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Markets hit by 'buffalo herd' mentality: Borg

Markets hit by 'buffalo herd' mentality: Borg

Published: 05 Aug 2011 14:42 GMT+02:00
Updated: 05 Aug 2011 14:42 GMT+02:00

Swedish finance minister Anders Borg attempted to reassure worried investors in the wake of stock market drops across Europe on Friday, but admitted that financial markets remained "turbulent".

"We've got a very turbulent situation on the financial markets," Borg told the TT news agency, commenting on the tumble that many of Europe's major stock exchanges took as business opened on Friday morning.

Europe's major stock exchanges plummeted as business opened on Friday morning.

"We've got a very turbulent situation on the financial markets," he added.

"I've been in touch with the Swedish central bank, Riksbanken, the Financial Supervisory Authority, and the Ministry of Finance, to ensure that they are all following developments closely so we can be sure to have our bastions in place."

There's a risk of a messy autumn on European markets, according to Borg, who underlined that Sweden can't help being affected by this.

"It affects us through stock markets, and through households and companies becoming insecure," he explained, recommending caution.

The finance minister did not give any direct answer to questions about the shaky financial situation affecting the fifth stage in the centre-right government’s in-work tax credit programme (jobbskatteavdraget), planned to be presented in this autumn's budget proposal.

Instead, Borg discussed the need for a careful monitoring of developments, and the need to make sure to state finances remain secure.

"Markets don't always work rationally," he pointed out.

"There's an insecurity, and a buffalo herd stampedes off across the world, creating storm winds. It's not part of my job to speculate about what's motivated and what isn't, but the problem is that there are several imbalances, weighing down the recovery that should be occurring now, and that is something we should take measures against," said Borg.

At the same time, Borg said that financial worries can have an effect on Sweden, and on budget plans in the Ministry of Finance.

"This is negative for Sweden's economic situation, it'll have an effect on investment incentives and on households' consumption," he said.

"We're still getting signals of strong developments from the Swedish economy, but the risk is looking grave. It looks to be getting more severe as the autumn approaches, and we should continue our work to keep Sweden outside the eye of the storm, by being careful in our own actions."

When asked about advice for Swedish households, the finance minister continued to recommend cautiousness.

"Be careful, don't incur large debts, and don't put all savings into stocks," he said, adding that the situation looks fairly stable for Swedish households.

Borg also noted that this is a serious situation, with a significant stock market drop, and that financial recuperation will be damaged.

One conclusion drawn was that the government will have to be cautious in their autumn budget proposal for 2012.

TT/The Local/cg (news@thelocal.se)

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Your comments about this article

16:19 August 5, 2011 by Svensksmith
Both have tails.
16:27 August 5, 2011 by conboy
and produce Sh#¤e
23:03 August 5, 2011 by Smallnose
buffalo's? i was thinking of lemmings.
23:08 August 5, 2011 by wxman
I didn't realize Sweden had buffalos. Who knew?
10:17 August 6, 2011 by J. L. Belmar
Gentlemen, gentlemen. Do you know the real name of Borg? Well, well. His name is William Frederick "Buffalo Bill" Cody Borg, and he still is a United States soldier, oops!, Swedish soldier, bison hunter and showman.

So, let us shout "Hi-yo, Silver!", oops again. That was The Lone Ranger". Sorry "Buffalo Bill"Cody Borg. I goofed as usual.
16:17 August 6, 2011 by skatty
“When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.”

Keynes in 1936
20:43 August 6, 2011 by J. L. Belmar
#6 16:17 August 6, 2011 by skatty

What? Buffalo Bill is not doing bad. His problem is that his ego is many times bigger than his mouth and the way he hunts buffalos at the Parliament, where there are too many, with moustache or without it, but too many.
08:05 August 7, 2011 by teknowaffle
According to Borg the buffalo horde will be assimilated as resistance is futile.
14:15 August 7, 2011 by Vstrommer71
OK guys.In case you are unsatisfied with your minister of finance then we'll send you our local minister from Greece!Our guy has done his job perfect so far and we are willing to send him to solve your fiscal problems too :-)))

By the way being out of the Eurozone I think it's a major plus these risky days
17:22 August 7, 2011 by J. L. Belmar
14:15 August 7, 2011 by Vstrommer71

I like Buffalo Bill. What I do not like is his way of hunting buffalos.

He is becoming a disgrace to his nickname.
11:38 August 8, 2011 by the fonz
If you don't like Mr Borg and what he's achieved with the Swedish economy - I hear Gordon Brown is looking for a job
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