| T.R | Title | User | Personal
Name | Date | Lines |
|---|
| 47.1 | Sweden posts deficit in 1985 | TLE::SAVAGE | Neil, @Spit Brook | Thu Mar 06 1986 16:33 | 16 |
| Associated Press Thu 06-MAR-1986 14:36 Europe-Trade
Sweden had an annual trade deficit, compared with a surplus
during the previous year.
The Riksbank, Sweden's central bank, reported the nation had a
preliminary current account deficit of 9 billion kronor, about
$1.24 billion, during 1985. That compared with a surplus of 2.8
billion kronor in 1984.
The Riksbank said the sharp reversal in the current account
stemmed from a series of monthly deficits in the first half of
1985, and cited a sharp narrowing of the 1985 merchandise trade
surplus to 15.0 billion kronor, about $2.07 billion, from 23.2
billion kronor the previous year.
|
| 47.2 | General price freeze | TLE::SAVAGE | Neil, @Spit Brook | Fri Jan 30 1987 15:14 | 29 |
| Associated Press Fri 30-JAN-1987 11:26 Sweden-Prices
Government Imposes General Price Freeze
STOCKHOLM, Sweden (AP) - The government has imposed a general price
freeze on most goods in an effort to head off new labor negotiations
that it says could further fuel the inflation cycle. A clause in the
current two-year national labor agreement says unions may renegotiate
wage contracts if inflation exceeds 3.2 percent. The 1986 rate was 3.26
percent, leaving 1987 wage scales in question.
"The spiral of price and wages must be broken," said a Friday statement
from the Social Democratic government. Finance Minister Kjell-Olof
Feldt said prices of most commodities would be frozen at their Jan. 28
levels. There would be exemptions for some fresh produce, rents and
gasoline, which is already price-controlled, the government statement
said.
Feldt said he hoped the freeze "would influence the unions so they did
not ask for renegotiations on the collective agreement." The last time
the government imposed a general price freeze was in March 1985. It ran
until October 1985, although it was gradually repealed over the period
for a variety of goods and services.
Despite low inflation, Swedes pay prices on the high side of European
standards. Six slices of sandwich ham cost about 11 kronor, or about
$1.65; a box of breakfast cereal sells for nearly $3; a can of tomato
soup is about $1.50; a loaf of bread $1.30 and a pack of cigarettes
about $2.27.
|
| 47.3 | Why fast food costs a bundle | NEILS::SAVAGE | | Fri Mar 30 1990 13:41 | 52 |
| From: [email protected] (Magnus Rimvall)
Newsgroups: soc.culture.nordic
Subject: Re: Comparative costs
Date: 29 Mar 90 15:05:24 GMT
Organization: Schenectady, NY
In article <[email protected]> [email protected] (Preston
Briggs) writes:
>The question is "how can a business that
>charges 8 dollars US for a hamburger make a profit?"
:-) Rebuttal: How can anybody charging $8 for a hamburger avoid
to make a profit? IMHO the question should have been:
"How can business that charges $8 for a hamburger sell any
burgers?" :-)
The answer to the second question is simpler.
1) Hamburgers are priced at the same level as alternative, traditional
nordic food (such as "korv med mos"=hotdog /w mashed potatoes for
approximately $5-6 in southern Sweden)
2) The reason for these fast-food prices are manifold. One is the high
price of raw material. Another primary reason is the _relatively_ high
wage level in the service industry.
In a country such as the US the span of hourly wages between
fast-food-jobs:skilled-worker:BS/MS-engineer (as an example) is
something like 1:3:6 (very rough measure, assuming MacDonalds pays
$4.00).
In a countrly like Sweden with a strong political movement to equalize
_all_ wages the ratio is more like 1:1.7:2.5 (assuming MacDonalds pays
Skr 40).
[FLAMERS: my Swedish numbers might be some years old, my ratios are
correct; after-tax ratios will be even more compressed].
3) With virtually no movement of non-nordic skilled labor into Sweden
no adjustment of these ratios to the ratios of other countries takes
place. Intead, the overall wage-level will spiral upwards as all groups
wants to become "more equal" until the overall comparative cost (export
vs. import prices of industrial materials and raw materials excluding
hamburgers 8-) eventually forces the government to slash the value of
the currency (and thus the standard of living of the whole country -
but remember that "it is better that all are poor than that some are
poor" 8-). Thus, every 6-8 years the Swedish hamburgers sell for less
dollars (this happened 1982 and will IMHO happen very soon again).
Magnus Rimvall
|
| 47.4 | Protectionist policies criticized | CHARLT::SAVAGE | | Tue Jun 05 1990 16:17 | 46 |
| From: [email protected]
Newsgroups: clari.biz.economy.world,clari.news.europe,clari.tw.misc
Subject: Sweden criticized in GATT report
Keywords: non-usa economy, economy, international trade, trade, chemicals,
manufacturing, agriculture
Date: 5 Jun 90 13:40:47 GMT
Location: sweden
ACategory: financial
Slugword: swedetrade
GENEVA (UPI) -- Sweden was criticized in a GATT "report card"
Wednesday for highly protectionist policies in the chemical, textils
and agricultural industries. GATT also indicated Sweden has a low
level of trade with developing countries. Those issues aside, "the
Swedish market is, for the most part, open to international trade,"
said the study by the General Agreement on Tariffs and Trade
secretariat. Sweden is the world's 15th biggest exporter and 18th
biggest importer, GATT said, and merchandise imports and exports
represent about half of the country's gross domestic product.
GATT noted preferential duty-free industrial trade with fellow
members of the European Free Trade Association and the European
Community, with EFTA and the EC accounting for 70 percent of total
Swedish trade. However, GATT said developing countries enjoy only "a
small share" of Swedish trade: less than 10 percent of the country's
total or about the same as that with the United States. "In some
product areas, market access has been heavily restricted, including a
broad range of agricultural products, clothing, textiles and footwear,"
the report said.
"Sweden has one of the most highly protected agricultural sectors
among industrial countries," the report added. "Domestic marketing and
pricinmg arrangements, supported by high variable levies, substantially
raise domestic prices for agricultural products. "According to recent
estimates, the average Swedish household would be better off, annually,
by some 8,500 kroner, currently $1,400, if these arrangements were
terminated," GATT said.
"Domestic consumers have also been penalized by the quotas for
textiles, clothing and footwear which currently restrain imports from
26 countries," the report indicated. "These restrictions increase
domestic prices and affect the range and quality of products available
to Swedish consumers." GATT said that although quota limits on foreign
clothing and textiles are to be removed by August next year and those
on footwear by 1993, they will be replaced by import duties.
|
| 47.5 | Representative rejects EC membership, responds to GATT | CHARLT::SAVAGE | | Wed Jun 06 1990 16:20 | 35 |
| From: [email protected]
Newsgroups: clari.news.europe,clari.biz.economy.world
Subject: Sweden says EC membership not an issue
Keywords: international trade, trade, non-usa government,
government operation, non-usa economy, economy
Date: 6 Jun 90 15:53:24 GMT
Location: sweden
ACategory: financial
Slugword: sweden
GENEVA (UPI) -- Sweden told its international trading partners
Wednesday it does not "at present" envisage possible membership in the
European Community. Sweden belongs to the smaller, six-nation European
Free Trade Association, which lacks political as well as economic
commitments. Other EFTA members are Austria, Finland, Iceland, Norway
and Switzerland.
Swedish representative Lars Ensell was questioned about his
country's future intentions at a meeting of the permament Council of
the General Agreement on Tariffs and Trade. In particular, he was asked
whether Swedish interest in the EC-EFTA "European Economic Space" issue
-- on which negotiations begin this month -- signals interest in EC
membership. "While supporting the concept of a European Economic Space,
Sweden does not regard a possible EC membership as an issue at
present," Ensell told the Council.
