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IMF Warns These 4 European Nations Are "Potentially Destabilizing" To Global Economy

Tyler Durden's picture




 

Europe is recovering, right? Wrong. As Nigel Farage raged last night, things are not what they seem and even the IMF is now beginning to get concerned again (especially after Lagarde's call yesterday for moar from Draghi and every other central banker). As Bloomberg's Niraj Shah notes, it's not just the PIIGS we have to worry about (or not), Denmark, Finland, Norway and Poland have been added to the IMF’s list of countries with the potential to destabilize the global economy.

 

Via Bloomberg's Niraj Shah ( @economistniraj ),

The IMF's decision means the four nations will be subject to mandatory financial sector assessments. The total number of countries on the list has risen to 29 from 25. The IMF’s decision may further undermine the safe-haven status of the Nordic nations, where rising household debt imposes a financial risk.

Ballooning Household Debt

Household debt and government-imposed austerity measures are deterring consumers from spending in the Nordic region. Denmark’s financial regulator is considering curbing banks’ lending policies to address the record household debt load. Danish households owe creditors 321 percent of disposable income, the OECD says. Norway’s household debt reached a record 200 percent of disposable income in 2011.

Austerity Triggered by Rising Government Debt

Finland’s debt-to-GDP ratio will almost double to 60.5 percent by 2015 from 33.9 percent in 2008, the IMF forecasts. The fund estimates the Finnish economy shrank 0.65 percent last year. Polish government debt reached 57.6 percent of GDP last year. A clause in the country’s constitution states that breaching a 55 percent ceiling triggers mandatory austerity measures.

Competitiveness at Risk

Denmark has dropped to 15th place in the World Economic Forum’s global competitiveness report from third in 2008. Labor costs rose 9.1 percent between 2008 and 2012, compared with an EU average increase of 8.6 percent in the period. Norway has the highest labor costs in Europe at 48.3 euros per hour in 2012, compared with 30.4 euros in Germany. That may undermine competitiveness and the growth outlook.

Most Financially Interconnected Countries

The inclusion of three Nordic nations for mandatory assessment is the result of a new methodology by the IMF that gives more weight to financial interconnectedness. The U.K. is the most financially linked nation in the world, followed by Germany. Seven of the top 10 most interconnected financial nations are in the euro-area.

 

So as the world congratulates itself (most notably Ben Bernanke today), the IMF seems concerned that this could all get worse again very quickly. Think they are all too small to worry about? Remember Lehman?

 

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Fri, 01/17/2014 - 10:49 | 4340743 markmotive
markmotive's picture

Death of the American Dream is the most destabilizing factor in the world.

http://www.planbeconomics.com/2014/01/the-american-dream-by-provocateur....

Fri, 01/17/2014 - 10:56 | 4340765 jbvtme
jbvtme's picture

the fox warning that the hen house door is open.

Fri, 01/17/2014 - 10:58 | 4340771 doomandbloom
doomandbloom's picture

We need a bigger acronym!

Fri, 01/17/2014 - 11:01 | 4340780 insanelysane
insanelysane's picture

Polar Pigs is probably more trendy than Nordic Pigs.

Fri, 01/17/2014 - 11:11 | 4340811 kaiserhoff
kaiserhoff's picture

Denmark went all in on wind and solar.  Big mistake.

The tax burdens everywhere in Scandia are crushing, but the chicks are world class.

Fri, 01/17/2014 - 11:14 | 4340824 Sudden Debt
Sudden Debt's picture

it's not important who's bigger and better
but one a sidenote...
BELGIUM IS IN FIFTH PLACE AND HOLLAND ONLY 6TH!!!

BBBBOOOYYYAAAHHH!!
TAKE THAT HOLLAND! SAY CHEEEEEEEEEZZZEEE!!!

Fri, 01/17/2014 - 11:19 | 4340842 Acet
Acet's picture

Kaaaas!

Fri, 01/17/2014 - 12:33 | 4341202 Occident Mortal
Occident Mortal's picture

How can Norway be considered a financial risk?

 

It's a $500bn economy with 5 million people.

 

They have a $1 trillion sovereign wealth fund (enough for everyone to take a 2 year holiday!!) and operate an ongoing budget surplus (saving even more money).

Thanks to the fact they have had a positive trade balance for the past 30 years.

