ST Alpha - "A lot of what he said is incorrect though - Japan's lost decade wasn't caused by trying to bail out the banks, it was because the banks were allowed" (Reading a Post)

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In response to "SITWAP: CNBC finally getting a clue: "Let AIG go bankrupt, not America." -- (link)" by TaurusII

A lot of what he said is incorrect though - Japan's lost decade wasn't caused by trying to bail out the banks, it was because the banks were allowed

Posted by Roger More (aka RogerMore) Mar 11 '09, 14:14

to continue to hold bad debts. Sweden in the early 1990s, which is the model on how to respond to a banking crisis, bailed out banks and took their bad debts off the books.

Responses:

Sweden also got the government out of a lot of national areas in the 90s too. Deregulation was as big a part of that as anything else. -- nm - Name Withheld By Request Mar 11, 14:21 1
- Oh definitely. While Japan made a lot of investments in infrastructure that it didn't need. Not that gov't stimulus in infrastructure is a bad thing, - Roger More Mar 11, 14:31
well, in japan, the banks became "zombie" banks, which - tRuMaN Mar 11, 14:20 4
- sure - goes to my point that the guy quoted in the article is mistaken. It wasn't the bailing-out of banks that led to the lost decade, but the way... - Roger More Mar 11, 14:25
- [deleted] 2
  - "or sometimes not at all!" -- nm - znufrii Mar 11, 14:24 1
    - YSMM! -- nm - TaurusII Mar 11, 14:24
And what are we doing? -- nm - TaurusII Mar 11, 14:16 6
- captializing profits, socializing losses - Epiphany Mar 11, 14:18 1
  - Sounds like "cooperative government officials" to me. -- nm - TaurusII Mar 11, 14:20
- My understanding is a little from column A and a little from column B -- nm - Roger More Mar 11, 14:18 3
  - When do I get my egg roll? -- nm - TaurusII Mar 11, 14:21 2
    - If you're interested though, here's a brief description of what Sweden did. I'll look for a story on Japan's response to its banking crisis -- (link) - Roger More Mar 11, 14:26 1
      - Here's a brief description of the lost decade - again from the Economist (c and p'd because it's subscription only) - Roger More Mar 11, 14:29
Hmmm... replace "a lot" with "some". I have issues too with the "debt + borrowing + consumption is not a solution" argument - Roger More Mar 11, 14:16

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A lot of what he said is incorrect though - Japan's lost decade wasn't caused by trying to bail out the banks, it was because the banks were allowed

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