Tuesday, 19 May 2009

A Fairy Tale - or all is well that ends well.

17th of May is over and so is the Eurovision Song Contest. Sunshine and douze points.
Spring almost done and summer in the offing.
All well?
Well, not quite. Demand for Norwegian products is falling sharply along with prospects for the oil price. We are an open economy and without our exports we will have only fish and potatoes for dinner.
The stock exchange is bullish nevertheless and share prices are again being inflated by the herd.
A few investors say however they are expecting another sharp downturn soon and have withdrawn from stocks altogether.
One says he will not invest in shares till banks are nationalized and firms' credit lines restored.
When will that be with collateral asset values still falling and a huge exposure to potential losses in Eastern Europe and elsewhere?
The government's crisis strategy for the pension fund is to hoard stocks because they are cheap right now. Right, as long as those firms don't go bust. But what else is there to buy? Well, why not real estate in London City, which is cheap as well - and more durable than paper. Billions from the same fund are also poured into employment creation. Will it help? Against what? At best it may give us good infrastructure for the future. It cannot possibly kickstart Norwegian industries in this global desert of recession. The rest of the world is already stopping buying our products and as we are only 4.7 million (well fed) people in this country, developing new national markets the Chinese way is no option. And do we really want to buy whale meat, oil drills and aluminium wheel rims from one another?
Much higher unemployment figures are unavoidable - but not before the general elections please.
Hope they save a tiny bit for my pension.

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