I loved the following comment from someone calling themselves "Bjorn Borg". In a recent ftalphaville blog post, he complained:
I'm fed up with all this 'following the Swedish bank/nationalisation/re-privatisation model' stuff. Ok so the Swedish banks went skint 10 years ago....they were bailed out...everything worked for a few years.
Now they're going skint again....in double quick time. It hardly sets a worthy precedent for the rest of the world to follow.
There is an uncomfortable truth in this observation. We appear to be locked in a cycle of bubble and bust with each round of the cycle proving to be more damaging than the last one. Mr. Borg has picked up the trend in Sweden, but it is world wide phenomena.
Take, for example, the US. Back in the early 1980s, US banks were almost destroyed by excessive lending to third world economies. Ten years later, the banking system was again in trouble with the savings and loans crisis. Before the decade was out, the US saw another boom and bust with the dot.com bubble. As soon as that bubble crashed, the housing boom was inflating, leading directly to the sorry mess we are in today.
The UK is no better. Since the early 1970s, we have suffered four cycles of housing boom and bust; the 1973 Barber boom, the somewhat less well known Callaghan housing bubble of 1977; the Lawson boom that crashed in 1989 and today's housing mess. Added to this list, we had our very own dot.com bubble; not to mention a couple of exchange rate crises.
Unfortunately, we seem to be addicted to particular kind of abuse. It is unlikely that this crisis will teach us much. It is a fair bet that as soon as this crisis is over, there will be another asset bubble waiting to pounce on us and lead us astray.
Changing the subject slightly - is everyone enjoying the snow?