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Sweden Without Crisis Plan Tests

Economic Reality: Nordic Credit

post 22.Nov.2012, 12:03 AM
Post #1
Location: Europe
Joined: 28.Oct.2008

Obviously this will be met with the usual denial followed by attempts to deflect any issue by looking for nations that are even more worse off.

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post 22.Nov.2012, 08:01 AM
Post #2
Joined: 20.Sep.2011

I think that what you consistently seem to avoid mentioning is that the whole world is suffering a recession to varying degrees. Europe is right in the thick of it and is far deeper in a pile of poo than every other part of the world. Some European countries are destined to be less prosperous than many 3rd world nations in the next few decades. So comparing how Sweden is weathering the storm is very important, because no where in the world has been unaffected, even countries like China who experienced year on year growth in double figures, have been hit too.

Next, you need to do some financial research, as you throw out the headlines, but don't understand the content. You used the same headline here as the bloombergs, but the actually article doesn't refer to test and plans at all, it is quotes from banks and institutions about Sweden potentially changing interest rates and it's desire to control public debt. Nothing about crisis planning, QE, fiscal stimulus or anything else you may do in a crisis. Greece is in a crisis, Iceland had a crisis, Sweden just needs to lower it's growth estimates and chase trade beyond Europe so it can weather the storm better. Probably why Reinfeldt was in Burma, chasing trade? You forget to report on that positive news.

Meanwhile some reading for you;

In 2011 the largest government deficits in percentage of GDP were recorded in Ireland (-13.1%), Greece (-9.1%), Spain (-8.5%), the United Kingdom (-8.3%), Slovenia (-6.4%), Cyprus (-6.3%), Lithuania (-5.5%), France and Romania (both -5.2%) and Poland (-5.1%).

The lowest deficits were recorded in Finland (-0.5%), Luxembourg (-0.6%) and Germany (-1.0%). Hungary (+4.3%), Estonia (+1.0%) and Sweden (+0.3%) registered a government surplus in 2011.

At the end of 2011, the lowest ratios of government debt to GDP were recorded in Estonia (6.0%), Bulgaria (16.3%), Luxembourg (18.2%), Romania (33.3%), Sweden (38.4%), Lithuania (38.5%), the Czech Republic (41.2%), Latvia (42.6%), Slovakia (43.3%) and Denmark (46.5%).

Fourteen Member States had government debt ratios higher than 60% of GDP in 2011: Greece (165.3%), Italy (120.1%), Ireland (108.2%), Portugal (107.8%), Belgium (98.0%), France (85.8%), the United Kingdom (85.7%), Germany (81.2%), Hungary (80.6%), Austria (72.2%), Malta (72.0%), Cyprus (71.6%), Spain (68.5%) and the Netherlands (65.2%).

If you want a sense of scale the UK government over spent by 125 139 000 000 (Euros - converted) in 2011.
Sweden under spent by 10 000 000 000 "
Germany over spent by 20 000 000 000 "

there is some slack in the system for Sweden to spend to boost the economy, as referred to in the article, but there are down sides to over spending too. The USA is about to feel that in January, when it's cuts bite back and they'll need to be bigger to fund the spending programme over the past 3 years. No one knows the answer to the recession, it is in effect a big experiment, which each nation taking a different route, only in 20-30years will people know what the most effective solution was or is.
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post 22.Nov.2012, 08:33 AM
Post #3
Location: Europe
Joined: 28.Oct.2008

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post 22.Nov.2012, 10:02 AM
Post #4
Location: Södermanland
Joined: 20.Mar.2012

So you believe that people who don't subscribe to your point of view are in denial?
It's called having a different opinion, you muppet!
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post 22.Nov.2012, 10:33 AM
Post #5
Joined: 2.Nov.2008

1. Cut interest rates immediately.
2. Announce plans to phase out interest rate relief on lending over a period of 5 years.
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post 22.Nov.2012, 11:27 AM
Post #6
Joined: 22.Nov.2011

I doubt that would have any impact. During the 90's the interest relief used to be 100%, today it is 30%. Yet debt is still increasing. From 2006 to 2011 there has been an 86% increase in mortgage lending (2.12 trillion SEK). The banks always find a way to lend more and more, which creates a spiraling effect that the economy becomes debt driven, eventually leading to a collapse as there reaches a point where there is no one left to lend to, and a dip in the economy bursts the bubble through over exposure and low (incorrect) risk-weights.

As some economist now believe, there is need to constrict the finance sector, as this is the cause of the bubbles, the latest estimate was that certain institutions should be allowed to go bust until the finance sector constricts by 50%. In parallel with that not only should the institutes be allowed to collapse, but private debt should be written-off, which would in effect be a reset of the system. (control-alt-delete wink.gif )

A standard mistake in many businesses is to become stuck in a cost-cutting spiral of death, when success is more probable if you invest your way out of trouble. The same applies to countries. Cost cutting of public services and projects takes monies out of the makro economy, it is like a person saving money at home!, but what is really needed is to speed up the flow of money through the economy ... invest not save. The current packages for helping say Greece and Spain are based around significant cost cutting, but that will just slow down their economies even more making a recession last even longer!

