The country of Sweden is going to be the Baltic nations’ knight in shining armor, as the land of the krona will do whatever they can to help the new Democracies, salvaging markets and related ETF.
Countries such as Latvia, Estonia and Lithuania are too precious to let fail, over the past decade, Sweden has plowed billions of kronor into their tiny but booming neighbors across the Baltic Sea. Deep recessions are hitting these countries as the Baltic states are experiencing economic hardship similar to the sub-prime mortgage mess hitting the United States, reports Carter Dougherty for The New York Times.
The Swedish banking crisis in the 1990s was defeated and this feat alone gives bankers the confidence that they can pull this off again. Because these countries are new democracies, Sweden feels a responsibility to try and help them out. In its deep sense of ownership of the Baltics, Sweden’s own financial self-interest and a broader desire in Europe to avoid a new East-West divide are driving Sweden to spend more money.
It’s more evidence that Sweden has embraced globalization by keeping its borders open and engaging in extensive worldwide trade, says The Exception magazine. Leif Pagrotsky, a Swedish politician, says that the government has been able to support strong employment, rising real wages and growing services.
Will Sweden’s citizens agree with the Prime Minister’s decisions? And will this attempt to rescue the Baltic nations amid the financial pullback work? Time will only tell.
- iShares MSCI Sweden Index (NYSEARCA:EWD): down 7.7% year-to-date