Darkness Falls Upon Norway’s Key Figures Going Into 2016

Tyler Durden's picture

Submitted by Alexander Grover

Darkness is Upon Us: Norway’s Key Figures Going Into 2016

As we move into winter, darkness has fallen up on us. Oil, ca. 65% of the nation’s economy, will not see the required $70 barrel anytime soon. American innovation, once again, turns a scarce resource into an abundant commodity. Despite optimistic Norwegian media articles, the potential for $20 per barrel looms. Production overwhelms demand while inventories rise to record highs. Although, still considered the best place to live, the cracks, in the oil based economy, are forming.

This story, told in numbers, derived from Norges Bank (The Norwegian Central Bank) and SSB (The Norwegian Statistics Bureau), shows that 2015 is much different from previous years. Things are breaking out to the negative direction all over.

Key Budgetary and Economic Metrics

I wrote an article just over two months ago, “Norway: The Silent Crisis.” This story is a follow up, confirming the trends. Many of us immigrated here to live well. Only a few places in the US and Switzerland can compete with Norwegian life.

Drilling holes under the sea, sitting back, counting the billions is no longer viable. Although The Oil Fund can carry Norway for around ten years, filling budgetary gaps, it is not a sustainable approach.


  • Budgetary revenues are declining while deficits attributed to oil revenue are widening.
  • Unemployment is at a decades high along with consumer debt. A Norwegian friend of mine, working in the local financial sector, told me that a 1% key-rate hike would make 14% of households insolvent. 
  • The Oil fund’s value is peaking while surpluses turn into withdrawals.
  • Real interest rates are at a record low, precipitating an inflationary environment, evident in the housing market. (This is a housing bubble!)

Exchange Rates:

The average Norwegian is feeling the effects, reflected in the foreign exchange. Norges Bank (The Norwegian Central Bank), biased towards rate cuts vs. rate hikes, risk turning the Norwegian Krone into the Norwegian Peso. Falling exchange rates are inflationary.  Trips abroad will cost more, even to Nigeria. Only Ukraine and Russia offer Norwegians a travel bargain. 

What we can expect now?

Although reluctant as of late, Norges Bank will do everything possible to save the housing market, where most Norwegians parked their wealth. The Norwegian Central bank staff never experienced crisis. We can expect policy miscalculations, underestimating oil’s new reality. It is difficult to estimate how much more they will cut before suddenly raising rates to protect the currency. But we can expect this to be the likely scenario over the next 4-5 years.

We can expect unemployment to rise as public spending cuts are imposed, compensating for falling revenues. Socialist solutions will be proposed to solve free market problems, making things worse. Norwegian unions are already pushing for a 6-hour workday, aiming to increase employment. We will see foreign M&A pick up, foreign firms buying up Norwegian ones. There are many high companies in Norway, trading at a discount.


As a new resident, I am hoping that fellow residents and the citizens can figure out the difference between spending and investment, taking time to understand the financials. The stock and bond markets and collecting rent from high street properties cannot replace the oil industry. Although Norway has strong fishing and technology industries, their growth is relatively limited due to environmental limitations, strong unions (which are not a bad thing but they can limit a company’s ability to adapt during difficult times) and the high cost of employment.  We need a new, difficult to duplicate, industry to carry us forward. Norway needs to be more Swiss and American and less European in their approaches to business and immigration. Otherwise, Norway will become a “Socialist Paradise Lost.” It will become just another European country instead the exception, like Switzerland.

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Looney's picture

... Darkness Falls Upon Norway

Norwegians should start wearing Daylight Saving Sunglasses® .  ;-)


KnuckleDragger-X's picture

Pesky reality once again rears its ugly head. Oil is a magical substance supporting a lot of stupid in the world today. Of course they COULD cut back on their socialist gravy train, and pigs could grow wings.......

Bubenthauser's picture

I'm in Oslo, and enjoying the demise of the NOK. Death!


Casey Jones's picture

Norge, Land of the $20 glass of beer. I couldn't get over how god damned expensive everything is over there. Beautiful scenery though, if you can pay the train fares.

Bubenthauser's picture

Well, not anymore. More like 8-10 bucks a good glass now. But yea, some things are insane.


