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. 

Snout in the trough

Good governance seems to be a real scarce commodity these days and kleptocracy is probably not a phenomenon unique to Africa.

Halliburton, Iceland, politicians granting themselves exceptional pensions, purchases and sales of political favours.

History and newspapers are awash with examples, and the stories from the British Parliament show that given opportunity and lenient norms, anyone seems capable of doing it.

Incredible that the same politicians seem to believe that they are Gods gift to their country and should be allowed to stay on in office, despite abusing taxpayers' money.

Do we really want our elected representatives to become corrupted or come to regard politics as a safe lifetime job?

Did we really look for little Mugabes in the making when we elected our MPs?

If Gordon Brown really wants his constitutional reform to make a difference, he should propose a ten year limit to the time any politician can sit in Parliament.

This could set a good example for other countries as well. There is no reason to believe that politicians are any worse in the UK than elsewhere.

But it won't happen, will it?

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.

 

 

 

But Krugman was not dead

Behold! Paul Krugman is in circulation again. His NYT column is flowing over with comments from concerned followers suspecting he was fed into submission or food poisoned at the White House dinner party. Messages from Beijing tell he survived and is as critical of the Obama rescue packages as ever. Good to see him back. Good to see he is still bent on saving us from a "Japanese slump".

Oslo is sunny and until further our only worry here is whether it will last.

Springtime in Winter Wonderland

May is happening in Norway. Nature simply exploded when the snow went away. In the land of the Winter God winter lasts 5 months. Plants have very little time to grow, florish and set fruit before the next snowfall. They know how to use it.

In the meantime the economic crisis disappeared from front pages. Struggling papers found that swine flu was a better life saver than the economic crisis. It was set to kill millions of us. Unfortunately it seems to peter away all too soon. Flu and crisis gone, what is there left to secure the future of the press? Just Gordon Brown, car bombs and philosophers who don't like gays?

Is a bullish Wall Street and ditto housing market really a sign of recovery?
Or are US banks still heavily stressed, European banks still heavily exposed to losses in Eastern Europe and are the rotten loans still there?
Optimism is well and good but is there really reason to declare victory already?

Whatever, rotten loans and viruses seem to make pretty good compost for the spring flowers.