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'Sweden will be affected by the crisis': experts

TT/The Local/rm · 8 Aug 2011, 06:52

Published: 08 Aug 2011 06:52 GMT+02:00

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“With things as they are today I think that the committee on finance should be summoned to discuss the situation. I also think that the Riksbank should attend that meeting,” Waidelich told news agency TT on Sunday.

On Friday Waidelich had said that the state of the world economy was so severe that the government should initiate talks with the opposition and that the Riksdag’s Committee on European Union Affairs should be called to attend.

Since then the developments in the United States has led to a harsher tone between the US and China and Waidelich, who is deputy chairperson of the finance committee, said on Sunday that he will now demand an extra committee meeting to discuss recent international developments.

Several Swedish financial experts also said on Sunday that they believe the international financial instability will have consequences for the Swedish economy.

Head economist at Swedish bank Swedbank, Cecilia Hermansson, told TT that Sweden can't avoid being affected by a world economy sent rocking, despite its own healthy state finances.

“If we enter a sluggish financial development on the world markets it will affect Sweden too. What will most probably happen is that monetary policy will become less severe. The government has announced that some reforms may have to be postponed. But it doesn’t necessarily mean that all types of support for the financial market should be completely ruled out if the economic trend points downwards,” she told TT.

Thomas Pousette, head analyst at Swedish bank SBAB is certain that Sweden can expect an unstable and spasmodic financial autumn.

“These are not problems that will resolve themselves all at once. It will be a question of seeing how policy will be shaped in the affected countries, how these are received and the effects they will have. This is just the beginning of a trend that might be pretty unstable for a longer period of time,” Pousette told TT.

Story continues below…

The announcement by the European Central Bank on Sunday that they will purchase eurozone bonds did some to stabilize the Asian markets and stave the massive drop expected after the weekend’s international financial developments.

However, Asian markets still fell early on Monday, despite assurances by the G7 group that they would act to strengthen financial stability.

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

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Your comments about this article

09:32 August 8, 2011 by andyron2
I think the experts might be predicting right from what i hear from friends in USA and Asia.

Does anyone know for sure,if recession is just round the corner in europe and in particular Sweden?
10:55 August 8, 2011 by AlexCN4
Recession is in whole Europe...the eastern is already death, the first country who gave bankrupt was Grecce, now is Romania in same situation...i'm from romania, but we dont have money in euro yet and the EU isn't interesed of Romania, more of Grecce because they have euro valute and that affect the area euro in all Europe. After this, seems to have problems and Italy, Spain...now U.S. and all Europe depending of U.S., many took this problem like joke "we have economy, will out from this" but isn't so...the real recession, crissis, begining now and thats is a problem. They must to have other plan for budget, spends, and economy.same and U.S.A they spend so much, consumption much money and they don't had any plan for crissis, recession, now they looking what to do for cure and a possible return isn't yet. I hope as Sweden to don't be affected so much.
11:35 August 8, 2011 by andyron2
yeah you are right in ur analysis Alex.The joke is turning into reality now.iv heard from friends in USA about people who are getting fired.Its not just europe that gets effected,India gets effected directly since majority of the IT revenues are based on US.It might not be as worse as in 2008 though and hopefully sweden might not be effected so much.Its crazy how much US spends and dont have any back up plans.When ever US take a Pee,the smell reaches Asia and Europe.
11:47 August 8, 2011 by Learner2011
Few days back, I saw a very thoughtful caricature about the European countries and its financial crises. The caricature artist has drawn a row of dominoes and each piece is representing a European country (A flag of each country is drawn on every piece). The dominoes piece (European countries) are falling and destroying each other. Interestingly, The first piece was Iceland followed by Greece, Ireland, Portugal, Spain, Italy...and so on... Indeed, it is one of best meaningful caricatures that I have ever seen since I was born.

However, I think the ONLY way out of this financial crises hell is to divide Europe into two spots:

1- Terrible/Awful Places: The countries which its financial systems cannot be trusted such as: (Greece, Ireland, Portugal, Spain, Italy). This category is expandable and must include any country exceeds the allowed budget deficit limits. Also, This category shall include any new members join the EU. So the idea of this category is to keep an eye on them and be monitored constantly and seriously.

2- Semi-Half Safe Places: The countries which its financial systems somehow still under control. However, It is very expected that the countries in this category are going to decrease gradually. Pretty soon we will hear that France is having serious issues with its economy, Finland is sinking in unresolvable financial crises and so on and so forth ...

What is your take on the future of Europe ? Any resolutions ?
12:49 August 8, 2011 by andyron2
@ Learner 2011

That looks pretty interesting and thoughtful caricature...did you watch on TV or some video online? would be interesting to see it.i have half knowledge about european economy so dont have a take now.
20:06 August 8, 2011 by gh2008
its called capitalism! we reap what we sow!

it is simple math! isn't it?

for people to get rich, others must go bankrupt ;)
14:39 August 9, 2011 by underskyofsweden
@ Learner 2011

This kinda of classification already exists but the problem is the insistence to save the Euro which is not worth saving anymore!

The Euro Zone, unlike the EU itself, is an unambiguously right-wing project. If this has not been clear from its inception, it should be painfully clear now, as the weaker Euro-zone economies (such as Spain, Portugal, Italy and etc) are being subjected to punishment that had previously been reserved for low- and middle-income countries caught in the grip of the International Monetary Fund (IMF) and its G7 governors!

Instead of trying to get out of recession through fiscal and/or monetary stimulus, as most of the world's governments did in 2009, these governments are being forced to do the opposite, at enormous social cost!

Also insults have been added to the injury: the privatizations in Greece or "labor market reform" in Spain; the regressive effects of the measures taken on the distribution of income and wealth; and the shrinking and weakening of the welfare state, while banks are bailed out at taxpayer expense - all this advertises the clear right-wing agenda of the European authorities, as well as their attempt to take advantage of the crisis to institute right-wing political changes!

The right-wing nature of the monetary union had been institutionalized from the beginning. The rules limiting public debt to 60% of GDP and annual budget deficits to 3% of GDP, while violated in practice, are unnecessarily restrictive in times of recession and high unemployment!
00:30 August 11, 2011 by Marc the Texan

I agree with what you said. This is an effort to save the Euro. The cost will be and has already been part of the sovereignty of EMU countries. Labor market reform will help southern European countries become more productive in the future, but the choice was essentially forced upon them. People will have to work harder, but will not become any wealthier if mass immigration continues. Open immigration helps capitalists and immigrants, and is detrimental to domestic labor.

If they save the Euro, they will do it by significantly devaluing it. The way I see it, it is the only affordable way to maintain the monetary union. And monetary union is the most important thing to the political class, because it means concentrated political power to which they all aspire. So the citizenry will be unhappy and poorer, but the political class will have a Europe which is under tighter control and a Union they feel can belly up to China, India and the US in this century. It's all about vanity and power for the political class and a larger share of the pie for multinational billionaires.

I wish the EMU would disintegrate, but I now think they will devalue the heck out of it to prevent that from happening. Stability of the Euro comes second to maintaining the harness on European sweat that is the EMU.
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