Ensell also rejected criticism in a GATT report of Sweden's
emphasis on preferential trade with EFTA and EC countries, comprising
70 percent of its total trade, while restricting imports from
developing and other countries. "Sweden sees no conflict between
regional and multilateral trade liberalization which it considers as
mutually supportive," he said. The GATT report praised Sweden for a
basic free trade orientation but attacked what it saw as excessive
protectionism in the chemicals, agricultural and textiles and clothing
sectors.
|
| 47.6 | A glossary of customer card terms | TLE::SAVAGE | | Mon Mar 04 1991 14:13 | 80 |
| From: [email protected] (Lennart Brjeson @ KTH, Stockholm)
Newsgroups: soc.culture.nordic
Subject: Re: ID and getting money
Date: 1 Mar 91 15:31:14 GMT
Sender: [email protected] (News Administrator)
Organization: KTH, Royal Institute of Technology,
School of Electrical Engineering
In article <[email protected]>, [email protected] writes:
>In article <[email protected]>, [email protected] (Peter
>Herman x5495) says:
>
>What is the situation in Sweden and other nordic countries with respect to
>credit cards? I got the impression from a few brief visits in Sweden that
>it was much less common to have a credit card and that most transactions were
>made by cash, check, or direct transfer at the bank. Is it possible to get
>a credit card and is it worth it to have one in Sweden?
I don't know if we use the same vocabulary, so I'll define...
"credit card" : The store charges the bank or whatever institution which
issued the card, which in turn charge you. You do not have
to pay the entire amount at once, can spread it out over
regular payments but with interest. "Kreditkort" in
Swedish. Most have an upper limit on their credit.
"pay card" : The store charges the bank or institution, which either
bills you the entire amount or automatically draws the
money from your bank account. "Betalkort" in Swedish.
Not limited, but the bank will not be happy with you
if your account is overdrawn, which anyway is not
possible if the card is used in ATMs or electronic
cash registers. If the card charge manually, the
store will probably call the bank if the amount
is large enough.
"Bankomatkort": Issued by banks, ONLY VALID IN ATMs! Money drawn
from your bank account. No surcharge, no annual fee.
"Bankkort" : A "Bankomatkort" which is also valid as a "pay card".
Often coupled with an international agency such as
Visa, MasterCharge or Eurocard. Surcharge (3 SEK)
on amount smaller than 300 SEK (But not if used in
an ATM). Annual fee of 200-300 SEK if coupled with
international agency.
I don't think I know a single person who has a "credit card", but I
have seen a lot of advertisements. There has been quite a lot of horror
stories in the press, of families bankrupted by overusing their credit
cards. Most people I know have "Bankomatkort", many "Bankkort". Elder
people (I'm 30, I mean the generation of my parents, 50+) use cash or
checks. Many banks offer to grant you a "credit limit" on your bank
account, effectively making your "Bank-" or "Bankomat-kort" a credit
card.
Most gas stations and department stores have electronic cash registers
which can read and charge your card automatically. Most other stores
accept cards, but have to use written forms. (Many of these stores
have a cheap little gadget which reads the card, calls the bank, and
gets a simple "Yes, the card is valid" or "No, the card is invalid"
answer.)
I myself use a "Bankkort" coupled with MC/Eurocard, and an AmEx card. I
use the AmEx for big amounts and Bankkortet for all other. I really
like them and I find them very worthwhile. But I personally wouldn't
ever want a credit card, why pay interest?
>Do all Swedish banks offer a Bankomat card or the equivalent?
Yes.
!++
! Lennart Boerjeson, System Manager
! School of Electrical Engineering
! Royal Institute of Technology
! S-100 44 Stockholm, Sweden
! tel: int+46-8-7907814
! Internet: [email protected]
!--
|
| 47.7 | Lending rate raised to 17.5% | TLE::SAVAGE | | Fri Dec 06 1991 11:06 | 22 |
| From: [email protected]
Newsgroups: clari.news.europe,clari.biz.finance
Subject: Swedish national bank hikes lending rate
Date: 5 Dec 91 15:58:29 GMT
STOCKHOLM, Sweden (UPI) -- Sweden's national bank Thursday hiked its
lending rate to commercial banks by 6 percentage points to 17.5 percent
in order to safeguard the Swedish currency, the krona.
In a statement, National Bank Director Bengt Dennis said the move was
temporary and not expected to be in effect for long, but became
necessary to stop money flowing abroad.
The steep marginal rate rise is the largest in Swedish history and
was expected to shoot domestic lending rates skyward on mortgages in
particular.
It came hard on the heels of a smaller interest rate hike last week
that failed to stem a flow of capital from Sweden in recent weeks of $4
billion.
The outflow came mainly from speculation that Sweden would be forced
to devalue its currency to combat a severe recession.
"Sweden's exchange rate policy remains the same," said Dennis in a
statement Thursday.
|
| 47.8 | Opinions on the future | TLE::SAVAGE | | Tue Apr 07 1992 09:26 | 71 |
| From: [email protected] (Anders Sundin)
Newsgroups: soc.culture.nordic
Subject: Expressen the 4th of April
Date: 5 Apr 92 20:14:24 GMT
Sender: [email protected] (LTH network news server)
Organization: Organic Chemistry 2, Lund University, Sweden
The Swedish evening paper Expressen of the 4th of April presented an
investigation of the opinion of the Swedish people on their economic
future. Expressen's political foundation is classical liberalism.
Question: How do you think your economy will be during the next two
years?
Better(%) 20 25 16 13 19 28
All Men Women Income: < 175000 175000-300000 >300000
Worse (%) 30 26 34 33 31 25
6 kr is about one US dollar.
--------------
Question: How will the following services change in your local area
(kommun)?
Better(%) 19 22 11 26 23
Elderly Schools Social Childerns Collective
care welfare care transports
Worse (%) 50 41 44 36 29
---------
Better(%) 24 14 12 16
Health Culture Libraries Recreation
care
Worse (%) 47 37 38 36
---------
Expressen also presented a Ph. D thesis by Bj�rn Haller�d, titled "The
Swedish Poverty".
His conclusion is that there is little overlap between the people who
are economically poor and the people who receive social welfare. The
economically poor generally try to make do with what they have.
The typical receiver of social welfare is generally a young man (18-30)
who has a low education, a loose connection to the "working market", a
jerky income, and a messy economy.
This group together with the refugees to Sweden are the cause of the
steadily increasing costs for social welfare. This growth has continued
during the eighties regardless of financial climate.
--
Anders Sundin e-mail: [email protected]
Organic Chemistry 2 [email protected]
University of Lund [email protected]
P.O. Box 124 [email protected]
S-22100 Lund phone: +46 46 108214
Sweden fax: +46 46 108209
|
| 47.9 | Opinion: 'troublesome' trends | TLE::SAVAGE | | Mon Jul 06 1992 14:52 | 60 |
| From: [email protected] (Tomas Eriksson)
Newsgroups: soc.culture.nordic
Subject: Re: Nordic Union
Date: 6 Jul 92 16:00:56 GMT
Sender: [email protected] (Usenet)
Organization: Royal Institute of Technology, Stockholm
[email protected] (John Dryselius TG/HB) writes:
>According to the Swedish Export Council (which is the voice of the new
>government and the exporting companies)
I don't quite follow you. The treasury (finansdepartementet) has it's
own voice, and so does the prime minister. It is true that the liberal
and conservative parties and the Swedish industry shared opinions about
what was wrong with the social democratic government we had until the
September-91 election, but the Swedish Export Council is not a
megaphone for the centre-right government. Rather, some Swedish
socialists with conspiratory views sometimes claim that the government
(and especially its largest party, the conservative) is some kind of
facade for the industrial leaders / capitalists etc, i.e. the other way
around compared to your claim. I don't agree with either view.
>Sweden does not have a strong economy and people with skill and work
>ethic, so I guess the weak southern economies should carry us.
I have never heard anyone say that "if only our economy was as strong
as Portugal's!" or "see Greece - an example to follow!". Was is
obvious and troublesome are the *tendencies* in the Swedish economy.
