At least when it comes to our very troubled, if not dying, banking industry. That's the advice of Joe Stiglitz. No matter what has been done, there has been very little (just about no) increase in lending. The banks are just sitting on our money. Well, 'sitting' may not be the right word. Some are buying planes, others having parties or paying bonuses to those who got the banks in trouble.
Sweden decided that if a bank couldn't rise money privately, the state would take it over provided it was, in fact, salvageable. Then, instead of running the bank for the executives, the bank would be run for the benefit of the country. Loans would actually be made. Parties would stop. Planes would not be bought.
Sweden's approach worked well. Eventually, the banks returned to private ownership.
Clearly what we're doing has not worked. It's time to change the game.
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