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0 pointsjpdoctor14y ago0 comments

Yes, and compare the Swedish solution: Let the banks go bankrupt, then QE. Iceland also did this recently.

It ripped the band-aid off quickly. More pain short term but their economies emerged quickly from the downturn. Too bad our gov't is so captured by the financial interests that such a solution is deemed unviable.

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effn14y ago· 2 in thread

Sweden only let one of its smaller banks go bankrupt, in the early 90s, and has never done any QE.

jpdoctorOP14y ago

> Sweden only let one of its smaller banks go bankrupt

See, eg. http://www.nytimes.com/2008/09/23/business/worldbusiness/23k... , note the term "series of bank failures."

As for QE: Note there was a devaluation imposed by the exchange rate, and the peg evaporated. So you are correct that Riksbank did not print, but the QE was achieved by the currency markets.

effn14y ago

Nope, NYT is wrong on that one. I suspect they are referring to the implosion of the real estate sector which brought down a number of companies, but none of them where banks.

QE is a word with a specific meaning, it's not just a synonym for "stimulus". It refers to the buying of financial assets by the central to increase their value, and/or to increase the money supply. Ending a currency peg has nothing to do with that.

Note that the bailout operations that did take place did so after the end of the peg.

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