Our GNP growth has been the lowest among the OECD countries more often
than not for several years. The structure of the Swedish industry is
changing too slowly - no new industrial companies established after c.
1950 have grown to become large. The newest large companies we have are
a few pharmaceutical companies (very sucessful ones!), that were
established in the 1940s. E.g. Pharmacia started as a producer of blood
replacement products based on carbohydrates during WWII. In fact, the
legislation and taxation system of the 1970s and 1980s more or less
made it *impossible* to build up a large industrial company from
scratch. We should hope that this changes. Some important changes came
already in 1990 and 1991 while we still had the social democrats.
When it comes to the work ethic, my personal opinion is that is much
"worse" today than before. I think it started to "deteriorate" (perhaps
a too strong word) in the 1970s, and that it became quite noticeable in
the 1980s.
. . .
And it would be a bit premature to pass judgement on our present
government after only 9 months, I think. For instance, their first
totaly *own* budget has only been running for 6 days (since July 1).
. . .
Tomas
-------------------------------------------------------------------------------
Tomas Eriksson [email protected]
Surface Force Group, Department of Physical Chemistry,
Royal Institute of Technology, Stockholm, Sweden
"This is the famous Hasan B Mutlu-trigger, insert it in your .sig file today!"
|
| 47.10 | Sky-rocketing interest rates | TLE::SAVAGE | | Wed Sep 09 1992 14:36 | 85 |
| Newsgroups: soc.culture.nordic
From: [email protected] (Tomas Eriksson)
Subject: Re: Interest rates
Sender: [email protected] (Usenet)
Organization: Royal Institute of Technology, Stockholm
Date: Wed, 9 Sep 1992 12:55:22 GMT
In article <[email protected]>, [email protected]
(Michael Haux) writes:
>I just received brief information from Sweden on much higher interest rates
>from the swedish national bank. Could anyone provide me with more information,
>analysis, etc. on this?
Finland abandoned their fixed exchange-rate policy yesterday, which in
effect meant that they devaluated the FIM by roughly 15%. Just as the
last time they devaluated, several actors in the capital markets began
to worry about a Swedish devaluation, which resulted in an outflow of
currency from Sweden. "Riksbanken", the Bank of Sweden, raised its
short-term interest rate to the banks to 24% yesterday. This wasn't
sufficient to stop the outflow of currency, so this morning they loaded
their large caliber gun and increased that interest rate to 75%.
Bengt Dennis, who heads "Riksbanken", has also declared that he will
use all means available to him to stop the outflow of currency and
speculations about a Swedish devaluation. This could include even
higher interest rates to the banks, if necessary, and taking up huge
loans in foreign currency; in his statement, he said that Riksbanken
and Riksg�ldskontoret (the government's debt managing office) were
prepared to take up 120 billion SEK (approx. 23 billion USD) in
short-term loans in foreign currency to reinforce the currency reserve.
This is a *huge* amount, and it shows that the since-1984 policy that
the government should avoid new loans in foreign currency doesn't
really apply to the Bank of Sweden's action in emergency situations.
The Bank of Sweden, which by the way isn't under governmental control
(it's directly subordnate to the parliament, which means the government
can not, and should not, direct the interest rates), wants to make it
clear that the announced policy - EMS-like fixed exchange rates and
absolutely no devaluations - is still in effect. "Sweden is not like
Finland" is the message. Bengt Dennis has also warned that it didn't
help the Finnish interest rates to devaluate.
The Swedish capital market has been in a volatile state today, and some
mortgage institutions stopped all new loans at fixed interest rates
yesterday, until the situation has stabilized, but to give an
indication about the actual interest rates right now, 3-month and
6-month government bonds had an interest rate of approx. 26% and 18.5%
respectively about 2 hours ago. One large mortgage institution just
raised its mobile interest rate by 3.5% to 21%.
Apart from the "Finnish disease" and general chaos in European capital
markets since the German interest rate increase some time ago, we have
a few domestic factors which have contributed to a high interest rate
in Sweden. (It's actually *extremely* high considering that the
inflation in Sweden over the last 12 months has been only 2%!) First,
there is a very large deficit in the budget (a figure of 100 billion
SEK for 1992 has been mentioned, which ought to be in the region of 6%
of our GDP, together with a higher figure next year). The 1984
no-foreign-currency-loans policy means higher interest rates in Sweden.
I don't really see why the government should pay, say, 2% higher
interest rates for its loans just to have them in SEK, if the fixed
exchange-rate policy is "holy". It should really mean anything if they
took their loans in DEM or ECU instead, at least to my naive mind.
Another contributing factor is the political situation in Sweden. The
non-socialist government doesn't have its own majority in parliament,
but have to get votes from e.g. the populist "New Democracy" party.
They have threatened to vote against the major government proposals
this autumn, much because of "bad karma" between that party and the
leader of the Liberal Party, Bengt Westerberg (minister of social
affairs and deputy prime minister). If the government suffered these
defeats, they would probably be forced to resign. This would leave
Sweden with a very unclear political situation. This possibility, and
the opinion of some people that the government isn't doing enough to
reduce the budget deficits (at the same time, however, the social
democratic opposition and many other are demanding a traditional
keynesian policy, i.e. increasing budget deficits), has added
insecurity about the future government policies.
Tomas
-------------------------------------------------------------------------------
Tomas Eriksson [email protected]
Surface Force Group, Department of Physical Chemistry,
Royal Institute of Technology, Stockholm, Sweden
|
| 47.11 | 75% - Forstor inte (= Huh???) | BLOFLY::PERRETT | | Wed Sep 09 1992 22:21 | 28 |
| Just some questions on the previous note.
>> so this morning they loaded
>> their large caliber gun and increased that interest rate to 75%.
Thats too much for my comprehension. Do you really mean that for short
term loans (probably days only) the interest rate would be 75% per annum.
IE if I borrowed 100 SEK at that rate for a year my interest would be an
extra 75 SEK on top of the 100 owed. Im just asking for confirmation as
Ive never come across a rate that high before.
Secondly, whats the average morgtage terms rates (21% quoted as example),
and also the top rate (marginal rate) of tax and at what salary level
does it come in at?
I am trying to get a picture of the financial situation of a person
living in Scandi now, as I lived there for 5 years (and loved it) but
left about 4 years ago.
Sounds like a few things are changing.
Secondly, a colleague says that Norway is in even worse shape, and banks
going wobbley. Is it true or just gossip rumors.
Rgds
Andy Perrett
Sydney Australia
|
| 47.12 | More on that 75% interest rate hike, from UPI newswire | TLE::SAVAGE | | Thu Sep 10 1992 15:54 | 50 |
| From: [email protected] (UPI)
Newsgroups: clari.biz.finance,clari.news.europe,clari.biz.economy.world,
clari.biz.top
Subject: Swedish interest rate rises to 75 percent
Date: Wed, 9 Sep 92 11:53:06 PDT
HELSINKI (UPI) -- Sweden's central bank Wednesday boosted interest
rates to a staggering 75 percent from 24 percent and Finland devalued
the markka in a currency storm generated by a surge in the German mark
and a decline in the U.S. dollar.
The dramatic move by Sveriges Riksbank to increase its marginal
lending rate succeeded in stopping the flow of krona into Deutsche
marks, but it also triggered fears of rising interest rates as other
countries move to preserve their currencies under the European Exchange
Rate Mechanism.
In Sweden the marginal interest governs both bank deposits and
borrowing with the central bank. Sweden lifted the rate to 24 percent
Tuesday from 16 percent after Finland decided to devalue its currency.
In Finland, the markka was effectively devalued by 15 percent as it
continued in free fall after the central bank's decision Tuesday to end
its link to the European currency unit and let it float.
The decision by the Bank of Finland and the government to let its
currency float failed to turn around the currency, which went from an
initial 13 percent devaluation Tuesday to 15 percent Wednesday.
The one-month lending rate in Finland Wednesday was 18.85 percent.
