It’s not complicated. It’s just unthinkable.
1) Let the banks go under if they’re bankrupt. Make their private owners take the losses.
2) Refloat the banks, this will cost a TON less than having governments pay of private losses.
3) For countries with “unsustainable” debts after doing this, roll the debts over into 100 year bonds at 1% interest. If the bondholders don’t like that, that’s just too bad. No, they won’t “strike”, neither Iceland nor Argentina have any trouble getting loans.
There are other things which should be done, but that’s the basics. This is not complicated. It just requires being willing to stick the bill for the financial crisis with the people who caused it, financial elites.
How to fix Europe’s economic crisis
“It just requires being willing to stick the bill for the financial crisis with the people who caused it, financial elites.”
And that’s exactly why it will never happen.
There’s another problem with Ian’s Rx: those “financial elites” include most of the biggest pension funds. So you stick it to the elites … who turn out to be millions of Mom and Pop pensions.
Not a good idea.
If you want rich people to pay, don’t stick them with the losses. There is no simple way to make sure that’s who takes the losses. If you want them to pay, stick them with taxes. Those can be targeted much more precisely. Just one example: a tiny transaction tax on all trades. It would have zero effect on individuals, and it would wipe out the business model of the big hedge funds. The new money from taxes could then be used to compensate the losses of the little folk.
That could work, which is why, as lurkerfan says, it’ll never happen.