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A few investors say however they are expecting another sharp downturn soon and have withdrawn from stocks altogether.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.

Aid euthanasia?

Good show by "Dead Aid" Dambisa Moyo in Oslo the other day.
Her cure may not be adequate but the aggression she is met with by the donor community proves she has got a point.
And counter arguments are less than adequate. If we agree that showering African leaders with aid money spawns corruption and relieve them of the onus of being accountable to their own people it does not help to argue for more aid to build well functioning states with accountable leaders. If there ever was a Catch 22....
And by the way, who are we? Why are African leaders not more active themselves in solving their problems? Why do the mzungu think they need to coerce the people on the Equator to do the right thing? What is the right thing anyway?
Aid is not Dead, but what about euthanasia?

Dollar traps and thaw

Snow has almost gone now and stockmarkets rally - in some places. But does this mean that the global economic outlook is also improving? Traders have always had a great capacity for turning gloomy depressison into exalted optimism (and back) in the course of minutes. Journalists are quick to follow suit. But mania does not mean that danger is over. Admittedly the pre-easter G20 did emit positive sounds but as Krugman suggests in "China's dollar trap", "... the crisis probably still has years to run".

 

Could it be that the Winter God's finger in all this is less significant than assumed and that the corellation between frost and recession is overstated?

This really needs to be discussed with this Italian scientist who established the link between camping trips and earthquakes.