 

If personal income in Norway is $50,000 then personal debt is $100,000 which means across the country the people owe $500bn. So their government could bail out every single loan in the whole country twice over and still not need to borrow 1 dime in the bond market. Yet the IMF consider this risky??

 

Show me another country on the planet that can bail out their entire economy twice over, using actual savings.

 

Clearly the IMF have completely forgotten what savings are (and simply do not recognize them even when you have $1trillion saved up), such are their rarity in today's modern economies.

Fri, 01/17/2014 - 13:43 | 4341488 CarrierWave
CarrierWave's picture

Really ZH? - Did you read the article before posting it? Norwaw is a risk?

This is only one more ZH article in a series of thousands going back several yeras stating how bad things are or of an imminent collapse.

Alas, those who stayed away from the markets or worse still - shorted the markets are the only ones bruising and licking their financial wounds.

There is no Collapse around the corner and no repeat of 2008-2009. The Central Banks are well coordinated and on top of things and will not allow any repeat of the drops we saw 5-6 years ago.

Stay with the trend because the markets ARE going higher in 2014. Take into account also the fact that this is an Election year - the Gov will not tolerate anything more than a 3-5% pullbck in stocks.

NO ONE on ZH can even propose a serious scenario for another economical collapse playing out for real. It's all empty speculations and insinuations.

 

 

Fri, 01/17/2014 - 14:20 | 4341592 angel_of_joy
angel_of_joy's picture

The Central Banks are at the end of their rope when in comes to "sustaining" the economy. They blew their stack and accumulated huge balance sheets (i.e. debt) just to keep things from evolving the natural way (economic crisis followed by auto-correction and purging of the accumulated financial garbage).

It doesn't matter how coordinated they are. All they can do is print fiat money and create more debt. As debt cannot increase to infinity (because debt obligations become increasingly hard to meet), the moment the great debt repudiation begins in the Western world, inflation will become high enough (and all too visible for every moron to see and feel) to destroy what's left of the real economy together with peoples lives. That's because, while debt can be cancelled, the money issued based on that debt cannot dissapear so easily (unless you start cancelling somebody's accounts...). Hence all the (true) talk about future record high prices for precious metals, on ZH but not only. History will repeat again, as it did so many times before, and in the process it will destroy all the human lemmings who thougt that "this time IS different because... well, just because we are so fucking smart compared with all previous generations !"

The collapse is very real, predictible, and visible for every human being with at least half functional brain and a minimum of education in economics and history. To pretend otherwise is to be either incredibly stupid (in which case you deserve to dissapear in accordance with the laws of natural selection), or incredibly corrupt (a troll shilling for the current system, in which case society should eliminate you as part of the self-cleansing process which precedes any recovery). Either way, you're a waste of time...

Fri, 01/17/2014 - 12:59 | 4341331 lasvegaspersona
lasvegaspersona's picture

'I hate the Dutch and Belgium is right next to them'...fasher of Austin Powers, Nigel Powers

Fri, 01/17/2014 - 13:48 | 4341511 Fuh Querada
Fuh Querada's picture

for their chicks or what ?

Fri, 01/17/2014 - 11:16 | 4340832 NoDebt
NoDebt's picture

Denmark was definitely at the top of my list of nations that would trigger the next collapse.  Uh huh.  Yup.

Fri, 01/17/2014 - 11:53 | 4340966 KickIce
KickIce's picture

Finland

USA

China

Korea

Japan

Argentina

Maryland (DC)

Italy

England

Denmark

Ireland

Monsanto

Qatar   (or QE)

Norway  (although I prefer NSA)

Fri, 01/17/2014 - 10:59 | 4340773 Croesus
Croesus's picture

"OMG No...we can't continue to squeeze blood out of these overworked schlubs"...

"If we keep squeezing, these poor, overworked schlubs might die"

"Whatever will we do?"

"Moar of the same"...

 

Fri, 01/17/2014 - 11:51 | 4341011 tempo
tempo's picture

Central bank stimulus is a zero sum game. Initially, there is a positive as interest rates decline but over time the low interest rates hurt consumption as interest income drop for consumers and companies. After 5 years of ZIRP the other costly side of QE is obvious. Central banks are boxed into a corner as they can't allow rates to increase which would trigger a deflationary slide in housing and stocks. Job creation is a crap and will likely get worse. The fun part of QE is over now comes the cost.

