G-20 Series: Can the Swedish Banking Model Save the World Economy?

Big Think recently approached top economic thinkers from around the world for policy recommendations that could catalyze the needed structural changes to pull the global economy out of recession. Included here are ideas from former Swedish finance minister, Leif Pagrotsky.

The inspiration for a series on global economic policy solutions came from Dr. Heizo Takenaka, who in 2002, acting as Japan's economics minister, successfully tackled Japan's banking crisis with his Plan For Financial Review, or, as it is widely known, the Takenaka Plan. His measures were largely successful after he convinced reluctant banks to write down billions in bad assets.

Leif Pagrotsky is a Swedish Social Democratic politician, who had various posts in the government of Göran Persson between 1996 and 2006. In 1997 Prime Minister Göran Persson made Pagrotsky Minister of Trade and in 2002 Minister for Industry and Trade. One of his most publicly known activities during this period was his efforts to promote Swedish popular music export. In 2004, he switched posts with former Minister of Education Thomas Östros. At the same time, the responsibility for cultural matters, previously belonging to a separate ministry, was added to Pagrotsky’s portfolio. Pagrotsky has a Bachelor of Arts and a Master of Science in economics from Gothenburg University. Before joining the Cabinet, Pagrotsky worked at the Central Bank of Sweden and in the Ministry of Finance.

The following are excerpts from a recent telephone conversation with Mr. Pagrotsky.

"It's very important to be quick in cleaning up the banks, to do away with all doubts about the value of the assets on the banks. The vagueness of that value and the lack of credibility of the balance sheets of banks is so important to get rid of. We need full transparency and I believe that requires a separation of the banks' assets into those that are healthy and should remain on the banks' balance sheets--the assets that have a clear market value and that are liquid--and the other assets--assets that cannot be sold because nobody believes that they can identify a proper value for them, that they should be separated and put into another entity, a bad bank or something, and the fresh bank with the healthy assets can move on and build a future."

"I believe that a healthy banking system must do away with the bonus culture. I believe bonuses are like a turbocharge on risk and we have seen now from so much experience that bonuses do not contribute to a strong and healthy banking system. They are not needed for the health of the economy. They delegitimize the banks in the eyes of the general public and I believe the trust of the general public is extremely important in the financial sector and for the banks and I think there is no reason to keep bonus payments the way they have been in the past. They could be reformed, but that's a very tricky business. they should be long term. They should be recalculated in a different way. But my proposal is to just get rid of them altogether. It's not worth the effort to reform them."

"In the European Union it is a very fashionable game to talk about the great things the European Union can do in the world and in Europe and the regret with which people say that the United States is so dominant and we need to rise to match the United States. Now when this opportunity is open and the European Union was not up to it, I think that's very depressing."

How to vaccinate the world’s most vulnerable? Build global partnerships.

Pfizer's partnerships strengthen their ability to deliver vaccines in developing countries.

Susan Silbermann, Global President of Pfizer Vaccines, looks on as a health care worker administers a vaccine in Rwanda. Photo: Courtesy of Pfizer.
  • Community healthcare workers face many challenges in their work, including often traveling far distances to see their clients
  • Pfizer is helping to drive the UN's sustainable development goals through partnerships.
  • Pfizer partnered with AMP and the World Health Organization to develop a training program for healthcare workers.
Keep reading Show less

Why does turkey make you sleepy?

Is everyone's favorite Thanksgiving centerpiece really to blame for the post-dinner doldrums?

(Photo from Flickr)
Surprising Science
  • Americans kill around 45 million turkeys every year in preparation for the Thanksgiving meal, only to blame our favorite centerpiece for the following food comas.
  • Rumor has it our after-dinner sleepiness results from the tryptophan found in turkey.
  • However, it is the meal's overall nutritional imbalance, not just the tryptophan, that make us want to leave the dishes for tomorrow. Or maybe the next day.
Keep reading Show less

How to split the USA into two countries: Red and Blue

Progressive America would be half as big, but twice as populated as its conservative twin.

Image: Dicken Schrader
Strange Maps
  • America's two political tribes have consolidated into 'red' and 'blue' nations, with seemingly irreconcilable differences.
  • Perhaps the best way to stop the infighting is to go for a divorce and give the two nations a country each
  • Based on the UN's partition plan for Israel/Palestine, this proposal provides territorial contiguity and sea access to both 'red' and 'blue' America
Keep reading Show less

Why Henry David Thoreau was drawn to yoga

The famed author headed to the pond thanks to Indian philosophy.

Image: Public Domain / Shutterstock / Big Think
Personal Growth
  • The famed author was heavily influenced by Indian literature, informing his decision to self-exile on Walden Pond.
  • He was introduced to these texts by his good friend's father, William Emerson.
  • Yoga philosophy was in America a century before any physical practices were introduced.
Keep reading Show less