So, what countries were the conservative think-tanks trashing three years ago? Maybe we should move there. :)

You probably are there. Scandinavia doesn't make the disaster news much.

Hmm... Interesting.
You mean they don’t consider our well-function social democratic (that’s probably a pinko European euphemism for Socialist) economy a disaster?

Just out of curiosity, let’s make a list of Norwegian and Canadian banks that have failed during this particular financial crisis.

Let’s see, uhm... zero! :cool:

True, Stones;

In bubble economies, it pays to be stodgy and stick to the old standards of bank behavior.

Yeah, but you have a good job market too. That's probably more important.

You would do well to read Newsweek Editor Fareed Zakaria’s excellent article on what the Canadians are doing right -- and have been doing right for a good many years. In fact, I’ll see if I can dig up a link. However, in my opinion that deserves a separate thread. :)

Our current unemployment rate in Canada is 6.6%, about double Norway's, but that is largely due to the huge job losses in the automotive industry and the huge decline in crude oil prices which has brought tar sands production to a near halt.

Zakaria's article is here

Oh, I'm sure that American banks are completely out of whack, but I think employment is more important because leverage works when everyone has a job.

I think the US has had things backwards for so long now that we think it's normal! We think that by making the business profitable, jobs will come, but in reality businesses don't invest in new employees if they're already profitable. Instead, they look for cheaper labor elsewhere so they can increase their profits.

We need to focus on creating good jobs and let profitability come from them.

I'm not sure how that could be arranged. Companies don't exist to create jobs except when they're small family-run businesses.

Think Henry Ford.

Seed money and morality, seizures and summits...
 

Well, some types of businesses are more capital intensive than others -- for instance the defense industry. In many sectors, small businesses are a far better way to go.

Also I think there is a lot to be said for seed money, even from the government. In fact that was the helping hand that enabled me to establish my company 14 years ago; since then I have paid that money back dozens of times over in the form of payroll tax, personal tax and VAT. In other words, it proved a sound investment for the government.

If I had my druthers, bureaucracy and current paperwork burdens would be greatly simplified for small businesses. Certainly that could be done with advantage in Norway; I suspect that’s also the case in the USA and many other countries.

Morality and the social contract
Another point is this: strengthening of social contracts and the moral aspects of corporate leadership and ownership. And, no, I am not kidding. I do not think corporations by definition are immoral or amoral. There are lots of exceptions!

In some cases the social contract should be made very explicit. I still cannot fathom how banks can receive billions in taxpayers’ money and not provide the lifelines many businesses need. There are vast numbers of viable projects being cancelled because businesses cannot get loans. (That applies to Norway, too.)

Sensible seizures
Prosecuting (and seizing the assets of!) people who are guilty of tax evasion and illegally salting away money in bank accounts in Switzerland, Liechtenstein, the Bahamas and the like is a good start in that respect. Penalties should be financial in nature and immediate -- say a fine of 10x-50x the taxes evaded. That would pay for a lot of stimulus programs (and jobs)!

Another kind of summit
Let me throw out another idea. I would like to see Geithner and Obama call an Economic Summit Meeting of, say, the 100 richest people in America and ask one simple question: What constructive efforts can you contribute and how? Come to think of it, that might be a good thing to try in other countries as well.

Well, those are a few ideas.

-- ArcticStones

That seems odd that a decline in oil prices should impact on production when according to the oil bubble thread the price was artificially inflated. I'd have thought that a price crash would simply unmuddy the waters for a return to normal production. Still my grasp of anything to do with money is sketchy at best.

@fazstp: The decline in oil prices has made some oil recovery less viable. A number of oil companies, at least here, have shelved plans for further expansion and cut back on production. Those things produce jobs. Similarly, even with the price decrease, people are driving less so fuel consumption is down -- equals loss of jobs in the industries that refine, distribute, and sell oil and gasoline. Etc.

@Stones: Here in Canada, employment in small business exceeds employment by huge corps. In Nova Scotia, it's well over half.

Even better: round up the cokehead bankers, put them in a prison camp and hold an auction. Highest bidder -- as contributor to earmarked social programmes -- gets out first. Lather, rinse, repeat. Group solidarity? I don't think so.:D

I thought of another take on this during my morning constitutional in the woods. The model prices risk on the basis of the market's pricing of risk without using the model. Therefore, if the model is so great, the market's pricing of risk, which does not use the model, cannot be very good. Ergo, the model is using a sub-mechanism that cannot be very good. Ergo, if the model is great it cannot be very good.

There has been a lot of focus on the bankers -- but they are just tools. The financial system that has stopped working is "the bank behind the banks", i.e. the one run by individuals who truly have resources.

In my opinion, there is far too little focus on them and what they can contribute.

Not sure 18:1 or 26:1 makes a lot of difference if the underlying assets (as in outstanding mortgages) are all bad.

@Woodsman
That would be all of them that didn't have enough regulation to prevent wide spread corruption.

Might raise more money if you put the trophy wives in jail and auctioned them off to the highest bidder...... every rich banker has a strong wife standing behind him saying, "It's not enough... make more!" :D

@AEH: Only one Canadian bank had any exposure to toxic mortgage paper and they wrote it down as a loss, took the stock price hit last year. The investors holding that paper got screwed, of course, their investments frozen, and that's still unwinding.

The investors should take the big hit, along with the individuals who bought the homes and cannot make the payments. Not sure it's going to go down that way here.

Lest we all forget... at the height of the housing bubble, a full 40 percent of all homes sold went to the rich as a vacation home or an investment in rental property (spending their new found wealth courtesy of major tax cuts). When the housing market went South, many just walked away and turned the house back to the bank. They could do that because the loan was secured by the house.