Tuesday, May 19, 2009

Norway's Big Score During Crisis!

Norway's sovereign wealth fund is also managed by a woman. One with real nerve and spectacular timing. A socialist who understood the market.....
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Thriving Norway Provides an Economics Lesson
OSLO — When capitalism seemed on the verge of collapse last fall, Kristin Halvorsen, Norway’s Socialist finance minister and a longtime free market skeptic, did more than crow.
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As investors the world over sold in a panic, she bucked the tide, authorizing Norway’s $300 billion sovereign wealth fund to ramp up its stock buying program by $60 billion — or about 23 percent of Norway ’s economic output. “The timing was not that bad,” Ms. Halvorsen said, smiling with satisfaction over the broad worldwide market rally that began in early March.
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The global financial crisis has brought low the economies of just about every country on earth. But not Norway. With a quirky contrariness as deeply etched in the national character as the fjords carved into its rugged landscape, Norway has thrived by going its own way. When others splurged, it saved. When others sought to limit the role of government, Norway strengthened its cradle-to-grave welfare state. And in the midst of the worst global downturn since the Depression, Norway’s economy grew last year by just under 3 percent. The government enjoys a budget surplus of 11 percent and its ledger is entirely free of debt. By comparison, the United States is expected to chalk up a fiscal deficit this year equal to 12.9 percent of its gross domestic product and push its total debt to $11 trillion, or 65 percent of the size of its economy.
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Norway is a relatively small country with a largely homogeneous population of 4.6 million and the advantages of being a major oil exporter. It counted $68 billion in oil revenue last year as prices soared to record levels. Even though prices have sharply declined, the government is not particularly worried. That is because Norway avoided the usual trap that plagues many energy-rich countries. Instead of spending its riches lavishly, it passed legislation ensuring that oil revenue went straight into its sovereign wealth fund, state money that is used to make investments around the world. Now its sovereign wealth fund is close to being the largest in the world, despite losing 23 percent last year because of investments that declined. Norway’s relative frugality stands in stark contrast to Britain, which spent most of its North Sea oil revenue — and more — during the boom years. Government spending rose to 47 percent of G.D.P., from 42 percent in 2003. By comparison, public spending in Norway fell to 40 percent from 48 percent of G.D.P. “The U.S. and the U.K. have no sense of guilt,” said Anders Aslund, an expert on Scandinavia at the Peterson Institute for International Economics in Washington. “But in Norway, there is instead a sense of virtue. If you are given a lot, you have a responsibility.” Eirik Wekre, an economist who writes thrillers in his spare time, describes Norwegians’ feelings about debt this way: “We cannot spend this money now; it would be stealing from future generations.” Mr. Wekre, who paid for his house and car with cash, attributes this broad consensus to as the country’s iconoclasm. “The strongest man is he who stands alone in the world,” he said, quoting Norwegian playwright Henrik Ibsen. Still, even Ibsen might concede that it is easier to stand alone when your nation has benefited from oil reserves that make it the third-largest exporter in the world. The money flowing from that black gold since the early 1970s has prompted even the flintiest of Norwegians to relax and enjoy their good fortune. The country’s G.D.P. per person is $52,000, behind only Luxembourg among industrial democracies. As in much of the rest of the world home prices have soared here, tripling this decade. But there has been no real estate crash in Norway because there were few mortgage lending excesses. After a 15 percent correction, prices are again on the rise. Unlike Dublin or Riyadh, Saudi Arabia, where work has stopped on half-built skyscrapers and stilled cranes dot the skylines, Oslo retains a feeling of modesty reminiscent of a fishing village rather than a Western capital, with the recently opened $800 million Opera House one of the few signs of opulence. Norwegian banks, said Arne J. Isachsen, an economist at the Norwegian School of Management, remain largely healthy and prudent in their lending. Banks represent just 2 percent of the economy and tight public oversight over their lending practices have kept Norwegian banks from taking on the risk that brought down their Icelandic counterparts. But they certainly have not closed their doors to borrowers. Mr. Isachsen, like many in Norway, has a second home and an open credit line from his bank, which he recently used to buy a new boat. Some here worry that while a cabin in the woods and a boat may not approach the excesses seen in New York or London, oil wealth and the state largesse have corrupted Norway’s once-sturdy work ethic. “This is an oil-for-leisure program,” said Knut Anton Mork, an economist at Handelsbanken in Oslo. A recent study, he pointed out, found that Norwegians work the fewest hours of the citizens of any industrial democracy. “We have become complacent,” Mr. Mork added. “More and more vacation houses are being built. We have more holidays than most countries and extremely generous benefits and sick leave policies. Some day the dream will end.” But that day is far off. For now, the air is clear, work is plentiful and the government’s helping hand is omnipresent — even for those on the margins. Just around the corner from Norway’s central bank, for instance, Paul Bruum takes a needle full of amphetamines and jabs it into his muscular arm. His scabs and sores betray many years as a heroin addict. He says that the $1,500 he gets from the government each month is enough to keep him well-fed and supplied with drugs. Mr. Bruum, 32, says he has never had a job, and he admits he is no position to find one. “I don’t blame anyone,” he said. “The Norwegian government has provided for me the best they can.” To Ms. Halvorsen, the finance minister, even the underside of the Norwegian dream looks pretty good compared to the economic nightmares elsewhere.
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As a socialist, I have always said that the market can’t regulate itself,” she said. “But even I was surprised how strong the failure was.”

