GM’s sale of Saab collapses

From Reuters: A deal by General Motors Co GM.UL to sell its Saab brand collapsed on Tuesday when the buyer pulled out in a move that threatens the Swedish luxury brand with closure. GM had been aiming to close a deal by the end of next month to sell Saab to a partnership led by

The latest bubble warning: Swedish house prices

There is mounting evidence that bubbles are forming again everywhere across the globe as easy money makes itself felt in asset prices. The latest evidence comes from Sweden where Europe’s lowest home loan rates have pushed up the price of residential property. At issue is the extremely loose monetary policy in Sweden that is an

Sweden prepares for financial collapse in Latvia and major bank losses at home

The following is my translation of a much-discussed article that appeared in Swedish daily Svenska Dagbladet at the weekend.  This information was being withheld from the public and leaked at an inopportune moment. Note that the Swedish government has secretly been preparing the banks for financial Armageddon, encouraging Swedbank into a rights issue which arguably

Zombie banks Scandinavian edition and the threat of too big to fail

Across the world, governments are doing their level best to shore up weak banking systems in the wake of the most significant final crisis in decades.  Most market players appear to believe these efforts successful; why else have shares risen so dramatically from lows late last year and early this year? While I do believe

Why is Swedbank doing a second rights issue?

Today, Swedbank, a Swedish bank with huge Baltic loan loss exposure, surprised investors with a second rights issue in less than a year.  In going to investors for more money, the company said its doing so in a fully underwritten deal demonstrated “a position of strength.” “This is a forward-looking rights issue” to deal with

Earnings results at Swedish banks show large writedowns in Baltics

Earnings season is upon us and the Swedish banks have begun reporting earnings. Their results have seen huge writedowns that demonstrate large and continued exposure to souring loans in the Baltics. Handelsbanken and Nordea reported today. Despite the writedowns, you do get the sense that things are going better than expected as the banks beat

Transferring Swedish bank risk onto Latvian taxpayers

This is my translation of an article from Dagens Nyheter, a Swedish daily. Swedish banks are planning to write down Latvian personal loans by 10 percent. However, the proposal includes only a small part of the Latvia’s mountain of debt. The criteria for qualifying for the program, as it stands right now, is quite strict.

Sweden: negative interest rates and quantitative easing

In the clearest signal yet that we are still in a potentially devastating global deflationary spiral, The Riksbank, Sweden’s central bank and the world’s oldest central bank, has effectively cut interest rates to minus 0.25% and has started a program of quantitative easing a.k.a printing money. These are the most dramatic moves yet by a

Event risk in the Baltics is critically high

This is the assessment of den Danske Bank as reported by Edward Hugh.  The last time I mentioned the Baltics was on May 12th in my post “A bearish view on Eastern Europe.”  I ended saying the Scandinavian banks’ exposure to the Baltics is just as worrying and should be the place to watch before

Is Obama considering nationalisation?

You may have seen Ed’s post “Gillian Tett: Washington is talking to Swedes about banking crisis solutions” a week back about how the U.S. government was getting ready to talk to Swedish officials regarding the banking crisis. This is a very important development and I have a lot more to provide below on the issue as it pertains to today’s events and Japan’s crisis early this decade

Gillian Tett: Washington is talking to Swedes about banking crisis solutions

Gillian Tett has written in the Financial Times that the Obama Administration is no talking to the Swedes directly about their solution to the credit crisis, suggesting a openness to potential banking crisis solutions. Next week, Bo Lundgren, now head of the Swedish debt office, but formerly a Deputy Finance Minister under Carl Bildt, is scheduled to meet with American officials in Washington. For those of us who see positives in the Swedish crisis solution, this is positive news

Lessons from Swedish bank resolution policy

The following is a post from the site Euro Intelligence, published just 5 days ago regarding the Swedish solution to the banking crisis. I am providing this version with the author’s permission, who should be credited with much of the Swedish bank resolution solution’s creation. A longer version is linked at the bottom of this post.

Lars Jonung, who wrote this piece, is now a research adviser at the European Commission in Brussels. He was previously professor of economics at the Stockholm School of Economics. He has published many books and articles in English and Swedish and is the co-author of the leading macroeconomic textbook in Swedish.

You should also note that Jonung served as chief economic adviser to the Prime Minister Carl Bildt in 1992-94 when the Swedish solution was implemented. His characterization of events in this piece is very much at odds with what Alan Blinder recently said in a New York Times piece. Given his role in the process, this discrepancy should be noted