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Borg blasts US and UK over financial crisis

TT/The Local · 27 Apr 2009, 08:18

Published: 27 Apr 2009 08:18 GMT+02:00

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“Primarily in the United States and Great Britain there is unfortunately such a connection between banks and the political system, and possibly also for ideological reasons, that people can’t really be bothered to react as strongly as necessary,” Borg said during a Sunday conference call from Washington, DC.

Borg is in the US capital attending the spring meetings of the International Monetary Fund (IMF) and has had meetings with a number of economists and representatives from the IMF and the United States.

Sweden’s handling of its own banking crisis in the 1990s has received a great deal of attention recently as the world struggles to pull out of an ongoing financial crisis.

And according to Borg, neither the United States nor Britain have succeeded with the fundamental first step of acting taking control of ailing banks.

“One has to be ready to provide capital to banks in crisis. One can only recapitalize through ownership,” he said.

He believes that state-ownership of banks, which lie at the heart of the market economy, is a sensitive political issue.

But according to Borg, it’s not only an effective way to kick start the financial system, but also a good way to safeguard taxpayers’ money.

Borg suggests that the government should first take over financial institutions, supply them with fresh capital, and then return them to the market again.

He points out that that the Swedish state got back 95 percent of its outlays within five years in the 1990s.

The United States and Britain have been unclear in their cleaning up of bad assets and haven’t succeeded in guaranteeing bank loans very well, according to Borg.

“They’ve given out huge sums, but they’ve done it using different hybrids, like a cross between loans and shares and that’s never effective,” said Borg.

Story continues below…

Borg also pointed out that together, the Nordic and Baltic countries are the world’s ninth largest economy, and in absolute terms, the same countries are the third largest donors to the World Bank, and one of the largest in the IMF.

Nevertheless, power in the global economy remains in G-20, claims Borg.

“It’s not right that we give so much money only to have decisions moved from the IMF to the G20, where we don’t have the same influence,” he said.

TT/The Local (news@thelocal.se)

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Your comments about this article

15:56 April 27, 2009 by taytelbaum
Mr Borg is wearing a nice shirt today. 200/300 euro's a piece? And delivered perhaps is a wooden box? Nice.
20:46 April 27, 2009 by JGame
This guy keeps bagging on the United States and he needs to stop. Things are messed up all over the world and we all need to fix our own. The world always rides on the United States financial coat tails and then when things go bad, then come all the attacks. We are not perfect here in America, there are good and bad with all countries. The reason Borg refers to the 90's, is because he has the same hair cut. Nice pony tail dude. God Bless America!
21:11 April 27, 2009 by taytelbaum
Correction on my entry/ comment earlier today.

I meant to say that Mr Borg's shirt was problably delivered in a wooden box, wrapped in exquisite crisp wrapping paper. Not only a nice pony tail, but nice on a handsome face too!

But I understand, it was about the G-20 and where all the 'big money' is going to. What the minister was trying to say. Or explain.
15:44 April 28, 2009 by peropaco
Doesnt cyborg resembles the talking dude from Pen& Teller

And is that a west-side gangsta sign he is trying to flash? ;-)
15:51 April 28, 2009 by Braderunner Rennuredarb
Mr Borg does have that right...just as the large countries have the right to ignore the smaller countries.
16:13 April 28, 2009 by VikingHumpingWitch
He should be careful lest people start asking what he's done to manage the financial crisis. Cos the answer I got here some weeks back was a big Squat All.
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