The chairman of the Finnish parliament's bank commission, Erkki Maki-
hakola, urged the government not to let the currency float but to agree
on a devaluation percentage before the French referendum Sept. 20 on the
Maastricht Treaty. The treat spells out economic, political and military
union in Europe.
The Finnish parliament also began talks on deeper cuts in the 1993
budget for Finland, where unemployment is about 13 percent.
The Swedish central bank revealed it had a 16 billion ecu ($23.2
billion) borrowing facility with an option to double it if necessary to
support the krona.
Analysts said that with a budget deficit equal to about 9 percent of
gross national product, Sweden had the least flexibility of all three
Scandinavian countries to resist a run on its currency.
Sweden, Finland and Norway, which saw its one-month rates increase to
17 percent from 13 percent, remain outside the ERM but are vulnerable to
pressures within the mechanism. Analysts said their currencies were
unlikely to recover long-term stability until the German central bank
eased interest rates.
Finland and Sweden both have applied to join the European Community.
A requirement of membership is to maintain a fixed exchange rate with
other European currencies under the ERM.
Sweden was expected to lower its overnight rate that banks charge one
another for loans back to around 15 percent by next week.
Finland said it would align its economy more closely with the EC when
the situation stabilized.
|
| 47.13 | Some numbers | SWETSC::WESTERBACK | Mimsy were the borogroves | Fri Sep 11 1992 07:17 | 19 |
| Re .11:
As .12 said the 75 % interest rate is the one banks are charged when
taking new loans from "Riksbanken", it's not involved in personal
loans. Even though this sounds extremely high, it's not unprecedented
in these circumstances. It's been mentioned here that France hiked
their margin rate to 2,000% (two thousand!) for a short time in the
early eighties to defend the franc.
But it does drive up mortgage loans. Examples of today's rates on
those are: Mobile rate loan 24%
Two-years fixed rate 17%
Five-years fixed rate 14.75%
Re taxes: Top marginal rate is now 50% (if you have the average
local tax of 30%, varies 27-34% I think). It hits you above 200,000 SEK
a year (~39,000 US$)
Hans
|
| 47.14 | Markka to float for a while | TLE::SAVAGE | | Fri Sep 11 1992 16:35 | 35 |
| From: [email protected] (UPI)
Newsgroups: clari.biz.finance,clari.news.europe
Subject: Finland's president sorry for devaluation storm
Date: Thu, 10 Sep 92 12:26:56 PDT
HELSINKI (UPI) -- President Mauno Koivisto said Thursday he was sorry
the decision to float the Finnish markka caused such turmoil in
international markets but said the currency would continue to float for
``a long while.''
The Bank of Finland released the markka from its link to the European
currency unit Tuesday morning after using 10.6 billion Finnish markkas
worth of supporting credits in a failed bid to stem a currency outflow.
The float had the immediate effect of devaluing the markka by 13
percent. It devalued further to 15 percent the next day.
Sweden, determined to defend its own currency, reacted by increasing
its overnight interest rates first to 24 percent and then to a
staggering 75 percent Wednesday.
The U.S. dollar's recent slide was halted because of the turmoil on
European currency markets over concerns higher Scaninavian rates would
prompt Germany to boost its rates and draw investment funds from other
currencies.
Koivisto told a news conference he was sorry the decision to float
the markka had generated such a strong reaction. He said he had not
expected the decision to be noticed in the international market.
The president said the markka would continue floating for ``a long
while'' but eventually would return to its level prior to the float that
triggered the Scandinavian currency storm.
Koivisto denied there was a political crisis in Finland. He said the
parliament retained confidence in the government and he expected this to
continue.
Bank of Finland President Sirkka Hamalainen said not even a sharp
rise in interest rates was able to block the currency outflow.
The Bank of Finland also raised its auction interest by 0.45 percent
to 18.45 percent. The increase was aimed at encouraging investments in
Finnish markkas and boosting its reserves.
|
| 47.15 | | BHAJEE::JAERVINEN | VMS++ == WNT | Mon Sep 14 1992 05:24 | 13 |
| Last night, EC decided to devalue the Italian Lira by 3.5% and
*increase* the value of other EC currencies by the same amount, after
Germany agreed to lower interest rates today. This obviously means a
defacto devaluation for the Lira of 7% (within EC).
I think the Scandinavion turmoil had put unbearable pressure on UK�;
the Lira has been under devaluation pressure a long time now.
It's intersting to see how the Finnish Markka will react... maybe it'll
fall below DM 0.30 for the first time in its history.
(When I visited Germany for the first time in my life, the Finnmark was
worth DM 1.22 !!).
|
| 47.16 | Interest rate down | TLE::SAVAGE | | Tue Sep 15 1992 10:23 | 24 |
| Newsgroups: soc.culture.nordic
From: [email protected] (Tomas Eriksson)
Subject: Re: Interest rates
Sender: [email protected] (Usenet)
Organization: Royal Institute of Technology, Stockholm
Date: Mon, 14 Sep 1992 11:56:11 GMT
...
Last week's raise of the short-term interest rate in Riksbanken (the
interest rate banks pay) to 75% (plus a reinforcement of the currency
reserve) was successful insofar as to generate a large *in*flow of
currency to Sweden. Whether international investors will believe that
Sweden never will devaluate, or if similar actions will be needed again
in a few months or so, we'll see.
By the way, Riksbanken lowered their interest rate to 20% this morning.
Tomas
-------------------------------------------------------------------------------
Tomas Eriksson [email protected]
Surface Force Group, Department of Physical Chemistry,
Royal Institute of Technology, Stockholm, Sweden
|
| 47.17 | The 'Great Crisis Package' | TLE::SAVAGE | | Tue Sep 22 1992 11:33 | 3 |
| For information on the tumultuous events of the third weekend in
September 1992, see replies .16 and .17 to note 181.
|
| 47.18 | Floating SWKrona | TLE::SAVAGE | | Fri Nov 20 1992 10:20 | 49 |
| Newsgroups: soc.culture.nordic
From: [email protected] (Torkel Franzen)
Subject: The krona floats...
Sender: [email protected]
Organization: Swedish Institute of Computer Science, Kista
Date: Fri, 20 Nov 1992 08:54:54 GMT
....without visible means of support! As some of you will remember,
there was a great brouhaha here a couple of months ago, with the head
of the national bank sticking out a steely jaw and declaring that he
would rather see Sweden reduced to ashes and rubble than depart from
the fixed rate of exchange, and the government and the opposition
yodeling in perfect harmony about the necessity of introducing extreme
measures so as to keep the specter of a floating krona at bay. Well,
yesterday all this collapsed, and there is a blight upon the land, or
so some politicians would have us believe. My point of view is a simple
one: now we won't have to put up with another round of interminable
blathering about rates of interest and crises and emergency meetings
and that kind of thing, which is all to the good.
--------------------------------------------------------------------------------
Newsgroups: soc.culture.nordic
From: [email protected] (Odd Bolin, Royal Inst of Tech, Stockholm,
Sweden)
Subject: Re: The krona floats...
Sender: [email protected] (Usenet)
Organization: Plasma Physics, KTH, Stockholm, Sweden
Date: Fri, 20 Nov 1992 10:19:59 GMT
In article <[email protected]>, [email protected] (Torkel
Franzen) writes:
>
> My point of view is a
>simple one: now we won't have to put up with another round of
>interminable blathering about rates of interest and crises and
>emergency meetings and that kind of thing, which is all to the good.
True enough. Now we only have to keep track of a two-digit inflation
rate, and a few quarrels between different labour unions saying things
like 'Since you got a 13% wage increase, we demand 14%!'.
