International Investing

Parallels between the current US situation and the Swedish bank crisis of the 1990’s:

“…the Swedish episode seems eerily familiar. … The first signs of trouble appeared among the finance companies that were responsible for the bulk of such investment. In September 1990, a company called Nyckeln — known as ‘The Key’ — folded when it was unable to renew its financing. … By late 1991 there were indications that two of Sweden’s major banks had exhausted their capital reserves and were barreling toward bankruptcy. Property prices, which once seemed capable only of rising, plunged by 50% in 18 months. … Unemployment took a sudden leap from 1.6% in 1990 to as high as 12% in 1993. … Fearing that a collapse of the banking sector would capsize the economy, the Swedish government in September 1992 issued a blanket guarantee of all of the banks’ obligations. … That led authorities, amid a general European currency crisis in late 1992, to briefly increase overnight interest rates to a commerce-killing 500%.”