Friday, 3 July 2009

Green Shoots July 2009

The US unemployment figures are soaring and Schwarzenegger and colleagues are struggling to balance their budgets. Does re-election of Obama require another stimulus package? Also the slump in the UK turns out to be much worse than expected and Germany and Sweden have severely strapped state finances and their banks are highly exposed to the east. China has been remarkably quiet for a long time.
Surprising that all the bad news don't affect stock markets more. Have they priced in this and that already? It could be that all these traders really are expert macroeconomists with privileged access to information on impending recovery. It could also be that they have just become immune to the massively negative flow of information, hunch down to let the next log pass and concentrate on the daily trade.
By contrast the recession is not much felt in Norway - yet. Interest rates have been cut and boost spending on holidays and high street goods. A new housing bubble is on its way. Swedes and Poles still swarm here to get jobs. Fiscal stimuli have already been applied generously which will give us more of the same. There is a lot of latitude in a big oil fund. Probably only pockets of unemployment, falling import prices and banks hoarding money saves us from inflation. Stawberries are as expensive as ever.
Of course this country should do its modest bit to get the international economy growing again, but subsidized housing? Hardly the sector with the highest imports contents. Banks should probably rather lend to businesses, but there they are as prudent as financiers elsewhere in the world.
So, for how long can this country maintain its own private comfort bubble?
Just a reminder: there is also a general election this year.