Norway huge bank bailout

[krakknisse]

This just on the news. Press release: 350 billion Kroner Government Bond Swap Facility

The Norwegian government will provide 350 billion NOK (55 billion USD) in loans to banks - backed by mortagage bonds. In essence, it is a swap of mortgage-backed bonds for Norwegian Treasuries. This will bypass the Norwegian Central Bank. This will need the Storthing (Congress) approval, but this seems assured. It will go into effect on November 1st, which seems quite late in these turbulent times.

Just to put this into perspective, on a per capita basis, this would be 3500 billion USD if it were in the US. The amount is huge. The Norwegian Central Bank will also provide fixed interest rate loans up to 1 billion NOK (150 million USD) per bank for up to one year.

They clearly state that the interbank market does not work. "The system is fundamentally sound", "banks are safe" bla bla. No blanket deposit guarantee, though.

The narrow monetary base (M0) is here, and includes physical money and bank sector deposits at the Central Bank. It is now 80 billion NOK (12.5 million USD). M1, M2 are here. M1 is coin and in "transaction deposits", currently 746 billion NOK (117 billion USD). M2 is M1 + other deposits, bank sertificates, money market funds, currently 1500 billion NOK (235 billion USD).

I'm trying to figure out how inflationary this is. Seems to me that the government/Norwegian taxpayers are taking on a significant liability in the housing market, to take that burden of bank's backs. However, the Norwegian government has stellar finances due to the oil boom. If oil goes to 50 USD/barrel, then that government AAA rating might not be that good.

Comments and clarifications welcome.

[*T*]

Re: Norway huge swap facility (MBS<->Treasuries)

Well at least you have wood, fish, jam, elk, land, sheep, oil and a social spirit, so you will not starve, go cold or descend into civil war.

In fact Norway is my bolthole of choice if TSHTF in a superbad way.

[globaleconomicollaps]

Re: Norway huge bank bailout

has anybody else noticed that we are not hearing about giant government bailouts of stricken Chinese, Japanese or middle eastern banks? Didn't they buy American mortgages?

Also on the subject of relative strength of banking systems, I see two contradictory articles about this:



Support for euro in doubt as Germans reject Latin bloc notes

Which i just noticed is from June so it might be out of date
and

The World’s Banks Could Prove Too Big to Fail — or to Rescue

Which contains this graphic showing Greek and Italian banks as some of the strongest in Europe:

http://www.nytimes.com/imagepages/20...S_GRAPHIC.html

[serge_oc]

Re: Norway huge bank bailout

Does anyone know of any rating for countries?

Until recently we were looking for ratings for banks, wondering which one may go under?

Does anyone compile a list of which countries are most likely to fail?

Which ones are more safe from social, economic and of course financial chaos?