Odd Bolin
Department of Plasma Physics, Alfven Laboratory
Royal Institute of Technology, Stockholm, Sweden
Ph: +46 - 8 - 790 7701 Fax: +46 - 8 - 245431
Internet: [email protected]
|
| 47.19 | Rating downgraded | TLE::SAVAGE | | Tue Feb 02 1993 13:05 | 54 |
| From: [email protected] (UPI)
Newsgroups: clari.biz.finance.earnings,clari.biz.economy.world,
clari.biz.finance,clari.news.europe
Subject: Moody's downgrades Sweden's senior debt
Date: Mon, 1 Feb 93 11:46:12 PST
NEW YORK (UPI) -- Moody's Investors Service downgraded Monday to
double-A2 from double-A1 Sweden's long-term foreign currency debt rating
in a move that affected about $39 billion of debt.
The rating service said Sweden faces a period of difficult policy
choices in the context of a weak domestic economy, a sizable
deterioration of public sector finances and a high level of
unemployment.
"These imbalances can only be corrected gradually and may delay a
needed recuperation of investment," Moody's said.
"This, in turn, may hurt the country's long-term competitiveness and
creditworthiness," the rating service said.
Moody's announced the downgrade as the European Community began
formal negotiations aimed at admitting Sweden to the Community.
The long-term foreign currency debt ratings of the Kingdom of Sweden,
Forsmarks Kraftgrupp, Swedish Export Credit Corp., Kommuninvest, the
City of Gothenburg and the City of Stockholm also were downgraded to
double-A2 from double-A1, Moody's said.
In addition, the ratings of Kommuninvest, City of Gothenburg and the
City of Stockholm remain under review for possible downgrade, pending
final assessment of the effects of current trends on the local sector,
the rating agency said.
Moody's, whose best investment grade is triple-A, defines the double-
A category as high-quality investment with some long-term risks and
single-A as having many favorable investment attributes with greater
suspectibility to future risks.
"As a result of the recent devaluation and slower wage growth,
Sweden should enjoy improved rates of export growth," Moody's said.
"Other recent policy measures should also ultimately enhance
productivity growth and improve competitiveness."
The rating agency said "these factors will help increase activity,
raise the share of the exposed sector, and dampen growth in net external
debt."
Sweden's current account may even go into surplus by 1994, Moody's
noted.
However, the rating agency said, "this situation reflects the
negative rates of growth of consumption and investment and is perhaps
not sustainable in the medium-term."
Moody's noted the country faces other risks, including its
unemployment, which has risen to 7 percent -- excluding labor market
training programs -- and may move to a higher permanent level.
In addition, Moody's said it may also prove difficult for Sweden to
reduce the fiscal gap, based on expected weakness in the domestic
economy and on existing budget commitments.
The rating service said high public sector deficits could contribute
to policy uncertainty and to inflationary expectations.
"In such an environment, investment demand is expected to remain
stagnant so that ultimately living standards may suffer and relative
competitiveness may lag," Moody's said.
|
| 47.20 | People are asking... | TLE::SAVAGE | | Mon Jul 19 1993 12:30 | 39 |
| Newsgroups: soc.culture.nordic
From: [email protected] (Ahrvid Engholm)
Subject: Re: Swedish currency, what went wrong?
Sender: [email protected] (Usenet)
Organization: Stacken Computer Club, Stockholm, Sweden
Date: Sat, 17 Jul 1993 19:05:16 GMT
In article <[email protected]> Huachen Pan
<[email protected]> writes:
>What went wrong with Swedish currency? Its value has dropped rapidly
>during recent weeks. Specifically, I would like to know:
>1) How is the Swedish foreign trade balance?
>2) What is the unemployment rate?
Thanks for your questions, which are the same as *many* people in
Sweden these days also ask.
The SEK may have dropped rapidly last weeks, but the *big* drop was
last fall when the national bank surrenered and dropped the defence of
the SEK (after first saying "we'll defend it to the death"). Recent
drops is only marginal to last fall.
Swedish trade balance is probably doing well, *because* of the fall of
the SEK (Swedish crown) last fall. Then Swedish products became cheaper
for foreign countries to buy.
The state budget, however, is *not* doing well. It has increased
steadily, to levels of deficit that would be considered science fiction
even in the US (considering per capita). Presently the deficit is
above 200 billion SEK (divide by eight to get it in dollars).
The unemployment situation is getting quite dramatically worse. It is
now ca. 10% (ca. 15% including "emplyment market political efforts",
i.e., some people will be on emplyment courses by AMS (the Employment
Market Agency)). It used to be 2%.
Productivity is, though, probably going up, just as export. We'll
probably have better times in a few years, but right now it looks dark.
|
| 47.21 | National income tax | TLE::SAVAGE | | Mon Jul 19 1993 12:31 | 20 |
| Newsgroups: talk.politics.misc,soc.culture.nordic
From: [email protected] (Lars-Henrik Eriksson)
Subject: Re: Swedish taxes (was: Vouchers and humanism)
Sender: [email protected]
Organization: Swedish Institute of Computer Science, Kista
Date: Tue, 13 Jul 1993 19:10:36 GMT
The national income tax is not progressive. It is fixed at 20%, but is
only taken out on incomes above a specific level, which is adjusted
each year for inflation.
That level is currently something like SEK 180000/year, give or take
SEK 20000.
--
Lars-Henrik Eriksson Internet: [email protected]
Swedish Institute of Computer Science Phone (intn'l): +46 8 752 15 09
Box 1263 Telefon (nat'l): 08 - 752 15 09
S-164 28 KISTA, SWEDEN Fax: +46 8 751 72 30
|
| 47.22 | National debt | TLE::SAVAGE | | Wed Aug 04 1993 10:04 | 9 |
| Newsgroups: soc.culture.nordic
From: [email protected] (Torkel Franzen)
Subject: A new record!
Sender: [email protected]
Organization: Swedish Institute of Computer Science, Kista
Date: Tue, 3 Aug 1993 17:44:54 GMT
Sweden's national debt has now reached the 1000 000 000 000 kronor
mark! That's one thousand billion kronor.
|
| 47.23 | Is Sweden too small to resist the EEC? | TLE::SAVAGE | | Fri Oct 08 1993 11:59 | 38 |
| Newsgroups: soc.culture.nordic
From: [email protected] (Torbj|rn Keisu)
Subject: Re: Help - EC is using me for evil
Sender: [email protected]
Organization: Swedish Institute of Computer Science, Kista
Date: Thu, 7 Oct 1993 11:29:22 GMT
In article <[email protected]>
[email protected] (Richard Wavle) writes:
>> But why would a country, any country, want to surrender
>> its hard earned freedom to a bunch of bankers in Brussels?
>> That is where your currency will be controlled and you
>> know if they controll the currency, they also control
>> yours or any country. These bankers are not elected
>> and are answerable to no one.
It's not a matter of wanting or not. Sweden tried to control its own
currency up to last autumn. We had a single-sided fixed rate against a
weighted basket of EEC currencies. At the big turmoil when the
Maastricht treaty were turned down in Denmark no-one believed in the
Swedish currency (at this point the GBP had already been devaluated).
For a short period we had a marginal rent at 500%, which clearly is an
impossible situation. The Swedish government had to drop the fixing
against EEC currencies and the SEK has today been depreciated by about
36% against major currencies.
Much of this is due to those bankers you are talking about. In fact
even American investment banks took part in this, so it's not only
bankers in Brussels.
One expectation is of course that in a joint EEC a small country will
have saying and the sheer power of a united Europe may withstand the
attacks of investment banks. Daily the currency market shuffles around
some 1000 billion dollars, which is to much for a small country if an
attack is ventured.
/tk
|
| 47.24 | Cry now, or cry later | TLE::SAVAGE | | Fri Oct 22 1993 12:33 | 17 |
| Newsgroups: soc.culture.nordic
From: [email protected] (Ahrvid Engholm)
Subject: Re: Swedish crown sinking?
Sender: [email protected]
Organization: Stacken Computer Club, Stockholm, Sweden
Date: Thu, 21 Oct 1993 12:33:45 GMT
The bad news is that the government wants to tax us out of the deficit.
