DENMARK DEAL:JUST TWO years ago everything was so rosy in Denmark that a cocksure finance minister could unveil his annual budget with the brag "we'll end up owning the whole world".
Yesterday in Copenhagen, ministers of the same centre-right government ate a large helping of humble pie as they announced a broad emergency package to underwrite commercial banking operations and to avert financial meltdown.
To be fair, Denmark's predicament was no different to the problems experienced by almost every other developed economy during the last few weeks: a serious dose of clogged arteries in the world's money markets, triggered by a collapse of trust.
For the Danes, this crisis of confidence meant that some banks had problems securing short-term loans from other financial institutions to manage their day-to-day operations. For several weeks the Danish government hoped that the underlying strength of their economy, combined with the inherent solidity of their bigger financial institutions, would be enough to restore trust and cash into the system.
But when Ireland stepped in with its blanket guarantee to bank customers, the writing was on the wall. Anders Fogh Rasmussen, the Danish prime minister, acknowledged the Irish trigger yesterday.
"The Danish banking sector is solid and sound but international capital is flowing to where the guarantees are. Without a package from us, healthy and well-driven banks couldn't get the cash they needed," Mr Fogh Rasmussen said.
Against the background, it is understandable that the Danish government appears somewhat annoyed that Irish, and subsequently German, rescue initiatives goaded it into action.
Ireland's initial decision to limit its guarantee to native banks seemed particularly irksome. "Our solution is non-discriminatory. It applies equally both to Danish and foreign banks that operate in Denmark so that we comply with European Union rules," Mr Fogh Rasmussen said yesterday.
The Danish package differs from its Irish equivalent in that it is the banks themselves that are stumping up the bulk of the cash. Between them the banks will pay as much as 35 billion kroner (€4.7 billion) over the next two years to a fund to insure depositors against losses.
The state will only step in to augment the fund with taxpayers' cash should the banks' contribution become exhausted.
Ordinary citizens who fretted that they might be left carrying the can for the profligacies of a flawed system drew some comfort from this.
But it was another element in the deal that yesterday provided most succour to regular punters: for the next two years Danish banks will be banned from paying dividends to shareholders, buying back their own shares or issuing stock options to their management.