Mr. David McWilliams:

I was very in favour of the Swedish approach as it looked like a good blueprint from a country that does not get much wrong. Over the years, the Swedes seem to be very good at public administration. What they did was to write down their loans incredibly quickly, which had the effect of allowing the banks that were good to begin to lend again very quickly. This materialised rapidly in the significant growth of the Swedish economy in the 18 months after their banking crisis. My feeling was and to a degree still is that the NAMA process was so slow in writing down and it never freed up the banks that had got the stuff off their balance sheets to begin the process of lending. We remained in what Keynes would have described in a traditional liquidity trap for a long time. Irrespective of how low the interest rate was, people had too much existing debt and did not want to borrow any more while the banks had too much bad debt and did not want to lend.