JustObserving's picture

American innovation, once again, turns a scarce resource into an abundant commodity

It is not American innovation that is pushing oil prices down.

It is Obama's war against Russia's largest export and Putin.

And American poodle Saudi Arabia goes along

Stakes are high as US plays the oil card against Iran and Russia

John Kerry, the US secretary of state, allegedly struck a deal with King Abdullah in September under which the Saudis would sell crude at below the prevailing market price. That would help explain why the price has been falling at a time when, given the turmoil in Iraq and Syria caused by Islamic State, it would normally have been rising.


Did the U.S. and the Saudis Conspire to Push Down Oil Prices?

Falling oil prices and the plunging ruble are not some kind of free market accident brought on by oversupply and weak demand. That’s baloney. They’re part of a broader geopolitical strategy to strangle the Russian economy, topple Putin, and establish US hegemony across the Asian landmass. It’s all part of Washington’s plan to maintain its top-spot as the world’s only superpower even though its economy is in irreversible decline.


NotApplicable's picture

It is too American innovation at fault. Specifically that of the Fed.

No honest people can compete with free money criminality.

Even without the parasite of Norway's socialism, they would still be unable to survive given oil is 65% of their economic output.

Meanwhile, all of their wealth is sitting in the free-money housing bubble.

Handful of Dust's picture

There's a dark side to those delightfully low gas prices: Housing markets are slumping in communities that were recently flush from the U.S. shale oil fracking boom.


Home sales are down sharply this year in North Dakota and the West Texas cities of Midland and Odessa. Home sales have also slowed in El Paso, and, more recently, in Houston.




Norway's tourism will eventually plunge also ... who wants to visit [the once beautiful town of] Bergen when It's filled with moslims in the city center? I can go to New Jersey and see that..or Houston, or LA or ...on and on.

Niall Of The Nine Hostages's picture

Well. If you're white, speak English and aren't above working for a living, nobody gives a damn if you lose your house.

Falling Down's picture

Meanwhile in Russia...

Lady Jessica's picture

New Year's Message to Australia, Canada and Norway:  Housing is merely a consumption item.  Using commodity wealth to bid up the price of real estate is not investment. 

PhD's picture

Norway is a ticking bomb, very much like Iceland was during the financial crisis.
Im norwegian myself and i see the crazyness with my own eyes. There are no savings in the economy. The entire economy is based on using housing as a piggie-bank, and the vast majority has floating interest rates. Norway used to have a solid industry, but after years with basically free money from the oil-fields, the salaries are so high that norway cannot compete. The only way to save the industry that is left is through debasing the currency, but doing that will crash the currency as the trust in the Krona is already thin. Debasing the Krona will in other words cause an inflation spike, causing inflation, and thereby the interest hikes that will crash the housing-bubble.

Yes, there is ofcourse the oil-fund, but that has already been eaten by the insain pensions that the current generation of seniors has gifted itself.
Add to the problem that Norway has a public sector that can serve the needs of a population 3-4 times the current population, and you have a major shitstrom just vaiting to happen. Oh, and btw. Noboddy owns gold or silver, NOBODY.

Clint Liquor's picture

I have a work-mate from Iceland. His family put all their wealth into Gold in 2005. They sold it when they were sure Iceland was going to do the right thing with their banks and debt. They are now filthy fucking rich.

Handful of Dust's picture

I mentioned gold to my buddy in Australia when their currency was strong ... he already had a house paid off so he put 35% of his savings (which were yielding almost zero] into those beautiful Perth Mint gold coins...


He is in good shape now that their currency has plunged 40%. I read alot of Chinese are doing that since 1) they can no longer get their money out of China that easily; and 2) everyone expect the yuan will drop alot ... so they buy those beautiful Chinese coins, 24k.

COSMOS's picture

The muslim invaders are only too happy to know that the infrastructure and public sector can service four times norways population.  Expect Mohammed and Ali to the right and left and Hussein and Abdullah front and back of each Norwegian in a few years time.

Anopheles's picture

I think so far, Iceland has accepted 4 Syrian refugees... 

The "islamic horde" isn't going to be a problem for them. 