Rather than making it easier to borrow, placing more monies in peoples and companies hands (eg. via interest relief on mortgages, tax cuts) will give them more power to spend without having to borrow, it is real money flowing through the economy. Encouraging amortisation of mortgages will also reduce the total debt, and indirectly over time reduce the need to borrow to pay for increasing debt! Again, more real monies flow through the economy. The only issue right now with amortisation is that since there is growing risk of defaults, the more that has been amortised, the lower the property prices would drop if banks went into wholesale reposessions and selling of defaulting properties only to recover outstanding debt. (which is what happened in the UK).

On the brighter side! The majority of mortgages in value terms are held in Stockholm, which is normally the last to enter into recession, and the first to exit. So, for a more total collapse it requires a large rise in unemployment coupled with fast falling property prices in Stockholm. The rising number of job cuts that we have seen during the last 12 months are mainly focussed outside of Stockholm.
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post 22.Nov.2012, 11:38 AM
Post #7
Joined: 20.Sep.2011

QUOTE (Yorkshireman @ 22.Nov.2012, 11:27 AM) *
As some economist now believe, there is need to constrict the finance sector, as this is the cause of the bubbles, the latest estimate was that certain institutions should be ... (show full quote)

A close relative of mine is/was quite high in the world of business, now semi retired, he just does mentoring work now for big company directors and ceos. Even 2/3 years ago he was of the opinion that the recession wasn't hard enough, it didn't separate the wheat from the chaff. So the UK is going to take a long time to fix and will be vunerable for a repeat performance again.

He thought the banks and economy should have come much closer to near collapse with more banks(or parts of larger banking groups) going to the wall. Very painful at the time with financial losses and job losses, but it would have cleared the way for a better structured system and everyone would know where the weak spots were and regulations could be put in place. Instead the UK has muddled through it so far by the skin of it's teeth.

Conversly, greece, italy, spain have 1 or 2 decades of real hard times ahead. Public services will be poor and under funded, plus mass unemployment.

As he points out, if the UK was business, you wouldn't run an individual department that makes consistant losses in the same manner. You would take measure to make it profitable again, but that wouldn't involved just cutting funding to it!
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post 22.Nov.2012, 04:10 PM
Post #8
Joined: 3.Oct.2011

I agree that cutting the interest rates will not really help.

Look at US and Uk both of which have close to 0.25% and 0.5%.

The recession is still there.

IMHO the Government will need to invest a lot more in infrastructure projects which will lead to job creation.

Also the news from the Eurozone is not good. http://online.wsj.com/article/SB1000142412..._LEFTTopStories
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Gamla Hälsingebock
post 22.Nov.2012, 04:26 PM
Post #9
Joined: 21.Dec.2006

Anybody for fiscal responsibility?

Also known as balancing your budget, living within your means, etc..

When Germany first introduced the Volkswagen...it was sold on a time payment basis...yes...you made payments and when the car was paid for, it was then given to you!!!!

Oh! The good old days! laugh.gif
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post 22.Nov.2012, 04:33 PM
Post #10
Joined: 7.Jul.2006

Byke is becoming a bit of a troll...he throws in links to reports, comment etc to try and demonstrate that Sweden is in big trouble etc etc. He then IGNORES most of the replies and continues on his path of posting only negative reports, which he is ENTITLED to do. Yet, counter his argument or negative article and you are then labelled someone who is in denial. It's like some Jewish people who call others anti Jewish because they dare to criticise Israel...just as Gordon Brown and others will call you a bigamist or racist if you dare raise an opinion/concerns regarding immigration/migration and the impact that hs on society.

Tha fact is that Byke hasn't got a clue as most of us don't. We can't predict the future as much as the over paid economist who predicts recessions or booms and then jumps ship when their predictions go against them. In fact Byke doesn't really give an opinion...more a shotgun approach to trying to justify a view or argument he has. We can all do something similar...I bet most of us can find an average person and even successful people and finds holes/weaknesses and expose it to such an extent that they fell like sh*t. It's easy to be negative...but harder to be positive. It can of course work the other way round when there is a boom and the sheep start to parise everything and ignore the gaping black holes.

Thankfully, most people on here give a balanced view IMHO...and try to show the positive while acknowledging the dangers here and now and in he future. But...you're in DENIAL...because you don't agree with the argument and you're supposed to LISTEN to SO CALLED EXPERTS who at the time were saying only POSITIVE things about Sweden, the UK and probably GREECE. We are entitled as intelligentindividuals to post whatever we wantwithin the law, but as decent people most have a give where they can try to see the point from the opposing person and acknowledge that there are genuine concerns. IT WORKS BOTH WAYS for most, but not for Byke and many others.

Cup of tea for me now...before the world ends on December 21st...so the future doesn't matter ANYWAY smile.gif
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post 22.Nov.2012, 04:34 PM
Post #11
Joined: 3.Oct.2011

Yes I don't disagree.

But when you look at housing prices I can't imagine ever being able to pay for it fully AND afford my holidays to Ibiza and Mallora or Thailand.. A man's got to party you know ! wink.gif
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post 22.Nov.2012, 08:58 PM
Post #12
Joined: 22.Mar.2011

QUOTE (byke @ 21.Nov.2012, 11:03 PM) *
Obviously this will be met with the usual denial followed by attempts to deflect any issue by looking for nations that are even more worse off.http://www.bloomberg.com/news/20 ... (show full quote)

Well, politicians in sweden are trying really really hard not to think about the future biggrin.gif
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