bubble economy

in a world in recession.

That is where Norway is now – in a bubble, and if we're not careful it may end in bubble‐burst, with disastrous effects for many Norwegians.

“Poor Norwegians … in the richest country in the world.”

State economy is solid enough. Still plenty of oil in the seabed along our long‐stretched coast, and – for now at least – reasonably cool policy for how to spend and invest the money that pours in. On paper Norway is in a unique and enviable situation, and although any economy can only take a certain amount of stress, there is little chance that a bubble‐burst will bring down Norwegian state economy.

Private economies are more vulnerable.

overoptimistic private economies.

Everyone knows, or should know, that growing bubbles have a tendency to burst sooner or later, but all signs are that there is an unfounded growth in private spending based on beliefs that the bubble will hold.

Simply said: rarely ever have so many Norwegians based their economy on loans – big loans – as today.

Cost of borrowing money is so low today that it can only go one way – up. Basing ones economy on beliefs in lasting stable loan‐cost have always been risky, and in the present situation all warning-bells are ringing. Yet, with rising cost of living and inflating house prices, it looks like those who can get loans take their chances even though they should know better.

Many Norwegians with average income can not support their own economy for long if the cost of loans starts growing above today's levels, and that cost is controlled as much of international as overall Norwegian economy.

If/when international economy changes much – either improves too much or goes totally down the drain (both scenarios are possible), it will affect loan‐conditions in Norway directly – most likely in a negative direction for Norwegians who live on large loans.

protection shows cracks.

Our strong economy with large reserves, have so far protected us Norwegians from the recession we see in the world around us. But, we are ourselves slowly but steadily destroying that protection, simply by relying too much on its strength.

Although our ruling political parties (at the time of writing) show restrains, and the official policy is to save up for the future now when times are reasonably good, instead of spending most of what we earn on various projects, there are plenty of populistic political play-outs that if followed up on will increase spending and the risk for bubble‐burst – and “the spenders” have plenty of followers.

Governments don't create economies, only help preserve or destroy existing ones. People create economies through their work, and obviously most want governments that preserve rather than destroy. Can be difficult to see who will do what beforehand and choose right, but that's what elections are all about.

I may be far from happy with the present democratically elected Norwegian government, but the alternatives that are presenting themselves on the political stages a year before next election, are in my opinion far worse.

this country on strike…

I can understand that people in crisis-stricken countries go on strike to save jobs and show what they think of corrupt politicians and “others”. I find it harder to grasp what Norwegian workers are threatening with and going on strikes for. Although there are easily defendable exceptions, most strikes in Norway are totally unfounded.

This year there have been a high enough number of totally unfounded strikes to make many people react and utter that this nonsense has to stop. All that happens is that inflation gets pushed another turn, and most are back at earning the same as before and many end up with less.

As more and more Norwegians each put their tiny bit of stress on the protection we all are relying on in order to keep our national economy sound, it looks more and more likely that it won't hold for all that long. If it breaks we all know who will pay first and most: those who got least – we have been there before.

seriously … why?

I know people do not want to see “the writing on the wall” if it isn't in their favor. Screwing up ones own economy and hope some external mechanism will keep it afloat, is not the smartest thing to do. Nevertheless, too many Norwegians are doing just that these days.

The housing market is the toughest, as at the moment there arent't enough houses being built in the areas people want to live, so overpricing is the norm. For young people with weak economy to begin with, loan-financing more than they can realistically handle is a trap waiting to clap shut – just look at the American housing market in later years.

So, for all you foreigners who are battling private, national and international recessions, do not look to Norway today. We are busy trying to get into a recession of our own. Hopefully we will come to our senses and not succeed.

sincerely  georg; sign

Hageland 03.jul.2012

last rev: 04.jul.2012

side notes.

fossil eco­nomy.

It will last a while, but not forever. So by definition Norway has a non‐sustainable economy.

That in itself isn't a problem, as oil and other fossil fuel reserves will last long enough to build up other foundations for our national economy, providing we start work on that soon. Does not appear to be much urgency getting started with developing alternatives and investing in and for the future though.

lazy town‽

Norwegians are lazy, and like to get paid well for doing as little as possible.
(heard a Swede say it like that the other day)

Nothing unique in that, just look around the world and closer to home. It is not a favorable characteristic of anyone anywhere though, and not much positive comes out of being lazy.

Sure, I feel a bit lazy too at times, but I excuse myself with the fact that I have done my part. Even spent a couple of my younger years building oil platforms still in production in the North Sea, so clearly I have contributed to the national economy…

EU in crisis.

Well, Norway isn't a regular member of EU – only associated. Apart from sharing market with EU members, and getting many job seekers from EU countries up to fill positions we Norwegians do not want, the effects of failing economies in parts of Europe are not felt very strongly in our quiet corner.

Norway is not part of the Eurozone either, but the health of the Euro (€) is of course important. At the moment it is good to be Norwegian tourist in EU, but not quite so good for those who rely on selling goods to EU as the Norwegian krone (NOK) is a bit too strong to be really competitive on the European market.

weak American Dollar.

Definitely good to be Norwegian tourist in the US these days, but I do at times feel sorry for the less fortunate Americans. When a retired Norwegian on basic pension makes more in a year than Americans with two or more jobs, then times must be tough for many.

The US market became over­hyped and over­heated, and in the end it collapsed. Unless they slow down and give the natural market mechanisms time to work on small and large scale, most Americans will probably go from bad to worse in the next few years.

More than anything I think the American market needs stability for a few more years, to let people get used to the notion that economic growth must be based on real values for it to be sustainable – being able to move money in ones own favor does not help the national economy. A few winners on Wall Street is not an indication of solid growth, as for every winner there are hundreds, or thousands, of losers.

Beyond that my thoughts on American economy and politics is something I will keep to myself. I come from a  different system – although originally founded on the same principles, and all I ask is that we never adopt the American system – it won't do our Norwegian society any good.

no worries here.

Private economy is well under control at my end. Income is not high but OK, I don't owe my bank much, and do not spend more than I earn.

In short: I have a handle on my own economy, and hope others have theirs under control.

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