Paul Krugman keeps insisting we should nationalize our troubled banks: But if you think that the banks really, really have made lousy investments, this won't work at all; it will simply be a waste of taxpayer money. To keep the banks operating, you need to provide a real backstop - you need to guarantee their debts, and seize ownership of those banks that don't have enough assets to cover their debts; that's the Swedish solution, it's what we eventually did with our own S&Ls.Now, early on in this crisis, it was possible to argue that it was mainly a panic. But at this point, that's an indefensible position. Banks and other highly leveraged institutions collectively made a huge bet that the normal rules for house prices and sustainable levels of consumer debt no longer applied; they were wrong. Time for a Swedish solution.Tom Maguire keeps asking what banks, because no one seems to have heard of them, noting in any event it's a dumb idea:But as I said at the time - let's end these...(Read Full Post)