The current financial crisis may be affecting economies around the industrialized world — but there’s one region that doesn’t seem overly worried: Scandinavia.
Sweden and Finland, which suffered through a similar financial mess in the early 1990s, are apparently now well-positioned to survive the current woes — and despite the struggles facing Iceland and other neighboring nations.
“Let me be clear that Sweden differs from some other European countries,” Swedish finance minister Anders Borg told London’s Financial Times. “We don’t have any failed banks and thus reconstruction needs are not as great.”
Next door, Norway is feeling the pain — up to a point.
Just this week the nation launched a $55 billion plan to relieve banks of their bad mortgage debt.
But news reports from Norway are notably lacking in the kind of panic that has characterized so much business news in recent weeks.
Rune Bjerke, the chief executive of Norway’s largest bank, soberly told Bloomberg News: “When the government tells us it’s ready to do what’s necessary to boost confidence in the banks, that strengthens the effectiveness of the measures taken.”
Iceland, one of the most prominent victims of the crisis, was once called a “Nordic Tiger,” but is now teetering on the brink of bankruptcy after last week’s collapse of three banks.
But that doesn’t seem to bother neighboring Finland.
“Our banks are not all that active in the real estate market in the United States and there do not appear to be any contagion effects from Iceland,” the Finnish finance ministry’s Peter Nyberg told the Financial Times.
It’s probably no accident that the Scandinavian nations are calm in the face of the current crisis, as they’ve been through it before.
As the London Telegraph points out, the current crisis eerily resembles the one that rocked the multinational peninsula 14 years ago.
Both were sparked by a property boom and deregulation.
Sweden, Finland and Norway each found different solutions in the ’90s — but each essentially boiled down to a limited nationalization of the banks until they were solvent.
“It was very, very painful,” Steinar Juel, of the Scandinavian bank Nordea, told The Telegraph. But in the end, he said, “Taxpayers, in general, did well.”
The British treasury’s plan to rescue its banks, announced last week, is reportedly based on the Scandinavian model — and now other European countries and the United States appear to be following their lead as well.
“World Bank President: Financial Crisis Will Hurt Poor Countries Most”
Voice of America, October 13, 2008
“Nordic nations watch from the sidelines”
Financial Times (U.K), October 13, 2008
“UK turned to Nordic bail-out”
The Telegraph (U.K.), October 13, 2008
“The Stunning Collapse of Iceland”
BusinessWeek, October 9, 2008
“Norway Offers $55.4 Billion Liquidity Boost to Banks (Update2)”
Bloomberg, October 13, 2008