Norway Pushes Panic Button: "We're In A Crisis Now, We Can't Deny That"

Tyler Durden's picture

We’ve spent quite a bit of time documenting Norway’s precarious balancing act in the face of slumping crude prices.

On the one hand, falling crude puts pressure on the krone which essentially allows the Norges Bank to compete in the regional currency wars without resorting to the same type of deeply negative rates as the ECB, the Riksbank, the Nationalbank, and the SNB. In short, a falling krone preserves export competitiveness in a world gone Keynesian crazy.

At the same time, falling crude puts enormous pressure on the country’s economy, which is heavily dependent on oil production

Additionally, collapsing crude revenue means the country will soon be forced to drawdown its $830 billion sovereign wealth fund (the largest in the world) to plug the various budget leaks caused by “lower for longer.”

Now, Norway has declared that its oil industry has entered a “crisis.”

“[The] industry is in a crisis now, we can’t deny that,” Bente Nyland, director general of the Norwegian Petroleum Directorate, told Bloomberg who reminds us that “Norway depends on oil and gas for about one-fifth of its economic output and nationwide, the petroleum industry has cut almost 30,000 jobs.”

The government last year announced plans to boost spending on the way to shoring up the flagging economy and officials says those measures - which are part of the reason why Norway will pull money from the SWF - should be sufficient to offset the pain from lower crude prices. “Finance Minister Siv Jensen says budget proposals put forward last year already contain ‘a lot of expansion’ and will help stem job losses,” Bloomberg continues, before noting that “the question is how quickly the economic adjustment brought on by a weaker krone will manifest itself.”

Yes, that is the question. Of course that’s partly a function of how monetary policy plays out for Norway’s trade partners. Like Europe for instance. And Sweden, which is Norway’s fifth largest export destination.

As a reminder, the Riksbank is effectively beholden to the ECB. If Draghi eases, so too must Stefan Ingves. This means that when it comes to whether a weaker krone helps Norway's non-oil industries, it's essentially a matter of whether the depreciation in the krone tied to falling crude is enough to offset any upward pressure on the currency tied to further easing by the ECB. 

Of course that leads us to an absurd paradox: the lower oil goes, the stronger the disinflationary impulse in Europe and the more deflation Europe has, the more Draghi eases. In other words, the idea that falling crude prices will help support the krone is to a certain extent self-defeating in the current monetary policy regime. 

In short, while we've seen some NOK weakness over the past 12 months, the currency "just can't get weak enough," to quote Bloomberg. 

And because Norway's debt-to-GDP ratio is just 29%, QE isn't possible

In the end then, you can expect the highlighted number in the following screengrab from the Norges Bank's webpage to go markedly lower if Mario Draghi decides he isn't done playing Krugman:

By the way, if the rest of 2016 ends up looking anything like the first two weeks, Norway can go ahead and forget about squeezing a respectable return out of its SWF this year. The less it returns, the less able it will be to offset the money being pulled out to shore up the budget and provide fiscal stimulus. 

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MrNosey's picture

There will be no real recovery what so ever!

The elite will soon run and hide in the bunkers paid for with citizens taxes, after engineering a full economic collapse as well as starting WW3, plus they will make sure that there are enough Jihadi's in the West to start a race war.

That should be enough to cover up the failed fiat ponzi scheme and take care of the 'excessive' population......

J S Bach's picture

"Isn't it gude... Norwegian Crude?"

CheapBastard's picture

" We have Putin exactly where we want him! "


~ Soweto

MalteseFalcon's picture

So the oil isn't worth as much anymore. 

Just import another couple million military aged African men and everything will be fine.

RaceToTheBottom's picture

More refugees would solve the issue.

Dead Canary's picture

Not as good as morning wood.

Dr Ongo's picture

We are so lucky in Australia all this has no effect on us, we have LNG, Iron Ore, Coal..............yeah we are laughing.?........what commodities collapse.........what housing bubble............honestly we are in for a world of pain..........and over here most people think its all hunky dory

jm's picture

You need more tin foil for your hat.

Eirik Magnus Larssen's picture

That can serve as a standardized reply for much of the comments on these forums.

Personally, based on discussions with family members back home, I am more concerned about Norway's housing market.

jm's picture

I'm deeply pissed at myself for some mistakes made this January. 

Squid Viscous's picture

you had a white baby with a gorilla too? what are the odds??

Eirik Magnus Larssen's picture

The irony about White Supremacists is that you drooling inbreds typically represent the least intelligent and the least educated of all "whites".

According to the bigotry of your own dogma, that renders you an inferior sub-group that other whites should prevent from breeding.

Squid Viscous's picture

actually I have an M.B.A. from Columbia, you holier than thou fucking fool...

Eirik Magnus Larssen's picture

Yes, there isn't a doubt in my mind that you are a tragic, loathsome product of the American educational system.

I take it you were a vigorous advocate of having Creationist demagoguery supplant biology courses during your time there?

Squid Viscous's picture

lol what? back on the meds~! stat!

Aaronson.Jones.Rutherford's picture

"I've got an MBA from Columbia": classic. Stick that in yer pipe n smoke it :-)

Bobbyrib's picture

Can you thank your former classmates for ruining our country? Remember to blame African Americans more.

TahoeBilly2012's picture

Hows the SAAB running Larsen?

FredFlintstone's picture

but still a standard deviation or two above the ones they "hate".

Dangertime's picture



Boy that "White envy" really has crippled you hasn't it son?