You can't cut more in the budget, because if you do kindergarten nurses
will demonstrate and cry on TV. Sweden already has the perhaps highest
tax levels in the world, and higher taxes will only make the situation
worse. The latest proposal from the government is a compulsary
unemplyment insurance fee (ie a tax) that will cost everyone roughly
1000 crowns a month. What we should do is of course to cut, cut, cut in
the budget. It's better that a few people cry now, than to have a whole
nation cry a few years from now if this goes on. The politicians don't
have the guts to do the necessary cuts.
|
| 47.25 | Cost of things | TLE::SAVAGE | | Wed Dec 29 1993 14:08 | 13 |
| Newsgroups: soc.culture.nordic
From: [email protected] (Ahrvid Engholm)
Sender: [email protected]
Organization: Stacken Computer Club, Stockholm, Sweden
Date: Wed, 29 Dec 1993 00:03:50 GMT
The cost of things? Well, the Swedish crown has fallen more than 30%
against the US dollar, so whatever the costs used to be it is cheaper
now - by 30%. Stockholm was earlier known to be an expensive city, but
I think it is more bearable now.
The thing that is expensive here is booze. Half a litre of beer (some
will actually only serve 40 cl) costs around 4 USD in a bar.
|
| 47.26 | High taxes | TLE::SAVAGE | | Tue Mar 29 1994 14:37 | 18 |
| From: [email protected] (Ahrvid Engholm)
Newsgroups: soc.culture.nordic
Subject: Re: SWEDISH ECONOMIC MODEL
Date: 28 Mar 1994 16:51:46 GMT
Organization: Stacken Computer Club, Stockholm, Sweden
High taxation reduces productivity. It makes people less willing to
work hard, because they get so little for it. This became evident
already in the 70's, but the system could be kept for another decade
and a half because of two things: the 80's meant an economical boom and
even a bad system can survive then, and secondly the government started
to borrow money on a huge scale.
Sweden has one of the highest taxation levels in the world, and the
political system has grown into the habit of having lots of money to
spend. Even now when the state budget deficit is critical, the
politicians continue to spend. The last budget had a deficit of ca. 250
billion SEK.
|
| 47.27 | Slow recovery from banking debacle | TLE::SAVAGE | | Wed Mar 30 1994 13:01 | 36 |
| From: [email protected] (Reuters)
Newsgroups: clari.world.europe.western,clari.biz.finance.services
Subject: Swedish Bank Support Authority releases last assets
Date: Tue, 29 Mar 94 8:30:04 PST
STOCKHOLM, March 29 (Reuter) - The Swedish banking sector
passed another milestone on the slow road to recovery on Tuesday
when the specially-formed Bank Support Authority (BSA) handed
over its final four assets to the Finance Ministry.
The newly-merged state-owned bank combine of Nordbanken and
Gota Bank will now be prepared for the relatively short step to
privatisation. Two bad debt disposal companies, Securum AB and
Retriva AB, will remain under the ministry.
Tax minister Bo Lundgren, addressing parliament, said the
BSA would stay in place as a separate authority as long as the
state's full guarantee for the lending sector remains.
The guarantee has been a key part of the Swedish state's
rescue package for the banking sector after capital adequacy
ratios collapsed in the early 1990s due to a boom-bust lending
spree and a sharp accumulation of bad loans.
In the end two large banks fell entirely into state hands,
prompting the creation of the BSA in late 1992, and during last
year another handful of lenders applied to it for aid and
assistance.
Of those, two more received state help in conjunction with
rescue programmes carried out with shareholders. BSA staff will
continue to monitor those agreements, Lundgren said.
"Today's transfer marks the end of the acute clean-up of the
financial sector..." Lundgren told parliament.
While, he said, aid to the banks has cost the state budget
60.2 billion crowns (nearly $7.65 billion) since autumn 1991,
the total spend on assistance may well be higher once the
relationships between Nordbanken/Securum and Gota/Retriva are
fully clarified.
The BSA maintains that the final bill for baling out the
sector should not be drawn up until after Nordbanken's sale.
|
| 47.28 | Pharmacia AB privatisation delayed | TLE::SAVAGE | | Tue Apr 05 1994 16:09 | 62 |
| From: [email protected] (Reuter/Andrew Huddart)
Newsgroups: clari.world.europe.western,clari.biz.top
Subject: Shakey bourse could derail Pharmacia float plan
Date: Tue, 5 Apr 94 6:10:10 PDT
STOCKHOLM, April 5 (Reuter) - Sweden's biggest privatisation
- the 14-billion-crown ($1.8 billion) sale of its stake in drugs
firm Pharmacia AB - could be delayed by a plunging stock market,
share analysts said on Tuesday.
Rising U.S. interest rates have sent the Swedish bourse into
a prolonged slide, with the OMX index falling for the 13th
session in a row on Tuesday, and this may force the state to
consider delaying the sale, planned for later this spring, they
said.
An Industry Ministry spokesman said the state had no fixed
timetable for setting the terms for its 46 percent shareholding
in the listed pharmaceutical maker.
But share analysts say the ministry has already prepared a
plan to sell-off the entire stake in one go in early June.
"Plans for the privatisation are continuing, but we are not
insensitive to what is happening on the (share) market,"
ministry spokesman Per Blixt told Reuters.
"We will not sell at any price," he added.
The financial daily Dagens Industri said on Tuesday that a
cabinet meeting to finalise the details of the sales had been
delayed to May 20 from April 14, but Blixt said he had no
information about these dates.
"No date has been set for a decision," he said. He declined
to comment on the possiblity of postponing or cancelling the
sale.
The planned sale of the Pharmacia stake is the second part
of a twing-pronged float plan for 1994 by the conservative-led
coalition government.
The first sale, of 49 percent of the shares in timber and
paper products group AssiDoman AB, was succesfully completed in
March and brought the state 7.6 billion crowns ($960 million).
With a general election due on September 18 there is
pressure on the state to complete the Pharmacia sale soon.
Giant industrial group AB Volvo is also an interested party,
having undertaken with the ministry last year to maintain a 25
percent long-term stake in the drugs firm.
It has an option to increase this to 35 percent.
Last month, Industry Minister Per Westerberg told Reuters he
still saw room in the share market for the float and he would
make a final decision about one month before the sale.
For several weeks since there has been widespread share
market speculation that the sale will have to be postponed.
Market doubts stem not only from the state of the bourse but
also from perceived pressure from rights issues and initial
offerings from many companies over coming months.
Over 40 billion crowns ($5.0 billion) in rights issues,
placements and initial public offerings are scheduled by a range
of blue-chip and lesser-known companies between now and July.
On Tuesday the OMX index fell about 0.50 percent to 1065
points, compared with 1099.94 at the end of 1993, before
recovering in late trading. The market has now wiped out its
January gains of 13 percent.
Although the ministry has not yet specified how it plans to
sell Pharmacia's shares, the company itself has hinted that an
international sell-off is being considered, including floating
some stock in Italy where it has a large presence after buying
Farmitalia Carlo Erba last year.
|
| 47.29 | | TLE::SAVAGE | | Tue Apr 19 1994 16:20 | 99 |
| From: [email protected] (Reuter/Vibeke Laroi)
Newsgroups: clari.world.europe.western,clari.world.europe.northern
Subject: Sweden's net borrowing on way down - economists
Date: Tue, 19 Apr 94 3:40:06 PDT
STOCKHOLM, April 19 (Reuter) - Sweden's massive budget
deficit and net borrowing requirement are falling, but the key
to reassuring markets is whether this is happening fast enough,
economists said on Tuesday.
"The problem is that even if we are seeing a certain
improvement now, the budget deficit and borrowing requirement
are still large," said Sven Arne Svensson, economist at Swedish
brokerage United Securities.
"Much points to a fall in the borrowing requirement in 1994
and 1995 but it remains to be seen if it will continue down
after 1995," he added.
