And Sweden cannot devalue for two reasons. One is well known, while the other leaked out during the present crisis. The well-known reason is (or was) that devaluation means Goodbye to the European Community (or its inner circle). Sweden wants in and has tied the SKR to the European Monetary
System.
Banks insolvent
The other reason is more scary. It is connected to the fact that a hot dog in Stockholm is currently half the price of a share in the Scandinavian Enskilda Banken, the biggest bank in
Scandinavia.
As in Japan, the Swedish property market started to collapse about
18 months ago. Then small finance firms went bankrupt. Now the whole Swedish financial
Нарио system is disappearing into the same "black hole", with credit losses estimated at between SKR 75 and 90bn in the coming years.
Nobody really knows how much - it is possible that one bank, the Handelsbanken, is not drowning in the credit swamp. But every day new figures and discoveries fuel fear in the Swedish business world.
In the mid-'80s the then social democratic government decided to "release the creative powers of the market" and removed all restrictions on bank lending. With loans guaranteed by property assets, the banks handed out lorryloads of money to finance companies and speculators coun ting on the "estimated price increase" of their property assets. Thus a building worth 10 million on the market was the guarantee for lending out 12 million.
Over the past ten months, the new bourgeois government has already stepped in with SKR 20bn for the state owned Nordic
Bank and close to that figure for two other banks — one of which, the Gotha Bank in
Gothenburg, was declared bankrupt a few days before the French referendum, finally brought to its knees by the Riksbanken's
500% marginal interest rate.
Thus a total of around SKR 40bn of taxpayers' money has been spent to avoid a
• breakdown of the country's financial sysbreakdown of the country's financial eve.
tem - the same amount as is to be saved by the crisis cuts package. And this crisis is not over yet.
And this is the second reason why the krona cannot be devalued. Swedish central and municipal governments have foreign loans for SKR 550bn (July) to cover their deficits. They have also borrowed heavily from Swedish banks. A devaluation of
10 % would Now, shall we mean an negotiate? increase in their CLAES ANDERSON is a writer and poet and chairperson of the Left League. H OW serious is the present crisis in Finland? Times are tough in Finland presently. The worst off must pay for the crisis — the unemployed, the sick, families with children.
On the other hand we have the speculators and the export industry. They get huge extra benefits. Yesterday the government started to discuss yet another proposal for new cuts. • So when the chairperson of the
International Viewpoint # 236 • October 12, 1992 debts of SKR 55bn. This would end the death struggle of the banks with a gentle push over the cliff.
In the days after the crisis package, some commentators pointed out that the enteebled condition of the SE bank was one reason for the unenthusiastic response of "the markets".
This bank is suspected to have around half of these foreign loans. Through a SKR 1bn loan it is the main owner of the Gotha Bank. It is harassed by rumours of more heavy losses from speculation in US dollars. * I fox in the henhouse" Finnish trade union confederation says that "the whole country will soon be like a big soup kitchen" it is no exaggeration?
No. Above all you can see the misery clearly in the bigger towns. In Finland everybody takes out loans to buy apartments — we don't have the system of renting apartments. Now the unemployed have no chance of paying the loans they have taken out for their apartments.
We have 400,000 unemployed, each of whom is the breadwinner for two or three other people. In this way every third or fourth Finn is directly hit by unemployment. One in four young
ALREADY reeling from the economic effects of the collapse of the Soviet
Union, Finland has also been hard hit by the latest bouts of market turbulence. In response, the Finnish government is proposing a swingeing round of austerity measures.
The proposals centre around the privatization of everything except rescue services like the ambulance and fire services. Education will now be free up until the age of 15 only, unemployment benefits will be cut drastically and the conditions for claiming them tightened, subsidies to companies and farms will be practically abolished, all tax benefits for single parents and families with children will disappear and the pension age will be raised and pensions cut in value.
Peter Lindgren spoke to two leading members of the Left