Raul44's picture

Yes problem with commodity exporting countries like yours(and others) is that they rely too much on that. Lot of Norway`s revenues was invested in European stocks instead into human capital, research etc. at home. Not to mention currency suppression. Now when tides turn, you ended up with much less money than originally imagined, with prices still above any sane levels and currency already too weak to withstand much more pressure. Thus the richest countries(Latin America, Norway, Russia, Africa...) in the world usually lag and sometimes bust and countries lacking those resources tend to be better off. Its a shame of course.

PhD's picture

True, and that is the cycle of life i suppose. It is quite similar to the gold-rushes of the wild west, where new gold mines flooded areas with money until the mines were depleted. I think that Norway has to a large extent done things right. There has been a large investment in human capital etc. But with the flow of money has followed corruption, of minds, the bureaucracy, and the monetary system.

But the bust does not need to be bad. There are alot of people that sees what is comming and is preparing. The resources will of course not disappear. Our cheap electricity will still be there after the bust, so will the capital and the equipment of the current industries. Bankruptcies are not the problem, but the solution.

What does worry me however, is the mentality. The economic understanding in general is low. When the bust comes, the outcome might well be a confiscation of the wealth that remains, where the policies of the country are pushed even further left. If Norway does the right thing (like Iceland), we should do ok. But whether or not we will remains to be seen.

_ConanTheLibertarian_'s picture

"strong unions (which are not a bad thing"

Yes, they are!

WTFUD's picture

Hello darkness my best friend . . .

_ConanTheLibertarian_'s picture

Hello darkness, my old friend
I’ve come to talk with you again
Because a vision softly creeping
Left its seeds while I was sleeping
And the vision that was planted in my brain
Still remains
Within the sound of silence

Jack Burton's picture

I've made posts before comparing Sweden to Norway. The big difference in modern times being oil. Norway has massive North Sea oil reserves, Sweden does not. With oil bringing in so much cash to Norway, it stands to reason all the social welfare state was easily funded by oil revenues. The Norweigan currency reserves and funds were vast and gave a solid base to the future generations. All positive. On the down side, all this easy money allowed education to expand beyond economic needs and become a place for youth to go till they were 25-30 years old, getting degrees of dubious value, and allowing leftists in university to sow their leftist ideals, like Open Borders. Due to oil money, Norway was content to expand government administration far beyond reason, and also to fund many marginal enterpises that make no profits, but get funding from the state to basically keep employment levels up. So Norway has an abundance of non profitable state employees and so very many dependent on state subsidies to everything from publishing magazines nobody reads to agriculture that could not survive EU competition without hefty state payouts. Many people in Norway are directly or tangentially connected to state money. All this has allowed real world competitive enterprise to fall by the wayside. Norway was just too rich to struggle to create world class industries on a large enough scale to employ a significant portion of workers. Again, way too many people live off the state. Go down any residential area and ask where people work. The schools, the univerisities, the city government, a nature reserve, the hospital, adminitration of government, administration of regulation, regional planning, etc.etc. And then thereare all the state subsidized people who work in unproitable enterpises.

I once saw a very good Norweigan movie that as a side plot exposed the degree to which average Norweigans live off of Government money. One real life friend in Norway told me that mostly what he does is attend meetings. He is in regional administration, and instead of having real work, his type of job is mainly about calling meetings and going to them.

Sweden on the other hand has no easy money at all. No oil. So for the last 3 decades, they have had to focus on industry and commerce. They do have a big public sector too, but it is funded not from easy oil wealth, but the taxes on industry and commerce and incomes and profits. Education is Sweden has a strong bias towards tachnical colleges and universities. My friends and families kids all went to various technical and scientific colleges. Instead of working in a state capacity of some form, as so many in Norway do, all these kids now work in fields like. Industrial electronics and instrumentation, communication electronics, construction manangement, Bio tech, robotics and genetic engineering. Nobody is in government or a bank. This is just my example. I know all are not alike. But I do know that in general Norway spends oil money for unprofitable job creation while Sweden fights in the global market place in many industrial and high tech industries. Just the city nearest my families home village is surrounded by business and industrial parks with all kinds of manufacturing and high tech development.

