That said, the history of the Savings and Loans issue and the saga of LTCM indicate that some kind of bailout is rather likely.
(And not necassarily a bad thing that we have enough folk memory of the depression to feel that the banking system can't be left to collapse.)
But, of course, the two worries are:
That way we would actually get banking for the public interest. Those whom the Gods wish to destroy They first make mad. — Euripides
Sorry for the slip, Comrade Migeru.
This hasn't got the Jerome seal of approval AFAIK. Those whom the Gods wish to destroy They first make mad. — Euripides
It is interesting to read about it now thought. I was young when this was going on, so didn't really understand what was going on. From what I gather thought, 23 of the Norwegian banking sector was verging on bankrupcy because of a set of factors eerily similar to some advanced economies I know: First of all, the private banks increased their loan portfolio threefold in half a decade, after the government liberalised the banking regulations. Then, the economy started slowing in the late eighties, especially in IT and oil, two areas of big importance for Norway. Soon after, the norwegian housing boom, fed on by the increased aviability of cheap loans, collapsed. (About 20 percent of the bad loans were to private customers) The housing prices would take almost a decade to recover. (And that in a steadily growing economy)
Sources: (unfortunately in Norwegian) http://www.nrk.no/underholdning/store_norske/4704274.html http://www.ssb.no/00/aar2000/art-1999-11-10-01.html
By how much did house prices crash in Norway?
So the same interests might have bought them back, but they would have to pay real money for them. When I read about it, i discovered that the norwegian parliament actually passed a bank savings bill which mandated that the Norwegian government kept a "strategic interest" in the biggest business banks. First at 51 percent, then from 97 and on to 2000 at 33,33 percent. The Norwegian government still owns a sizeable part of the shares in the biggest bank consortium in Norway, DnB-NOR (34 percent).
Another one of them was sold off to foreign (Finnish or Swedish) interests however, in contradiction with the set goals of the banking reform law. This after the norwegian Labour got back into power and started playing Blairite disciples.