The National Debt Office, the government agency which
manages state debt, forecasts the net borrowing requirement
falling to 210 billion crowns in 1994/95 ($26 billion) from 220
billion in 1993/94 ($28 billion). This is below the 220 billion
($28 billion) and 270 billion ($34 billion) respectively
forecast by the Finance Ministry in January. Sweden's financial
year starts on July 1.
"I'm generally optimistic in terms of the outlook for the
budget situation," said Darren Cullen, economist at Salomon
Brothers.
Reasons for the more optimistic outlook are an expected
economic upturn in 1994 after three straight years of negative
growth, the disappearance of costs for supporting ailing banks
and income from government privatisation plans, economists said.
The Debt Office is shifting its focus from foreign currency
loans to the domestic debt market.
Sweden's total debt is so high -- 1.13 trillion Swedish
crowns ($143.1 billion) at the end of 1993 -- that it might
affect terms for financing on the international market if
overseas borrowing continues at the same rate.
At the same time the office is broadening its range of
instruments by, for example, using index-linked bonds.
The Debt Office said close to 80 percent of the net
borrowing requirement is expected to be raised on the money and
bond market in 1993/94 and 81 percent in 1994/95.
Sweden has a current account and household savings surplus
and mortgage bonds are no longer a strain on the market.
"Swedes are more capable of funding the deficit themselves
right now," Keld Holm, an economist at Lehman Brothers in London
said.
But economists say the market will need to be convinced that
the government is coming up with adequate measures to combat the
underlying budget deficit problem.
--------------------------------------------------------------------------------
From: [email protected] (Reuter/Andrew Huddart)
Newsgroups: clari.world.europe.western,clari.world.europe.northern
Subject: Swedish rate cut caution triggers market-wide slump
Date: Tue, 19 Apr 94 8:30:06 PDT
STOCKHOLM, April 19 (Reuter) - The governor of Sweden's
Central Bank, the Riksbank, signalled on Tuesday he would not
cut a key interest rate soon, triggering a major sell-off in
domestic debt and knocking share values and the Swedish crown.
"Efforts to bring down the Riksbank's marginal rate could,
in a volatile environment, lead to rising bond yields and
contribute to a weaker crown," governor Urban Backstrom said,
adding later that the current market state was indeed volatile.
Debt and share markets had been clinging to hopes of another
rate cut for nearly two months, but the governor's comments to a
parliamentary hearing ruled out any near-term action, dealers
said.
For an intense three-hour period following Backstrom's
comments, carried live on state radio, Treasury bill rates and
bond yields climbed steadily, adding up to 50 basis points, and
the crown fell sharply.
The three-year bond yield surged from an overnight close of
7.45 percent to 7.90 percent before peaking at 7.95 percent by
early afternoon then closing at 7.83 percent.
In the markets' eyes, Backstrom's speech was badly timed,
coming just as the bond market was trying to resist pressure
from Monday's U.S. move to raise short-term interest rates.
"Backstrom hardly achieved his desired affect," one stressed
debt dealer told Reuters in the midst of the sell-off.
Shares, which have been very sensitive to debt market falls
in recent weeks, also took a hit with indices doubling an early
fall of just over 1.0 percent to nearly 2.5 percent by early
afternoon. They trimmed back these losses by the close.
Some analysts retain hopes that the Riksbank will continue
to try to ease its marginal rate, in line with the government
policy of cautious rate cuts to support economic recovery.
The bank last cut the marginal rate by a quarter point to
7.25 percent on February 21.
A general election in September may add to pressure on the
government to bring rates down.
"We could quite possibly see one or two rate cuts before the
election," analyst Thomas Olofsson of brokerage Transferator
said. But such moves would depend on a stronger crown and
restored calm across European debt markets, he added.
The crown had ended Monday just under 4.62 to the mark but
after Backstrom's comments it slumped to a low of 4.67 and
closed just over 4.65.
|
| 47.30 | Will bond market volatility hinder recovery? | TLE::SAVAGE | | Tue Apr 26 1994 11:20 | 70 |
| From: [email protected] (Reuter/Andrew Huddart)
Newsgroups: clari.world.europe.northern,clari.biz.top,
clari.world.europe.western,clari.biz.economy.world
Subject: Wibble sees market threat to Sweden recovery
Date: Mon, 25 Apr 94 6:10:17 PDT
STOCKHOLM, April 25 (Reuter) - Swedish Finance Minister Anne
Wibble said in her spring mini-budget on Monday there were clear
signs the country's economic recovery was picking up pace.
However, she said current volatility in market interest
rates on Swedish government debt could undermine the recovery
process as well as efforts to control runaway state finances.
In the Swedish bond market, where the state borrows the bulk
of the 200 billion-plus crowns (over $25 billion) it needs to
keep the public sector functioning every year, yields rose and
analysts said the budget would not restore near-term stability.
The minister said that inflation was nearing extreme lows in
comparison to both Swedish and international records.
She revised her January forecast for inflation in calendar
1994 to a rise of 1.9 percent from a 2.5 percent rise.
But Wibble added in her statement: "Uncertainty has been
created around the forecasts by the recent bond yield
volatility. If current high interest rates remain, economic
development will be less expansive than calculated."
"There would have been reason to believe in faster growth,
but the latest (bond market) rate turbulence calls for caution,"
the minister told a news conference after the budget's release.
During the day the ten-year bond yield, the maturity
commonly used by markets to compare countries' state debt,
leaped over 0.25 percentage points to 9.06 percent.
Bank J.P. Morgan on Monday described the Swedish bond market
as the one of the worst performing in Europe in recent weeks.
It said it saw few signs that the foreign investors, who
have sold Swedish paper heavily recently, would return. Earlier
this year they were reckoned to hold over 40 percent of debt.
"Despite yields of near 9.00 percent, there are few signs
yet of people being willing to build new positions. Political
uncertainty is likely to rise, not fall," J.P. Morgan wrote.
With both a general election and an EU membership referendum
scheduled for this autumn, the market took little comfort from
the fiscal auterity plans Wibble included in her budget -- all
planned for the period after 1995.
She said a five-year budget defict reduction programme would
be increased by 20 billion crowns ($2.5 billion) to try to save
a total of 100 billion crowns ($12.7 billion) and would be
extended by one year to 1999.
Hubert Fromlet, chief economist at Swedbank, said the plan
did not tackle the country's current weak fiscal structure.
Like other analysts, he said the plans for savings after the
election gave little reason for bond market optimism, in view of
the minority government's weakness in parliament.
"The government's minority position makes it quite unlikely
that...the budget proposed today can create calm on financial
markets until the EU referendum on November 13," he said.
"There is therefore a strong risk that the Swedish market
will continue in future to be characterised by spells of rate
volatility...despite improvements in the economy," he added.
Wibble said low inflation and strong exports were factors
behind a new forecast that the deficit in the fiscal year from
July 1, 1994 would be 150 billion crowns ($19 billion), some 22
billion crowns ($2.8 billion) lower than previously expected.
Sweden's net borrowing requirement is also now expected to
be lower than previously forecast in the coming year, at 195
billion crowns ($24.8 billion) instead of the 220 billion ($28
billion) seen in January.
Wibble said that curbing state debt and unemployment would,
however, require high and stable growth over several years and a
continued committment to the outlined strategy.
Opinion polls suggest the government will be beaten in the
election on September 18, however.
|
| 47.31 | Opposition's budget proposes tax changes | TLE::SAVAGE | | Wed May 11 1994 11:47 | 53 |
| From: [email protected] (Reuters)
Newsgroups: clari.world.europe.northern
Subject: Swedish opposition's budget outlines tax rises
Date: Tue, 10 May 94 8:20:14 PDT
STOCKHOLM, May 10 (Reuter) - Sweden's opposition Social
Democrats, tipped to take power in general elections in
September, proposed coporate tax breaks and income tax rises in
an alternative budget released on Tuesday.
The party, with over 50 percent of votes in recent opinion
polls, said its proposal would, partly through spending cuts,
strengthen state finances by 18 billion crowns ($2.3 billion)
compared with the centre-right cabinet's supplementary budget
released in April.