Finland now too is on hard time. Their big phone company got bought out and many jobs closed out. Farming is big, and America ordered them to sanction their biggest market Russia, so billion or more was lost to farmers. Finland is in deep recession. What is worse, with Russia's 140 million person market now nearly shut down to them, Finland has nowhere to turn to export to. Sanctioning Russia and making war noises was just plain stupid. This is Finnish politicians bought off by Washington. If you have a huge market right across your border, and over 60 years of peace, why would you start screaming for war and sanctioning your export markets?

Anopheles's picture

Good analysis. 

One thing to add, is that despite what seems to be a high standard of living, individual Norwegians are actually worse off economically than the average person in Canada or the US.  

That supposedly "high" income doesn't go very far when the cost of ALL goods and services are at least double that of North America, and then there's a 25% sales tax on top of those doubled prices.

A basic VW Golf costs about $19 to $21k in the US and Canada.    In Scandinavia, that same car is $45k, and 25% sales tax on top of that.  

Bottom line is those "high" incomes don't go very far when everything you need to survive is outrageously priced and then heavily taxed on top of that.

silverer's picture

Good point.  Like city Connecticut vs. rural Wisconsin.

Anopheles's picture

A cousin of ours from Scandinavia was sent by his company to work in Canada and the US for a few years.  He said that financially, he got further ahead in those couple years than he would have been able to get working a lifetime in Scandinavia.   

He said he couldn't believe how inexpensive everything was over here and that we truly have the higher standard of living, not Scandinavia.   More so in Canada, as although the taxes and after tax income is lower than the US, there is "free" healthcare and other social benefits similar to Scandinavia.  

Lucky Leprachaun's picture

Well, got to pay for all those vibrant enrichers living off the public purse.

CTG_Sweden's picture



[- - -] A basic VW Golf costs about $19 to $21k in the US and Canada.    In Scandinavia, that same car is $45k, and 25% sales tax on top of that. [- - -]



My comments:

A basic VW Golf sells in Sweden for about $24,000 including a 25 % sales tax. (I think that the entry-level models are not sold in the US, they usually got bigger engines. The American Passat has a bigger engine but a cheaper interior.) Vehicle prices are a higher in Norway. In Denmark vehicle prices are about twice as high as in Sweden.

Food prices are generally lower in Sweden compared to Norway, but higher compared to Germany and the US.

The big difference between Sweden and most states in the US is probably the marginal tax rate for people making about $70,000 per year or more. If you make, let´s say, $200,000, you pay a 57 % tax on all your income in the $70,000-$200,000 bracket in Sweden. For 2016, that tax rate will be increased to 60 %. There may be a risk that some businesses will move abroad because of the Swedish marginal taxes since the top executives may prefer to live abroad. It may become easier to recruit the people you want to hire abroad. In the 1980s, the top executives of ASEA were enthusiastic about the merger with the Swiss company BBC (which created ABB) because the intention was to move the head office and most top executives to Switzerland. In the 1980s, marginal taxes were even higher in Sweden than they are now.



Lucky Leprachaun's picture

That's very true there.  My son worked there in the oil industry and said the whole place is pretty uncompetitive and not well prepared for an oil shock. Even only he'd known.......

CTG_Sweden's picture


Jack Burton:


"[- - -] Sweden on the other hand has no easy money at all. No oil. So for the last 3 decades, they have had to focus on industry and commerce. [- - -]"


My comments:

Despite this focus (which I doubt exists), both the manufacturing industry and the pharmaceutical industry have shrinked in Sweden. But the software engineering industry has expanded.

Furthermore, you shouldn´t forget that the forest industry always has been the backbone of the Swedish export sector. As long as you have a favourable exchange rate, the forest industry thrives. And you don´t have to make huge efforts to be competitive if you export wood and pulp.  


BarnacleBill's picture

"America ordered them [the government of Finland] to sanction their biggest market Russia..."

Good choice of words, Jack Burton, and a useful reminder of the reality of imperial rule.

Imagery's picture

Well, as a Petr Engr in my own private cos, I must admit I never recognized TBTF WS Finance as "innovation" but rather black letter law theft.  But hey, if you believe what you wrote:

"American innovation, once again, turns a scarce resource into an abundant commodity."

