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Sweden Starts to Suffer

Wall Street Journal

byke
post 9.Nov.2012, 02:16 PM
Post #1
Location: Europe
Joined: 28.Oct.2008

The Wall Street Journal, had some interesting articles today regarding Sweden's debt crisis.
Interesting to note :

QUOTE
In 2011, Swedish households had a gross debt-to-income ratio of 149%, higher even than the British, who, at a ratio of 139%

http://online.wsj.com/article/SB1000142412...=googlenews_wsj

And another similar one here :
http://online.wsj.com/article/SB1000142412...=googlenews_wsj

#Grim times ahead
#Swedish model?
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organic225
post 9.Nov.2012, 02:23 PM
Post #2
Joined: 7.Apr.2012

Good read, thanks.
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byke
post 9.Nov.2012, 02:34 PM
Post #3
Location: Europe
Joined: 28.Oct.2008

QUOTE (organic225 @ 9.Nov.2012, 02:23 PM) *
byke,. Can't access the article unless I'm a subscriber. Can you post some of it here?

Terribly sorry,
When I checked it earlier I was able to read the whole thing ... but now it says I have to be a subscriber (which I am not)
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byke
post 9.Nov.2012, 02:35 PM
Post #4
Location: Europe
Joined: 28.Oct.2008

Here we go :

QUOTE
Sweden's finance minister Friday painted a fairly bleak picture of the short-term economic outlook for his country as it feels the chill of the economic and fiscal crisis gripping Europe.

"We have the picture that we are seeing a very sharp slowdown in the Swedish economy, we have been clear that risks are to the downside," Anders Borg told reporters here.

This is connected to increasing signs of trouble in other countries, Mr. Borg said, particularly Europe, but also the U.S.

Sweden's exports account for half of its gross domestic product and 35% of goods shipped from Sweden go to the troubled euro zone. That makes the Nordic state sensitive to the slowdown there.

Companies like Ericsson (ERIC), one of the country's largest, recently announced job losses at home as they seek to ride out the downturn.

"The situation is not as bad as it was in [the financial crisis of] 2008 but it is troublesome and we are following it closely," Mr. Borg said.

He also said it was too early to issue any new forecasts for economic growth in Sweden. The government's latest forecasts are for growth of 1.6% this year and 2.7% next year. That is more optimistic than Sweden's central bank which forecasts 0.9% growth this year and 1.8% next year.

Mr. Borg said the economic slowdown had been of a type which wouldn't have a serious effect on his budget planning in the short term.

"What has happened so far has been mainly centered on things like poor export numbers which don't hit public finances so hard," he said.

The finance minister said he would wait until next year before issuing any new economic forecasts.

Write to Charles Duxbury at charles.duxbury@dowjones.com
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byke
post 9.Nov.2012, 02:36 PM
Post #5
Location: Europe
Joined: 28.Oct.2008

This one works as well now :

QUOTE
Sweden has been a beacon among post-crisis economies. That, though might be about to change. Not least because the widely feted sobriety of the Swedish banking sector, following its own crisis of the 1990s, might be an illusion.

Sweden's economy is slowing sharply, according to the Finance Ministry. The country, which is heavily export dependent and, like Germany, specializes in high-value manufacturing, is being hit by the European crisis and a slowdown in China as well.

Some 50% of Swedish GDP comes from exports and a third of those are shipped to the euro zone. So perhaps it's little wonder then that industrial production slumped 5% on the year given the gloomy news coming from points south and east. A richly priced exchange rate isn't helping either.

Job losses have already started to roll in.

That's a real worry for Sweden's heavily indebted households.

Swedes, like many north Europeans, are stuffed to the gills with debt.

In 2011, Swedish households had a gross debt-to-income ratio of 149%, higher even than the British, who, at a ratio of 139%, are struggling to maintain enough spending to keep their economy growing.

Not that Swedes are alone. The Dutch have an even higher ratio of 250%, thanks to government policies that have encouraged high levels of mortgage debt. But the Dutch are about to feel pain too, as their housing market starts to implode. And the Danes too, with their 267% debt.

But there's a saving grace. Like the Norwegians, who also have a high household debt to income ratio, of 178%, the Swedish public sector has relatively little debt thanks to structural changes over the past 20 years, not least through running budget surpluses or at worst small annual deficits. Sweden's gross national debt is just 37% of GDP.

In large part, this prudence was a direct reaction to the banking crisis of the early 1990s. Then, the Swedish government had to step in to rescue its financial sector, resulting in government deficits worth 9% of GDP in 1992, 11% in 1993 and 9% again in 1994 before they started tailing off significantly. Part of that was because of automatic stabilizers--welfare spending went up and tax revenue fell amid three years' of GDP contraction. But the Swedish government also spent some 4% of GDP filling the hole that opened up in its banking sector.

The banking crisis was triggered by the bursting of Sweden's housing bubble.

Between 1985 and 1990, Swedish house prices appreciated by some 40%. Over the next three years they then fell back by nearly a third.

There's a widespread feeling that the Swedes learned the lesson of this disaster, which is why they weathered the global financial crisis so well.

But have they?

To be sure, Swedish house prices have been relatively well behaved over the past couple of years. They have risen moderately after booming earlier in the decade. Between 2000 and 2007 they went up 60%. In the years since, the rise has been less than 10%.

