Not Sweden

I posted Obama's response to the Swedish model of bank nationalization earlier today. Matt Yglesias worries that the argument

amounts to saying “just because nationalization worked in Sweden doesn’t mean it’ll necessarily work here, so I’ll try something else that also might not work.”

He has a very helpful round-up of responses on all sides:

See also Paul Kedrosky (who I largely agree with but I wouldn’t quite get so irate), Felix Salmon (who’s grateful that unlike Geithner, Bush, or Paulson Obama can at least explain himself in a cogent way), Paul Krugman (who says nationalization is more American than Obama thinks, but who has no credibility since he’s on the Swedish payroll) and Tyler Cowen (who I think agrees with Obama).

Salmon, as often, makes a lot of sense:

I think the point about culture and traditions is actually substantive; it's not party-political. The number of banks in a country has almost nothing to do with its GDP; I don't know what Kedrosky's point is there. And Obama never said that we would need to nationalize thousands of banks. But if you nationalize some banks, then you introduce a generalized, and possibly self-fulfilling, fear that you might nationalize any bank. Pointing at smaller banks and saying "we won't nationalize you" is a recipe for creating multiple bank failures, if there's no other option for bailing them out.