Norway Pushes Panic Button: "We're In A Crisis Now, We Can't Deny That"
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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LOL!!!! Sure sure...
If they do, they better be damn sure that the kill everyone...
All of Europe is being flooded by middle easterners.
Also the economy is going into the toilet.
And you wonder why?
maybe they can drill for Muslims....or vice-versa
No need to drll they are already covering the ground...
With thousands of Muslim rapists milling about, I'd say they are the ones doing the drilling.
It's $830B sovereign wealth fund is going to be $500B in a few weeks.
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?
http://www.finfacts.ie/artman/uploads/3/Norway-sovereign-fund-Oct202010.jpg
oh, right.
You obviously need more muzzie immigrants. It's a good thing, just ask President Zippy and Mama Merkel.
Lillyhammer
jan hammer
jan hammer
The Great Leveling continues. Soon the Great RESET! Are you ready for this?
Bring it.
Springtime for (a new) Hitler! conditions are ripe, nein?
https://www.youtube.com/watch?v=sn4mVDtqi7g
Lions
haha the Nordic socialists that could do no wrong. Glad I dont work for StatToil anymore
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?
http://www.finfacts.ie/artman/uploads/3/Norway-sovereign-fund-Oct202010.jpg
Now that was funny.
duplicate
wtf, somebody needed this in triplicate?
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.
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.
The OP has it right, the Muzzies are "taxing" the welfare state.... If they dont pay the tax, then they will start killing...
Never looked at it that way, good point.
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...
http://www.independent.co.uk/news/world/europe/3-year-old-boy-raped-at-asylum-centre-in-norway-a6808551.html
Eirik wants to get in on that action,fucking sicko
Norway has a king, they should Mussolini him when they do Merkel.
The 08 crisis never went away. It was only masked over for a period of time.
Like a $99 dollar Earl Scheib paint job. Now the rust is poking through.
Well, at least they are not in a crisis for cute blondes.
Give it a couple of decades.
Can't they just print and sell more oil?
I can't believe no one is focusing on the real issue at hand here....where the fuck did the click bait go?
sorry you have to jerk off to the one square inch picture...make sure you block out Yellen and Cashin somehow.
cheers
- TD
Try ther printer friendly version, never known why they do that.
Clash of Clans mobile app will save Norway!!!!
Funny you should mention CoC. Since the last update it is literally impossible to increase your resources without buying sheilds every day. They have marked the end of that one.
Boom Beach is still good, and I have never spent a penny on either. (That is why Norway is in such trouble, my bad)
Well, the good news is they haven't created one of the world's largest unsustainable welfare states with a bunch of freshly imported immigrants who rely on it.
It'll be better when we restore democracy to Syria. Jeb said that Assad is pining for the fjords.
Might I humbly suggest all the Norwegian females (all females actually in EU and Europe) obtain their hunting license. Be sure to get a pistol for the hunt not a rifle. Even if you abhor violence and killing you're going to want to prepare yourself for the wild animals that will soon be unleashed upon you.
Like Poland not that many months ago Norway was gearing up for a new cold war Russian invasion. Send aid, send arms, send US troops, and send money. So where is the Russian threat nowadays? It seems to have fallen on or actually off the back pages of official hysteria.
http://www.nytimes.com/2015/04/02/world/europe/a-newly-assertive-russia-jolts-norways-air-defenses-into-action.html?_r=0
Socialist utopia.....still, Norway has the hottest women in the world if you like tallish, slender natural blondes.
Save the hot women of Norway!!!
What's that saying about socalists running out of other people's money........
Going to be interesting to see how the wealth sovereign funds get this year to raise cash and avoid having to liquidate meaningful portions of their overall investement that is relatively liquid. Norway is an utter beautiful place that has had savvy ecoomic policy in the 1960s-1980s when it nationalized oil, set up the sovereign fund, and avoided joining the EU or OPEC. Even its role in NATO never forced them to spend a large portion of their budget on military expenses.
If oil stays low it is going to force some really painful conversations about % of public workforce, benefits, and labor regulation at the natonal level. Immigration thing isn't quite teh political issue it is in Sweden or even Finland.
Their SWF has about $180k per person in it right now. Pretty good, but that money doesn't actually last very long when you start spending it, especially when you consider how atrociously expensive everything is in Norway. Oslo ranks among one of the most expensive cities in the world in which to live.
Also, most of their SWF is invested in markets, the same markets that have been buoyed by the global rise in markets over the past few years. A big market downturn will also substantially cut their SWF, and that's already happened the last couple quarters. Double whammy. The fund's largest share holdings are Nestle and Apple.
Don't worry, they have a lot of their wealth in realestate as well....
OOOPPPSSS
I think of it as a better, more sensibly run, and way less corrupt version of Venezuela. If they didn't have oil to pump out of the ground, what would it be? Fish? Skis? Metal ores? Creation of wealth entails the use of goods and ideas to create greater value. You generally don't see a plethora of that type of thing from a heavily socialist nation. They're mostly basic consumers.
Venezuela is a real stretch. I have been down to Caracas and only was over the border trading diamonds but that was a decade ago. Father's close friend comes from a moneyed family and he finally left in '09 for Houston. It just got too violent in Caracas with threats of kidnapping become too prominent even running back and forth to everyday places including school.
Your largely right about Norway though. Fish stocks have largely collasped off Norway's coast and in the North Sea in general. Timber exports aren't what they once were ditto the metao ores exports. Heavy manufacturing has been driven into the ground They have tried to start a tech emphasis there but I haven't seen much come out of it. They also have one of the highest % of public workforce among the OECD too.
I only clicked on this article for a larger view of the Swedish girls in the preview. What a ripoff.
So whats the problem Norway? You have all that surplus you accumulated over years... you do have it right? You did not wasted it on European stocks, right?
Obviously they need to have more young muslim men to come to there shores to fix things especially for their women & young boys!