But that's only part of the story.

Swedish house prices relative to average incomes have risen by more than 70% since the end of their banking crisis and are now around 20% above their late 1980s peak. House prices relative to rents are also well above the peak hit at the time its banks started crumbling in 1990 and around double the mid-1990s lows.

That housing should have gone up so much relative to incomes and rents in a country with so much land and so little population ought to be a worry for policymakers. Combined with heavy household debt loads and signs that the economy may be stumbling, the alarm bells ought to be ringing clearly.

As exporters react to slowing orders and shed staff, indebted Swedish households will find it ever harder to pay their debts and Swedish banks will have to take some potentially hefty losses.

Yes, Sweden's government is much better placed than many to pick up the bill for another round of banking problems. Though many thought the same of Spain before its economy went into free fall.

But to bet that Sweden will continue to triumph amid the rolling global crisis is probably a hope too far.

This is an opinion column by Alen Mattich, who has been a columnist for Dow Jones for more than a decade.

Write to alen.mattich@dowjones.com or on Twitter @AlenMattich
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organic225
post 9.Nov.2012, 02:36 PM
Post #6
Joined: 7.Apr.2012

Yeah, the opposite happened to me. I googled "Swedish economy" and the article came up in the news update. When I clicked that link, it worked.
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byke
post 9.Nov.2012, 02:37 PM
Post #7
Location: Europe
Joined: 28.Oct.2008

You have to go through google news to read them, rather than linking to them.
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Svensksmith
post 9.Nov.2012, 03:18 PM
Post #8
Joined: 28.Jul.2011

And yet the Swedish model is Obama's vision for America. Apparently he's not a subscriber either.
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Yorkshireman
post 9.Nov.2012, 04:02 PM
Post #9
Joined: 22.Nov.2011

QUOTE (byke @ 9.Nov.2012, 02:16 PM) *
The Wall Street Journal, had some interesting articles today regarding Sweden's debt crisis.. Interesting to note :

Debt Crisis? ...yet another exaggerated and misleading statement.

The 1st article was about slowing exports. And please highlight in the 2nd where it mentions any current debt crisis? rolleyes.gif
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byke
post 9.Nov.2012, 04:38 PM
Post #10
Location: Europe
Joined: 28.Oct.2008

QUOTE (Yorkshireman @ 9.Nov.2012, 04:02 PM) *
Debt Crisis? ...yet another exaggerated and misleading statement.. The 1st article was about slowing exports. And please highlight in the 2nd where it mentions any current debt crisis? rolleyes.gif



QUOTE
Swedes, like many north Europeans, are stuffed to the gills with debt.

In 2011, Swedish households had a gross debt-to-income ratio of 149%, higher even than the British, who, at a ratio of 139%, are struggling to maintain enough spending to keep their economy growing.
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byke
post 9.Nov.2012, 04:39 PM
Post #11
Location: Europe
Joined: 28.Oct.2008

QUOTE
Sweden's finance minister Friday painted a fairly bleak picture of the short-term economic outlook for his country as it feels the chill of the economic and fiscal crisis gripping Europe.
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Yorkshireman
post 9.Nov.2012, 05:27 PM
Post #12
Joined: 22.Nov.2011

QUOTE (byke @ 9.Nov.2012, 02:16 PM) *
The Wall Street Journal, had some interesting articles today regarding Sweden's debt crisis.

One article mentions debt-to-income ratios, and the other mentions european fiscal crisis. Still don't see anything that specifically mentions Sweden's debt crisis, as You claim they do?

Any chance perhaps that once You finish school you are going to train to become a tabloid jounalist, and practicing Your sensationalised headlines here? wink.gif
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Norrlands Turk
post 9.Nov.2012, 06:37 PM
Post #13
Location: United States
Joined: 10.Dec.2009

But it is pretty obvious, isn't it?

Ericsson just announced laying off 1,500 people. I mean when you compare it to the US, and consider the size difference, an equivalent news over here would be "Cisco Networks is laying off 45,000 people in the US!", which is something you could hear at the peak time of a crisis, like the one in 2008.

I have no idea how many people lost their jobs when they just let SAAB go bankrupt recently. But I assume that was more than a couple of hundreds as well.

When only a couple of hundred people lose their jobs in a country of 10 million, it is a pretty big deal and should be taken more seriously. Increasing Swedish household debt numbers in the article you have provided shows me that people don't care much. That is not good in the medium and long term.
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byke
post 9.Nov.2012, 08:28 PM
Post #14
Location: Europe
Joined: 28.Oct.2008

I wonder if Sweden's arrogance will be its own downfall ?
Attempting to save face at the risk of a much greater risk.
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trumanshow
post 9.Nov.2012, 09:27 PM
Post #15
Joined: 8.Aug.2012

I was attacked on here for criticising the mother land but whatever, I just try to say what I see from experience of living in a few countries. It comes as no surprise to me that Sweden is starting to crack at the edges. Sweden is so rigid that it can't change and this will be its downfall. If something seems to be good to be true it ALWAYS is.

http://en.wikipedia.org/wiki/List_of_count..._United_Nations

check out the future for Sweden.
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