30 comments:

Onlooker said...

Compared to our SWF....

I noted the word "Responsible".
With great Fund(entrusted to them by their people), there are great responsibilities.

Anonymous said...

Can't compare Singapore and Norway lah. Just look at how Norway treat their opposition, their citizens and their minister's salary. Can compare or not?

Anonymous said...

aiyo. what r u guys reading. the dream gets better right at the end. probably written by TSM disciple.lol

"Just around the corner from Norway’s central bank, for instance, Paul Bruum takes a needle full of amphetamines and jabs it into his muscular arm. His scabs and sores betray many years as a heroin addict. He says that the $1,500 he gets from the government each month is enough to keep him well-fed and supplied with drugs. Mr. Bruum, 32, says he has never had a job, and he admits he is no position to find one. “I don’t blame anyone,” he said. “The Norwegian government has provided for me the best they can.”

sps said...

4.6 m. people. $6.8 Billion oil revenue.

That's $15,000 each before anything else happens.

They're rich and can't be compared to poorer or larger nations.

Anonymous said...

we don't do drugs but then, we can have durians for life! LOL

Anonymous said...

Without drug, we are still the best with 40% of our reserves gone with the wind.

With the world highest paid minister, Norway can never hold a candle to singapore's elite miw.

Anonymous said...

Kristin Halvorsen,
please save Singapore. You will be given $1 billion per year it is still better to lose $1 billion than to lose $5 billions by our clowns.

Moreover, we will give you a kangaroo doll to sleep with everyday so you will not become the Singapore kangaroo.

Anonymous said...

Question is: What will you do with a million dollar given to you?

1) Jump from a 30 storey block?
2) Stand in front of an MRT and have your guts spattered for children to see?
3) Sit at home and rot?

Anonymous said...

i eat durian until...shiok shiok.
u sooo jealous...soooo jealous
lol

Anonymous said...

anon 9:2 with the question

judging from the political masturbaitors with mostly comments( and brain) of the below quality:

"Moreover, we will give you a kangaroo doll to sleep with everyday so you will not become the Singapore kangaroo."

this chap will probably sleep with all the kangaroos in Aus. LOL

Anonymous said...

926 PM,

i think lucky will get...even luckier

ke ke ke

Anonymous said...

hey

we are already doing these...

"1) Jump from a 30 storey block?
2) Stand in front of an MRT and have your guts spattered for children to see?
3) Sit at home and rot?"