I have a bridge to sell you.  About all that occured in these United Fascist States of 'Murica was the largest heist ever committed by the Banking Cartel.  They destroyed 100% of the literal Trillions of USDs of Capital invested into US TBTF WS Shale Portfolio Co Frauds leaving now only depleted wells and unpayable debts.

What the fuck Tylers.  Have you guys completely given up on editing these days or has your bar for posting become this low?  

Niall Of The Nine Hostages's picture

American innovation? Don't you mean Saudi dumping?

As for bargains, most of Euroland (Norway's biggest trading partner) is still much cheaper than Norway, whose currency is for once fairly valued versus the USD. Norwegians, like the Swiss, are only rich when they leave Norway.

Oslo can at least be given credit for saving at least some of Norway's oil money rather than piss it away on free gasoline and building terrorist recruitment offices in every corner of the formerly Christian world.

trader1's picture

if anyone wants to have that nice norwegian aurora pic as your desktop background



silverer's picture

Wonder if it looks like that to the casual observer or is it a bit time lapse to pick up the stars.  I only remember seeing a sky like once that in the middle of Kansas years ago.  The Milky Way was clearly visible, stars right to the ground.  Stunning.  Neat pic either way.

Anopheles's picture

Most of the US and developed countries have so much light pollution, even hundreds of miles away from major cities, that you can't see the night sky clearly.


I have seen the sky similar to that image (time lapse photography as in that picture, brings out some of the fainter objects).  

But also remeber that it takes your eyes over 20 minutes of total darkness to fully adjust. 


Youngun83's picture

Despite all the doom and gloom, Norway is still ahead in quality of life amongst the oil producing countries because of the fat Royalty fund.

Anopheles's picture

They are only ahead in SOCIAL measures of quality of lfe.  They are not ahead in individual or economic quality of life. 


yogibear's picture

That's right EUrotrash and United Socialist Amerika (USA) allow more ISIS refugees in and destroy yourselves!

2016 will bring more terrorist acts and anti-freedom storm-trooping.

CTG_Sweden's picture


One important reason for the high household debt to income ratio in Norway is probably that they didn´t abolish the death tax until 2014 and that they still have a 0.85 % wealth tax. The wealth tax threshold is currently NOK 1,400,000 (approx $160,000). People save less if it is less profitable to save.


The death tax was abolished in Sweden more than 10 years ago by a socialist government supported by the ex-communists. The wealth tax a few years later by the liberal-conservative government that followed. But the household debt to income ratio has still increased about as fast in Sweden, primarily due to the housing shortage.


It´s true that the Norwegians have been reluctant to invest science and high-tech. They don´t even educate their own doctors and nurses. Instead, they bring in such people from Sweden. In the past, Norway didn´t even teach people business administration and economics although that´s fairly cheap educations. So young Norwegians got their MBA:s in Sweden instead.


In the past, Norwegians depended on the fishing industry. It was hard work but it was rather good-paying jobs. In northern Norway, this is still an important industry.


Norway could probably have accomplished more with its oil incomes. They should probably have distributed the oil fund to the tax payers right from the beginning so that the government would not have become dependent on the oil fund. At the same time they should have abolished the death and wealth taxes. If everybody would have had some savings they would have been more inclined to save and less inclined to borrow.


The only way the Norwegians have benefited from the oil wealth is probably that they got great health care paid for by the government. It´s better than in Sweden. Since they got so few really poor people and most people are middle class it´s not a heavy burden for the upper middle class in Norway to pay for other people´s health care through the tax bill. But without the oil revenues Norway probably has a considerable surplus of labour that can make their excellent health care a burden for the upper middle class since others will be able to contribute less. In Sweden, they have solved the problem by reducing the quality of the public health care. If you want to subsidize families with low incomes and you don´t want to make that to a burden for the upper middle class you got to keep the number of poor people low and see to that most people are at least middle-class. In the past, that actually worked in Sweden. Although taxes were high for the upper middle class, the welfare system did not depend on these taxes because the upper middle class didn´t make not much more money than a factory worker anyway. Sweden had the highest robot per capita figure for about 40 years. A Swedish company (ASEA, now a part of ABB) launched the first industrial robot in the 1960s. Since wages were so high, there was a considerable market for industrial robots in Sweden.


