Monday, October 11, 2010

A sad day for Sweden

Sweden's finance mentalist Anders Borg presented a budget for 2011 on Tuesday morning. According to the Swedish government they forecast that GDP will climb by 4.8 percent in 2010, and 3.7 percent in 2011, according to the financial plan in the budget proposition. If that holds, which it won’t, it would mean a budget surplus and further tax cuts.

Looking at unemployment measured as a proportion of the labour market aged 15- to 74-years-old, is set to amount to 8.4 percent in 2010, and fall to 8 percent in 2011 and to six percent by 2014. And this is almost real unemployment. After a change in the way unemployed are counted Sweden actually have fairly good way of measuring, unlike most other nations. They are still lying of course, but still.

Sweden also have trade surpluses and, in comparison with other European countries, a pretty low public debt.

As a consequence the Swedish right-center government is one of the few governments out there that actually have the power to save much of their country, if they were to do the right thing. Sadly, as in every other case, they won’t. Most likely this was the last or second to last budget before the real mayhem starts, and so this was probably the last time they could do anything significant to change our destiny.

Basically the budget doesn’t change a thing, pretty much exactly the same numbers as the last one. Kind of prudent not getting carried away throwing cash around like Santa’s, which the lefties would have done, but being slightly better than communists and tree-hugging freaks won’t cut it.

Sweden is very dependent on foreign trade and many of her biggest trading partners are the ones in big trouble - soon to collapse. Basically the only important trading partner not about to burn in hell is Germany, which is yet another export driven economy… Sweden also have a slow moving, very regulated and extremely socialist labor market, which will not work in our favor when the world goes down the shithole and unemployment skyrockets.

But the worst problem is without a doubt housing and real-estate which has grown to ridiculous bubble heights and have made the Swedish people more in-debt than even their US counterparts. It’s like watching a young blonde walking around naked in the woods getting stalked by Jason Voorhees; you know she’s going to die, but you don’t know exactly when or how. When this thing crashes - and it will - once the world economy plummets and/or interest rates move up to levels were they should be, then Sweden will suffer immensely.

All things considered, Sweden is actually a country in horrific shape and things will turn very ugly.

The only thing we can be happy about right now is that the right-center coalition won the election which means that we have only a horrible government instead of an extremely horrible one.
I also noticed that the Finance Mentalist issued a couple of warnings about the future and other countries. Among other things he mentioned troubles in the U.S. and a very shaky European banking system. So it seems like they do have at least a hunch were this is going…
And I also do have a slim hope that the government will sell out a couple of government owned companies while they still can. If they do, they may pay of more public debt and maybe use some of that money to cut taxes. That could be the thing that saves us from a collapse and total upheaval in the near future, but I wouldn’t bet any money on it.

What they should have done is of course to cut every corner possible, and a reasonable and conservative way of handling it that would be highly possible to do is to; cut at least 100 billion kronor ($15 billion) and lower corporate taxes with the equivalent amount. They should sell every publically owned and run company, all of them, and use that money to cut public debt with 2/3 or more. They should eliminate a hundred or so of the worse laws that keeps ingenuity and entrepreneurs down. And instead of increasing the number of departments, increasing politician salaries and instead of the increase in support for municipalities, they should have done the complete opposite. And, if possible, make the central bank increase interest rates by 2-3 percent in one go.

If that had been done in this budget and similar actions were to be taken with the next budget, I would have some hope for my birth nation. As it looks now we’re screwed.

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