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. 

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
MrNosey's picture
MrNosey (not verified) Jan 15, 2016 1:41 PM

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.

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.

Navymugsy's picture

It will definitely generate tons of police and social services jobs.

alphahammer's picture
alphahammer (not verified) MrNosey Jan 15, 2016 1:54 PM


Before it's news... The very definition of that means they made it up.

Monumental bullshit... before its news... Please...

LawsofPhysics's picture

LOL!!!!  Sure sure...


If they do, they better be damn sure that the kill everyone...

yogibear's picture

All of Europe is being flooded by middle easterners.

Also the economy is going into the toilet.

And you wonder why?

Bananamerican's picture

maybe they can drill for Muslims....or vice-versa

MrCrackerJack's picture

No need to drll they are already covering the ground...

Mini-Me's picture

With thousands of Muslim rapists milling about, I'd say they are the ones doing the drilling.

Soul Glow's picture

It's $830B sovereign wealth fund is going to be $500B in a few weeks.

GoinFawr's picture

Good Valhallas! 4.5% unemployment?! The Norges might just run a national (gasp!) deficit for the first time in decades! A few decades of that and they might have to carry a (shudder) national debt by 2050, or thereabouts!

Anyway, for precedent, how did their SWF fare during the 2008-2009 crash in oil prices?


oh, right.

E.F. Mutton's picture

You obviously need more muzzie immigrants.  It's a good thing, just ask President Zippy and Mama Merkel.

Goldbugger's picture

The Great Leveling continues. Soon the Great RESET! Are you ready for this?

Squid Viscous's picture

Springtime for (a new) Hitler! conditions are ripe, nein?

Spitzer's picture

haha the Nordic socialists that could do no wrong. Glad I dont work for StatToil anymore

GoinFawr's picture

Remember back in the 2008-2009 days when you were absolutely certain that the crash in oil prices was going to devastate the Norwegian sovereign wealth fund, but instead it increased by ~250 billion NOK?

Now that was funny.

GoinFawr's picture

wtf, somebody needed this in triplicate?

SmittyinLA's picture

Then there's all of Norway's new "tax parasite immigrant communities",amazing how much money Muslims practicing jizya can consume, it's literally a state paid invasion with orgy and you get a pay increase with every kid you make.

How much can they consume, more than Norway has.

Pheonyte's picture

I think you're a little confused about what jizya is. That's the submission tax that Christians and Jews ("people of the Book") are supposed to pay to their Muslim rulers. For anyone else, it's convert or die.

gatorengineer's picture

The OP has it right, the Muzzies are "taxing" the welfare state....  If they dont pay the tax, then they will start killing...

Pheonyte's picture

Never looked at it that way, good point.

The Ingenious Gentleman's picture

Three-year-old boy 'raped at asylum centre in Norway'

...It is understood to have taken place in a communal area of the centre and may have involved multiple perpetrators...