Fri, 01/17/2014 - 10:50 | 4340747 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

The sooner the implosion happens to sooner we can start dealing with the rabble that caused it without having our hands tied...

Fri, 01/17/2014 - 10:52 | 4340754 Sufiy
Sufiy's picture


Glenn Beck: Where Is German Gold?

  Glenn Beck is digging up the mystery of German Gold repatriation. With the reports that even small amount of the delivered Gold so far was melted beforehand we can be sure that there is no more original German Gold left. As we have discussed before, theGold smashing down has started with Venezuela's request for Gold to be returned back and last year Gold's bloodbath was assured with Germany seeking for its Gold to be returned as well.

 

http://sufiy.blogspot.co.uk/2014/01/glenn-beck-where-is-german-gold-gld....

Fri, 01/17/2014 - 10:55 | 4340762 dick cheneys ghost
dick cheneys ghost's picture

can Beck tell me how many countries the ''money changers'' have been kicked out of?

its over 100.........call me when he ''gets it''

Fri, 01/17/2014 - 12:01 | 4341055 Herodotus
Herodotus's picture

 And what do these 4 countries (Denmark, Norway, Finland, and Poland) that the IMF does not like have in common?

Perhaps that they are mostly all "juden frei" ?

 

Fri, 01/17/2014 - 15:20 | 4341811 Rafferty
Rafferty's picture

Only partly true.  Numbers are indeed small but they own the MSM in all Scandinavian countries.

Fri, 01/17/2014 - 10:58 | 4340770 Billy Sol Estes
Billy Sol Estes's picture

Benn Gleck is part of the problem. He's just another radio whore.

Fri, 01/17/2014 - 12:15 | 4341120 NotApplicable
NotApplicable's picture

Works well for the divide and conquer agenda though. One "side" views his word as gospel, regardless of the message, while the "other side" views any message as propaganda to be refuted/ignored.

Fri, 01/17/2014 - 14:23 | 4341623 angel_of_joy
angel_of_joy's picture

I don't care who the messenger is as long as the message is correct and true...

Fri, 01/17/2014 - 11:05 | 4340788 dobermangang
dobermangang's picture

And Fort Knox is emptier than Al Capone's vault or Joe Biden's brain.

Fri, 01/17/2014 - 13:49 | 4341492 Fuh Querada
Fuh Querada's picture

please pimp your lousy blogspot elsewhere

Fri, 01/17/2014 - 10:53 | 4340757 Spungo
Spungo's picture

If they're concerned about debt load, why do they keep lowering interest rates and telling people to increase their debt load? Idiots.

Fri, 01/17/2014 - 10:54 | 4340759 the not so migh...
the not so mighty maximiza's picture

these countries are socialist utopias, it can't be

Fri, 01/17/2014 - 13:45 | 4341489 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

These people work? This is news to me. I thought the immigrants from N Africa did all of the dirty work like clean toilets.

Fri, 01/17/2014 - 10:55 | 4340760 Dr. Engali
Dr. Engali's picture

The solution is simple. They must spend more money to keep from going bankrupt.

 

~ Joe Biden~

Fri, 01/17/2014 - 11:40 | 4340961 yepyep
yepyep's picture

nice

Fri, 01/17/2014 - 10:55 | 4340763 The_Ungrateful_Yid
The_Ungrateful_Yid's picture

You better add more than just them.

Fri, 01/17/2014 - 10:56 | 4340766 Max Damage
Max Damage's picture

Only 4? The whole EU is more accurate

Fri, 01/17/2014 - 11:00 | 4340776 edwardo1
edwardo1's picture

The IMF has no credibility at all. The 800 pound out of control Gorilla in the room is the dollar based system itself. Flashing a warning about Finland, Denmark, etc, etc. is absurd on the face. It is like looking at a class room full of kids and finding the smallest and most docile children and claiming that they will be the catalyst for a food fight come lunch time.

Fri, 01/17/2014 - 11:40 | 4340952 Volaille de Bresse
Volaille de Bresse's picture

"The IMF has no credibility at all. The 800 pound out of control Gorilla in the room is the dollar based system itself"

 

You now realize why "they" invented terms like "PIIGS"? To entertain the masses and prevent them from realizing the crisis came from NYC and London aka the Anglo-American bankrupt sphere. 

 

It certainly was funnier to put the blame on Southern Catholic nations who accounted for 0.1% of the problem...