The Swedish model should have been combined with abolished wealth and death taxes 50 years ago. Unfortunately, that was impossible for ideological reasons. But the consequences for most of the general public were not significant since companies could accumulate assets that could be used for investments later on. Those who really suffered were affluent people who were not rich enough to move to Switzerland and were stuck in Sweden and didn´t, or couldn´t, elude the tax regulations by tax avoidance schemes. For instance, many people bought expensive carpets in order to avoid wealth and death tax. For those who had only one heir, that was excellent option (with two or more heirs it was more complicated to divide the carpets fairly and in secret without conflict). People could also reduce their income to zero by tax avoidance schemes based on real estate property. The Swedish finance minister Mr. Gunnar Sträng was one of the persons who did that in the 1970s. However, the heirs of Sally Kistner, the largest stockholder in Astra (now a part of AstraZeneca), got no inheritance since the value of the company dropped sharply after Mrs Kistner died. The stock market had anticipated that the stock price would plunge when the heirs would have to sell stock because of the estate tax. So therefore others sold when Mrs Kistner died. And the estate tax was based on the stock price the moment she died while the amount of inherited stock was based on the stock price after her death. And that meant that there was no money left for the heirs.


Since most non-institutional owners were opposed to the merger with Zeneca I assume that Astra would still have been a Swedish company if there hadn´t been any death taxe in Sweden in the 1980s.


The most devastating effect to Swedish wealth caused by the Swedish wealth and death taxes was probably caused in the early 1990s when the ban on selling restricted shares to foreigners was lifted while the interest rates were higher in Sweden than abroad and the death and wealth taxes had not been abolished. The Swedish system worked (although not for people like the heirs of Sally Kistner) until the ban on selling restricted shares to foreigner was lifted.


I think that the current conservative Norwegian government should distribute most of the assets of the Norwegian oil fund to its citizens as soon as possible. That would create a better understanding among the general public for the need for abolished wealth taxes (state and local). People would be more inclined to save. People that have some savings are also generally more interested in the stock market and retail investors also tend to prefer domestic stock which they can read about in their own language. So more individual investors would probably make it easier to raise capital for Norwegian companies even if many retail investors probably would prefer mutual funds or holding companies with a diversified portfolio.


So far, the Norwegian oil incomes have primarily been used for absorbing an excessive supply of labour. It has not been used for increasing the productivity of other parts of the Norwegian economy or to increase the share of high-tech companies based in Norway. There is probably a considerable risk that the oil fund will primarily be used for this purpose in the future as well unless they distribute the oil fund assets to the citizens. It´s probably a better idea to distribute the oil fund to the people and raise taxes instead. If they do that, it will be harder to fool the electorate.


Bazza McKenzie's picture

Thank goodness they have all those eager, skillful and law abiding young "Syrians coming to help sort things out.

theusername's picture

Norway is an unhealthy economy, that's for sure. We have been told all the time that we are the world's greatest country, but I don't know... There are heardly any agriculture left, Norway is doing whatever Washington wants when it comes to foreign policy, and the oil fund is being spent on all sort of weird stuff normal people have no idea about. If the economy goes down, I assume the elite who knows how to fool the system will grab most of the wealth. Norway is no different from other countries. People also seem less well informed than they used to, maybe a comfortable lifestyle has contributed to this. The economic downturn started about the same time as the Conservatives took power, but still the Social Democrats are blamed for everything that's wrong. And under the current government food prices have gone up! People seem more interested in identity non-issues than economy. But I think the reason why the banks and rich elite can get away with murder is that their language is so boring an impossible to understand for normal people. Like someone has written earlier here: Lots of people have meaningless jobs in Norway, I know people who don't even try to apply for jobs before trying to get social welfare money. I am not pro more capitalism and less welfare, far from, what we see is not the problem of socialism, but the problem of global capitalism as social democracy, which doesn't really work anymore. We need to build more industry, have more restrictions on immigration (the media plays the emotional game in Norway too), have a large agricultural sector. Typical for the Norwegian ruling class is that people twice have rejected EU through elections, but they forced us to become part of EEA without asking us.