Tuesday, December 17, 2013

Three Interesting Proposals by Hans-Olaf Henkel

Hans-Olaf Henkel makes 3 proposals in this article from Handelsblatt which, I believe, I originally made about 2-1/2 years ago:

Three measures against the evil
1. Across Europe, banks must be forced to mark their holdings of sovereign bonds to market. Once that is done, the real level of undercapitalization will be apparent.

2. The then inevitable bailouts must be handled on a national basis. For example, this would mean for France the temporary nationalization of its banks. In Germany, the federal and state governments should get more involved with Commerzbank and certain Landesbanken. While that would have as a consequence an increase in the national debt, for the first time our "saviors" would have to acknowledge what they are saving and where the saved ones are.

 3. After stabilization, and, where necessary, after closing banks, the banks can be privatized again. This has worked well in Sweden.

Only when the banking sector is stabilized, do policy makes have true 'freedom of action' (i. e. they don't have to fear at every step along the way that horror scenarios might explode if certain measures were not taken. What was called 'without alternative' so far would then allow many alternatives.


  1. Theses are excellent proposals! I wish politicians would listen to them!

    1. A politician who listened to an alternative view would not be a politician for long - their party machine would see to that.

  2. Why should i.e. a French president (with all the other burdens on his shoulders ;) want to go that thorny way?

    H. Trickler