Fri, 01/17/2014 - 11:40 | 4340956 Ghordius
Ghordius's picture

follow the money. in this case, the IMF wants to increase the shareholder's quotas. but the US provisional budget deal has no funds for that

Fri, 01/17/2014 - 16:09 | 4341930 disabledvet
disabledvet's picture

China definitely wants in. "And they're just launching rockets into Space in full public view with an announced plan to get all those resources" just to get it done. The fly in the oinkment is US housing because in theory that is the mother of all cash flow producing assets. I don't think Elon Musk had a "plan" with his billions when he started not only Solar City, Tesla and Space-X...just a very good idea of what NASA was up to in the 60's. http://www.youtube.com/watch?v=07nZxVxX8n4 This is what the competition is up to. http://www.youtube.com/watch?v=eEmLOU8zTSE http://www.youtube.com/watch?v=SHIrM2O6BZA

Fri, 01/17/2014 - 11:00 | 4340777 The Axe
The Axe's picture

Off topic...BUT when have you ever seen  GE with a bad number...INTC  with revenue miss..UPS  with a blow-up   AAPL not selling phones in China....this is the core of America business...yet the stock market is up.....NUTS just NUTS   

Fri, 01/17/2014 - 11:01 | 4340779 OwnSilverPlayMusic
OwnSilverPlayMusic's picture

WAR IS PEACE, FREEDOM IS SLAVERY, and IGNORANCE IS STRENGTH.  Orwell forgot one, DEBT IS WEALTH

Fri, 01/17/2014 - 11:45 | 4340932 frenzic
frenzic's picture

Yer goddam right, you son-of-a-whore!

http://vimeo.com/21074070

a bit over the top maybe but I just heard Frank Zappa say those words when I read your comment

Fri, 01/17/2014 - 11:01 | 4340781 AccreditedEYE
AccreditedEYE's picture

Remeber Lehman??? You are 1 of the smartest dudes on the waves today..you know better. 1st of all, you think anybody cares what the IMF has to say?? (answer: NO, gutless, powerless institution) 2nd of all, if we have learned ANYTHING over the last 5 yrs, it's that bad news sends asset prices higher! Nobody gives a crap about global economic horror stories. In fact, they are used to build the famed "Wall Of Worry" that "Bull Markets Must Climb". Please, the day the market actually cares about bad news is the day there is something to be gained by banksters being short. Till then, BTFATH.

Fri, 01/17/2014 - 11:01 | 4340782 yogibear
yogibear's picture

What happened? Everyone though Europe was fixed.

The ECB and others wouldn't be lying would they (make believe recovery)?

All the club-med countries should keeps threatening the banks for infinite bailouts.

The only real fix is to kick the deadbeat countries out of the EU, otherwise it's a continued  decline of the EU.

 

Fri, 01/17/2014 - 11:02 | 4340784 youngman
youngman's picture

Add in Puerto Rico to the chaos mix.....they will send a shockwave thru the system as they default...there is just way to much debt...and not enough income to pay for it....a politician loves to build a monument today and have someone else pay for it later.....or give additional benefits today..and pay for those later....problem is the later never comes with excess cash...

Fri, 01/17/2014 - 11:03 | 4340786 verbot
verbot's picture

Verbot.exe. load...economic cons.dll

Well well well..

How can there be any instability in a supposed "stable" system? What underbelly of discourse is missing to complete the circle of information?  I feel if that part of the information were to be accurate and available to us we would know more indeed...

Until then the model cannot be two states at once unless we are thru to "quantum finance" without prior notice we all were to move to the new standards.....regulation compliance its all we have now econ theory and best practices have expired....imhbo

Fri, 01/17/2014 - 11:08 | 4340802 Fix-ItSilly
Fix-ItSilly's picture

If so many of the IMF countries are basket cases, then so is the IMF. The mission creep of the IMF is soon to be curtailed.

Fri, 01/17/2014 - 11:11 | 4340810 DeliciousSteak
DeliciousSteak's picture

Seems to me like the IMF is full of crap. How is a debt-to-GDP of 60% a problem for Finland, or the world economy? Sure, the Eurozone rules state that it's the limit for member nations, but when the EU average is 85% it's not like anyone actually follows the rules. Private debt is relatively low, so that's a nonissue as well. Norwegian private debt is not an issue either, sure we might see a bubble burst soon but will it have a global impact? I'm not sure if it will even have much of a local impact. Norway is the richest nation in the world.