..without money :p

so your pt?

Anonymous said...

"judging from the political masturbaitors with mostly comments( and brain) of the below quality"

couldn't agree with you more...thats why forums like these are best for amusment..HA HA HA HA

Anonymous said...

sg shld consider merging with norway..then both pple from both countries can enjoy cold free aircon offered by norway and the extreme heat from singapore...i hope this will pave the way for future globalisation effect..

Anonymous said...

sg shld consider merging with norway..then both pple from both countries can enjoy cold free aircon offered by norway and the extreme heat from singapore...i hope this will pave the way for future globalisation effect..


see what i mean? another arseblain

HA HA HA HA

Anonymous said...

achually, merging is quite cleber...we can become super breed can stand heat and cold.

lol

Anonymous said...

"achually, merging is quite cleber...we can become super breed can stand heat and cold."

Herd immunity to become super-mutant. Immune to loss of own CPF money and immune to mee sian mai hum

Anonymous said...

no joke, that may one day be possible, lol

Clear eyed said...

In Norway their leaders are imbued with a sense of responsibility and virtue. Here our "leaders" are driven by a sense of entitlement and greed. This makes a world of difference - paradise in Norway and hell in Singapore.

Chee Wai Lee said...

Hmmm, isn't being prudent an "Asian Value"? >.>

Anonymous said...

HK STANDARD, WED MAY 20:

Tsang and his team to share pay pain

Top officials will stand "shoulder to shoulder with the people of Hong Kong to ride out these difficult times," and take the lead in cutting their pay, Chief Executive Donald Tsang Yam-kuen says.

Anonymous said...

@sps

Wrong. oil revenue goes straight into their SWF which is a PENSION fund.

with the exception of Norway (and maybe UAE), oil has been more a curse than boon.

Norway's success is due to sensible policies, high level of education , relatively high productivity and ,very importantly, avoiding the "trickle down" bullshit.

Obviously, Singapore is not Norway but seriously we need to relook at our sacred cows. Esp NS and Temasek. Scrap them. In fact, forget index investing. Return the money to the people in form of cheaper healthcare, public housing and lower CPF and GST.

Taishan said...

Not to worry, the next spin & excuse for losing billions in investments - they are liquidating to focus on better yielding assets that Singaporeans can have a fondue eating culture.
Coming soon ....

What would these clowns not say, foist, onto a pussycat populace.

Anonymous said...

Hey Lucky

Nevermind challenging Temasek.
U think your rabble here have the balls to turn up?

Remember Operation Spectrum.
6.30pm, 21st May 2009
Speakers Corner, Hong Lim Park

oh wait ... have you trained them not to pee into their pants when within 1km of our brave men in blue? Dun want them to raise a stink ...

Anonymous said...

http://brontecapital.blogspot.com/2009/05/tale-of-two-banking-crises-japan-and.html

Anonymous said...

"Not to worry, the next spin & excuse for losing billions in investments - they are liquidating to focus on better yielding assets that Singaporeans can have a fondue eating culture."

I bet is that they liquidating to focus on making more kangaroos to make more rhetoric and empty promises.

Anonymous said...

If u think the job at gic or temasek r overpaid, plus u can do a better job than those who r currently running the biz, pls apply for the openings at gic website. Serious. Sg needs u.

Anonymous said...

"oh wait ... have you trained them not to pee into their pants when within 1km of our brave men in blue? Dun want them to raise a stink ..."

Do not need to train. Most of us except the really brave ones, not your men in blue, have been sadly conditioned to fear and pee into their pants already. What a brave nation we indeed have.

You call them, your men in blue, brave men where they have the license to do what they have been assigned to do with all the law in place for them to do their job nicely and easily. I thought all or most of us, not the ladies, have gone to NS and do you think we are braver than your men in blue.

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Anonymous said...

It will not succeed in actual fact, that is what I think.