At least eight Norwegian municipalities have, through a decision-making process that remains unclear, decided to make money by making leveraged bets in hedge funds. Two salesguys at Terra Securities apparantly convinced these municipalities to borrow money and place the proceeds in funds that specialize in American municipal bonds. The fund is tanking, and the municipalities stand to lose hundreds of millions of Norwegian kroners in the process. The ministry of finance is not inclined to bail them out, but since municipalities receive block grants, it's hard to see how the ministry is just going to let them miss payroll for school teachers, old age homes, etc. Mutual recriminations are flying, and Terra Securities has meanwhile lost its licenses to trade, only to immediately declare bankruptcy; Citigroup, who manages the fund, has decided to close it.