I'd say that Danish debt is the only real problem, and their problems might become a problem for rest of the Nordic countries thanks to the interconnected banking in the area.

Fri, 01/17/2014 - 11:43 | 4340971 BurningFuld
BurningFuld's picture

They put Norway on the list as it has far too much money, which is making everyone else look bad.  Is this an Onion article?

Fri, 01/17/2014 - 11:54 | 4341026 adeptish
adeptish's picture

My thoughts also, with nearly a Trill in the bank, very risky Lol.

Fri, 01/17/2014 - 11:20 | 4340855 adonisdemilo
adonisdemilo's picture

THE BIGGEST PROBLEM IS THE IMF.

All they want to do is create more debt, get some other shmuck on the hook and come in with a "solution".

Fri, 01/17/2014 - 11:24 | 4340869 Rising Sun
Rising Sun's picture

Fucking bullish baby!!!!!

 

We need MOAR defaults to make these shit fucking markets to go higher!!!!!

Fri, 01/17/2014 - 11:27 | 4340889 ConqueringFools
ConqueringFools's picture

Norway? Hah funny how the IMF fails to mention the multibillion dollar wealth fund they have that continues to grow and fuel their economy. Norway is hardly going to destabilize the world economy. Their mixed economy is brilliant. 70% of their natural resources are owned by the people and it's those revenues which in turn have built their 300+ billion sovereign wealth fund. The other 30% of resources are owned privately. This and the Average Norwegian has a far superior intellect than the average American. Drive through Norway. You won't see shitholes like Detroit, East St. Louis, Watts/Compton.

Fri, 01/17/2014 - 12:34 | 4341234 LawsofPhysics
LawsofPhysics's picture

"70% of their natural resources are owned by the people" --  Bingo, and Goldman Sachs is not happy about this.

Fri, 01/17/2014 - 11:39 | 4340949 Finnman
Finnman's picture

Here in Finland it's common fun to have been enjoying low rates. So thanks Spain and Greece, without them mortgage rates would be much higher. One Finnish banker told that times are really easy for Finnish households, these are "kissan päivät" (the life of Riley) and they could easily take more debt because amount of debt per household is not yet so high like in Denmark or Sweden.

Housing is the new Nokia.

Fri, 01/17/2014 - 11:40 | 4340957 Finnman
Finnman's picture

... and Finland still has very strong economy, remember that.

Fri, 01/17/2014 - 11:53 | 4341018 Villageidiot777
Villageidiot777's picture

Care to explain? What are Finland's main export and on how many categories to they fall into? Nokia, Rovio, Supercell.. list doesn't sound very promising.

Fri, 01/17/2014 - 11:58 | 4341034 Nana
Nana's picture

Moar...Moar....Moar!!!!!!

Fri, 01/17/2014 - 12:16 | 4341127 Kirk2NCC1701
Kirk2NCC1701's picture

You treat financial "contagions" the same way you treat a biological one:  QUARANTINE, MFers.

They need LESS coupling, not more.  They merely need interface protocols and a mechanism for their financial transactions, not the same "bug-infested Operating System".

But let's not confuse the "reason" with the "pretext":  What the Anglo-American-Israeli alliance wants, is a One-World Financial Regime, with them holding the reins and calling the shots.  And the US MIC doing all the heavy 'lifting', i.e. Enforcement, with the Old Guard in the Shadows of Power.

The world is still being fooled by them, but less so every day.  Spread the word.

Fri, 01/17/2014 - 12:43 | 4341275 Richard Whitney
Richard Whitney's picture

What 'austerity'? What does that word mean?

Government spending in Denmark, for example, is up over 26% since 2008. That is greater than inflation over that time. The story is the same or worse elsewhere in Europe.

Please stop with 'austerity' until you can detail that a government actually spent even one euro less over one year.

Fri, 01/17/2014 - 13:48 | 4341499 Fuh Querada
Fuh Querada's picture

More fancy charts to justify overpaid "analysts". The top one is ludicrous and could be replaced by a simple bar chart.

Fri, 01/17/2014 - 15:43 | 4341867 Lord Wakefield
Lord Wakefield's picture

"Stay with the trend because the markets ARE going higher in 2014. Take into account also the fact that this is an Election year - the Gov will not tolerate anything more than a 3-5% pullbck in stocks."

So what pull back did we have in Election year 2008? 

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