Preserving one's culture is NOT "White supremacy", but then your kind would stop at nothing to demolish the white man's world, wouldn't you?

Newsflash, your "guilt and shame" weapons are coming to an end, and only the most extreme pussified of leftists fall prey to it any longer......Keep kicking and attacking those of us who only want survival for their culture and people, and I guarantee you will experience blowback like you never thought possible.

GoinFawr's picture

"the white man's world", which planet is that again?

Lorca's Novena's picture

Just wait until the silent and incognito realists decide to take action....

However, I do agree, the stereotypical "white supremist" is portrayed as a fucking moron.

neutrino3's picture

Eirikkk Magnusss Larssssen ... is it his middle name?

Padraigin Eagle's picture

No, that would be "Complete Doos", the Afrikaners always say it best.

DownWithYogaPants's picture

One hais to ask oneself why you keep coming back to ZH Eirik?  

You seem so incompatible to the point that I have to wonder if you are a paid government troll.  I've seen them on other sites that would hold no value for low testosterone / low IQ individuals like you.  Quite namby pamby you are.

Eirik Magnus Larssen's picture

Suffice to say that I wear the disapproval of far-right nutcases as a badge of honor.

You are quite right that ideologically speaking I probably couldn't be further removed from the scum that crawls around on these forums. I originally landed on this website because I was searching for less mainstream analysis of world trade and the financial sector. When I noticed that these forums were literally a refuge for right-wing extremist fringes, I decided to become a regular poster for no other reason than to publicly mock those "people".

That won't be changing.

Squid Viscous's picture

eirik did you ever take the MMPI test, might be worth the effort - just a friendly suggestion

JamesBond's picture

That's MMPI-2 and we already know his profile:


98/89 MMPI-2 profile with an elevated F score


-James Bond.   Dr. James Bond


Dangertime's picture

It's a strangely pussified world when preserving your culture and people is now considered "extreme".....isn't it?

GoinFawr's picture

'Preserving'? You mean keeping a culture exactly the same as you imagine it always was, even its obviously stupid and destructive aspects, never altering it regardless of new information, or changing times and conditions?

Sounds extremely Luddite to me. If I had the choice, I would rather my culture grow than stagnate.

nightshiftsucks's picture

Welcome to the US Eirik,now get the fuck out.

Freddie's picture

...based on discussions with family members back home....

Back home in Nigeria? 

nightshiftsucks's picture

Just wait till one of them gets raped.I'll bet your family are a bunch of sheep and have no clue just like you Eirik.

Antifaschistische's picture

So....if they have to sell a hundred million shares of Apple stock, will that impact the Swiss at all?    It sure is a good thing our world is completely disconnected financially.

sun tzu's picture

The solution is to import 1 million illiterate rapists each year and institute Sharia law. That should save the budget.

CheapBastard's picture

I heard cages are selling like hot cakes there in Norway, Sweden and Germany now:

847328_3527's picture

Don't forget sold out pepper spray and wasp repellent. Here's from the New York Times:


"... the police have received 653 complaints of robberies and sexual assaults, and several rapes. The mother of a 19-year-old who said she had been raped called the police by 10 a.m. on Jan. 1...."


"Sara said that she and her friend decided to seek safety outside the station with police officers, who were themselves helpless. “I never experienced that a policeman says, ‘I would love to help you, but I can’t.’ That was really the worst,” she said. “Who should I turn to as a woman? What should I do?”"

Son of Loki's picture

German town bans male asylum seekers from public pools


Berlin (AFP) - A town in Germany has banned male asylum seekers from public swimming pools after complaints from women that they were being harassed by migrants, AFP learnt Friday.


"insensitve" Germans!

RaceToTheBottom's picture

Segregated Pools, that will solve it!


techpriest's picture

“Who should I turn to as a woman? What should I do?”"

Here's a few thoughts:

1) Your husband and family... oops! The enlightened feminists destroyed families!

2) Your guns and other weapons... oops! The enlightened anti-gunners took them all away!

3) Your local church or any other organization that looks after helpless women... oops! The enlightened statists took them all away so you would have no one to turn to *but* The State!

4) With no one else to run to, how about the State?
oops! They don't give a damn about you.

Looks like you need to look to rebuild #s 1, 2, and 3, fast!

And no, it's not a joke. This is the end of a failed ideology and the woman quoted will be one of very many before it's all over.

gatorengineer's picture

Before Oil Norway had Salmon, Sardines, and made some pretty nice sweaters, back to the basics.  A million Muzzies will give them the cheap labor force to do all this work....   part of the plan / sarc

JohninMK's picture

Shooting themselves in the foot by supporting the US sanctions on Russia has not helped.

With the Russian sanctions, around a $1B of exports went down the tubes in salmon and white fish with that move. Searching for substitute lower priced fire sale markets stripped much of the profits out.

Bit like the German farmers, hit hard by the sanctions

"According to figures of the German Farmers’ Association (DBV), in 2015 German dairy farmers earned only half of what they did in 2014, while meat, grain and vegetable producers suffered income cuts of about 25 percent."

Read more:
cheech_wizard's picture

In a media briefing, reporters asked Russian Foreign Ministry spokesperson Maria Zakharova to comment on the recent statement by US President Barack Obama: 

"when it comes to every important international issue, people of the world do not look to Beijing or Moscow to lead -- they call us." 

"If the world calls Washington first, what happens next is that Washington calls Moscow" said Zakharova. 

yrad's picture

The "solution" is 3:30. And it happens every single fucking day.

Amish Hacker's picture

The 4:20 solution happens every day, too.