. Ahaahahaha... lovely! That'll play well with republican voters!

:rofl:

[Joe Chi Minh]

42. Giving privacy to some people is a luxury we can't always afford,

because some people simply cannot be trusted, and have to be kinda tagged; or given their wish in the form of enforced solitary confinement. And I don't mean in a labour ward. Unless you mean a Socialist electoral ward....

[barbtries]

41. we ought to do

what the swedes did. any chance?

[prayin4rain]

43. it also caused sweden to go into a three year recession. n/t

[RainDog]

49. isn't a recession better than a banking system collapse?

I mean, if you look at what FDR did, he basically smacked around the idiot capitalists who were so fucking clueless and greedy they couldn't see that the U.S. was looking at either evolution or revolution.

FDR kept the U.S. away from fascism and communism, and away from the fight between the two that so destroyed Germany after WWI.

There were salvos from American citizens after WWI with the bonus army march and with Hoover sending Patton and MacArthur into the Hoovervilles to shoot our own soldiers because the rich in this nation were so fucking greedy, so fucking ungrateful that they did not want to pay soldiers what they had promised them in a war in which people were physically and mentally destroyed.

So, tell me, is a recession so bad, compared to what the "capitalists" had to offer? I can't call them real capitalists because they consistently expect taxpayers to save their asses when their greed gets out of hand. Would it have been okay for you to allow the misery of the Hoover economy to continue...to destroy Americans' belief in the essential worth of capitalism?

I mean, when "capitalists" fuck up this big, there's a consequence. What's the best option when all options suck? (my best option would be to toss hedge fund managers out windows and confiscate their assets, then move on to Halliburton and Blackwater.. I'd bet all the offshore money those two have squirreled away would pay for a chunk of the war debt - and considering Halliburton and KBR did substandard work for billions of dollars - those "capitalists" should be held accountable too.

I suggest a firing squad for Bush, Cheney, Addington, Yoo, Feith, Gonzales, Paulson and Greenspan. I remember so well when Greenspan was lying his ass off about how good it was for people to take arms during the 2002 midterms, to prop up the Bush economy and get that war. That illegal war that has also cost trillions.

I'd say a recession would be well worth it if we could get rid of that scum and make sure future proto-fascists get the message loud and clear.

[Joe Chi Minh]

67. "Isn't a recession better than a banking system collapse?"

Don't be nasty!

[4dsc]

51. Along with this plan...

Congress must reject Paulson's Plunder and enact a plan with these progressive principles from the Backbone Campaign:

A. The people who caused the problem or profited most should pay for it

Highly compensated executives total compensation should be capped or taxed heavily as a condition for being bailed out.
Tobin tax on all transactions in Finance, Insurance and Real Estate including currency transactions.
Government takes an equity stake, proportionate to the size of the bailout
Tax hedge fund managers' income
Accountability - fire executives of failed companies as done in the UK, and abrogate their severance packages.
Impose a five-year, 10 percent surtax on income over $1 million a year for couples and over $500,000 for single taxpayers.
B. Re-regulate to prevent this from happening again

Direct the Federal Reserve to intervene to prevent asset bubbles.
Extend reserve requirements to new security categories
Regulate the packaging of loans so they can be evaluated, rated, and priced rationally.
Regulate hedge funds and private equity funds in a way comparable to banks
C. Include Main Street in the bailout and invest in a new productive economy

Establish a moratorium on foreclosures, renegotiating mortgages or institute a rent-to-own plan to keep people in homes.
Create a major economic recovery package which puts Americans to work at decent wages, in productive jobs that add value to homes and communities.
Invest the taxes on speculation, executive compensation, and the surtax on the wealthy in clean energy, infrastructure, education, and health care.


http://www.democrats.com/stop-paulsons-plunder

[Joe Chi Minh]

68. To be retroactive.

[mmonk]

52. Great. However, they don't have House Republicans.

[AZBlue]

73. Aren't they lucky?

[YankmeCrankme]

54. I read these posts about supporting the bailout and I wonder...

have we forgotten, at the very least, the last 8 years already? Do you people really believe politicians that are beholden to corporations are really going to hold them to task? Dems that haven't stood up for anything, even themselves, are now going to become leaders and statesmen?

You really think that there won't be special loopholes that will allow huge executive compensation. And even if there isn't for the duration of government oversight, once the government sells it's control these executives will award themselves back compensation. I think you can bet on that. Do you think that regulations are going to return or enforcement of regulations?

This isn't 1932. That was a different world, where the government actually feared the people and revolution and some politicians actually considered what was best for the country and people. Not now, these guys might fear not being reelected, but they don't fear the people. Hell, the guy who takes their place will be the same kind of corporate beholding politico that they ousted. Today, these guys only care about corporations, see telecom immunity bill and bankruptcy bill. Almost all of legislation written is written by the lobbyists from the industries directly effected by the legislation.

Yeah, it might look good on paper, though it's short on details, but when the tire meets the pavement nothings going to change. The elite will get bailed out without consequence and the people will continue to get stiffed. In a few years they'll be back to what they were doing before.

From what I've read this will probably be only a stop gap measure anyway. So, what do you do after this doesn't work?

[defendandprotect]

56. Remember .. $700 Billion, with interest will be 1 Trillion PLUS --

Force Wall St to pay for this --

AND where are remedies and RE-REGULATION???

[Dover]

57. How much did U.S. citizens gain from the savings and loan bailout?

Or from the bailouts of enron, etc.?

[defendandprotect]

62. Actually, that was the "Savings & Loan theft and embezzlement"...

[MilesColtrane]

70. "How much did U.S. citizens gain from the savings and loan bailout?"

The U.S. citizens who had their deposits insured by the FSLIC, and then the RTC gained by getting some of their money back from failed S&Ls.

"Or from the bailouts of enron, etc.?"

I wasn't aware of any government bailout of Enron. Got a link?

[ihavenobias]

63. K & R, thanks for the great perspective

:)

[bobbolink]

64. Yeah, but Sweden is socialist.

:evilgrin:

[Joe Chi Minh]

69. Can't have that!

[AZBlue]

74. OH NOES11111!1

[jwirr]

71. Someone from CT please email this to Senator Dodd.