The Social Democrats proposed as a growth-promoting, one-off
measure that industry be allowed to write off 70 percent of
investments in machinery, to take effect on July 1.
This and other tax proposals for the 1994/95 fiscal year.
would cut corporate taxes by six billion crowns ($779 million),
the Social Democratic "shadow budget" said.
But the alternative budget outlined higher income and
capital-gains taxes.
Income tax on salaries above 200,000 crowns ($25,960) would
be lifted to 25 percent from 20 percent. Capital-gains taxes
should return to 30 percent from lower levels, the Social
Democrats said, vowing to tear up proposed and already
implemented cuts.
The Social Democrats forecast its policies would result in a
4.5 percent jump in Swedish gross domestic product (GDP) in 1995
compared with a government-forecast rise of three percent.
The opposition party said it expected investment to soar by
16 percent next year, almost twice as much as finance minister
Anne Wibble's forecast.
The Social Democrats said the Swedish budget deficit,
forecast by the government at 150 billion crowns ($19.5 billion)
for the budget year beginning July 1, 1994, should be tackled
mainly by lowering unemployment, running at around eight
percent.
"Apart from that we will take a hard look at all public
spending and we will raise one or two taxes," Goran Persson,
tipped as finance minister in a possible Social Democratic
government, told a news conference.
Persson, keen to calm markets' memories of double-digit
inflation when the Social Democrats were in power between
1982-1991, stressed the top priority for monetary and fiscal
policy must be to keep inflation below an annual three percent.
Wibble described the Social Democratic budget as a recipe
for permanent high unemployment and a galloping national debt.
"The proposal makes it clear the Social Democrats have no
policy for halting the increase in the national debt," she said.
Swedish financial markets were sceptical about Wibble's own
budget because its fiscal austerity measures would not take
effect until after the September 18 election.
|
| 47.32 | Cost of coffee likely to rise | TLE::SAVAGE | | Fri Jul 15 1994 10:39 | 21 |
| From: [email protected] (Lars Aronsson)
Newsgroups: soc.culture.nordic
Date: 13 Jul 1994 17:46:10 GMT
Recent night frost in Brazil, one of the worlds most important coffee
producers, has made the price of coffee beans in the London market
reach US$ 4000 per metric ton, which is a 30 % hike in a few days.
A representative of the Swedish coffee roasting factory Gevalia today
told Swedish media that as a result, off the shelf coffee prices might
reach SEK 100 per kilogram the coming winter. Normally, the price is
between SEK 40 and 70 per kilogram, depending on brand and taste.
Swedish citizens consume more coffee per person than any other nation.
They are now starting to buy a few extra packets "while it is still
cheap". Some shops in the Stockholm area have seen their coffee
shelves emptied, says Swedish national radio.
--
Lars Aronsson, Lysator, Linkoping University, Linkoping, Sweden
|
| 47.33 | blame the 'indecisive politicians' | TLE::SAVAGE | | Mon Jul 25 1994 15:35 | 23 |
| VISBY, Sweden, July 21 (Reuter) - The head of one of
Sweden's largest banks on Thursday blamed indecisive politicians
for damaging the country's economy.
S-E Banken head Bjorn Svedberg told Swedish conservatives at
a seminar that foreign investors, which have been selling
Swedish investments, were unable to see how the political
parties planned to try to reverse a huge state deficit.
``We need political leadership with responsibility and strong
crisis management. High interest rates are a blot on the
country,'' Svedberg said.
According to opinion polls, Sweden's conservative coalition
will lose office in the September general election and be
replaced with the centre-left Social Democratic Party.
The coalition has embarked on a cost-cutting exercise to try
to balance Sweden's budget but the Social Democrats have been
less clear on how or if they would seek to cut state debt.
Sweden's political instability has been held responsible for
making financial markets nervous and pushing interest rates
higher and the Swedish crown lower.
``The Swedish political system seems to find it hard to take
long-term decisions,'' he added.
Svedberg said high interest rate levels were affecting
Swedish banks but would not affect S-E Banken's results.
|
| 47.34 | Interest rate boost sends out shock waves | TLE::SAVAGE | | Fri Aug 12 1994 15:45 | 181 |
| STOCKHOLM, Aug 11 (Reuter) - Sweden's Central Bank sent a
shiver round European financial markets with a surprise interest
rate increase on Thursday but analysts watching the country's
general election campaign said the move was in part political.
``The purpose of the increases in...interest rates is to
counteract, at an early stage, a tendency towards higher
inflation,'' bank governor Urban Backstrom said in a statement.
But Lars Heikensten, chief economist at Stockholm's
Handelsbank, was one of several who saw the Riksbank move as odd
just six weeks before an election.
``I wonder why they have done it right now. The timing is
extremely surprising,'' he said.
``This move definitely increases the risk of (political)
opposition to the Riksbank. There are going to be opposition
politicians saying Governor Backstrom cannot stay in office, but
I believe he will stay on,'' Heikensten added.
The bank raised its central repurchase rate to 7.20 percent
from 6.92 percent and its ceiling, or lending, rate to 8 percent
from 7.50 percent. The floor, or deposit, rate was left
unchanged at 6 percent.
Others said they thought Backstrom, a Conservative appointed
this year by the centre-right government under Prime Minister
Carl Bildt, was deliberately provoking the opposition Social
Democrats -- tipped to win the September 18 election.
The Social Democrats say they would like to stimulate
economic growth and focus less on inflation but Backstrom's rate
rise appeared to be a warning shot against this, analysts said.
Announcing the increases the bank suggested its sole
motivation was economic. Asked if the election had played a role
in the bank council's decision, Backstrom said, ``No, it was not
a factor.''
In interviews after the move, Backstrom stressed that he was
trying to defend the only monetary policy tool available to the
fast-recovering economy -- a target to keep the inflation rate
within one percentage point of 2 percent in 1995 and beyond.
Europe's bond markets shuddered and fell in reaction to one
of the key messages contained in Backstrom's explanation of the
cut, that economies may be about to enter a sharp growth phase.
Analysts interpreted this as implying that a recent two-year
period of gradual interest rate cuts may be about ot end.
The rate rise therefore also stoked widespread speculation
that Germany and Britain, seen as two of the continent's key
economies, were about to raise their rates. But analysts saw
only a tentative link.
``You can draw parallels, but I think this is largely a
Swedish story driven by Swedish fundamentals,'' said Michael
Dicks of U.S. bank JP Morgan.
Like many others he said that Swedish inflationary pressures
were primarily driven by a very weak currency (ever since a
November 1992 float from a fixed peg to the Ecu) and high
interest rates, known as yields, on government bonds.
``A weak currency and high bond yields are really a function
of a lack of confidence in fiscal policy,'' he said.
``To me, trying to fight a lack of progress on tightening
fiscal policy with higher interest rates is unlikely to prove
successful,'' he added.
In contrast, the Riksbank said one of the indirect aims of
raising its rates was to encourage the crown to firm.
Backstrom told a Reuters Television interviewer he thought
the crown had now depreciated ``too far'', causing the export
sector to boom and reach capacity ceilings. He said the bank had
acted pre-emptively due to fears that this part of the economy
may overheat, putting pressure on wage levels.
Stefan Wictorin, analyst at Midland Bank in Stockholm, said:
``The inflation picture has not changed so dramatically. This
(move) has surprised the market completely.''
While the Stockholm bourse's bluechip Top-16 index fell 2.21
percent to close at 1508.07, the crown closed 3.0 ore weaker
against the mark, which closed at 4.9635.
Bonds suffered most of all, with the benchmark nine-year
bond yield soaring 45 basis points to 11.28 percent and the
three-year bond yield rising 70 basis points to 10.62 percent.
========================================================================
STOCKHOLM, Sweden (AP) -- Sweden boosted two key interest rates
Thursday in a move to head off inflation, shocking European
financial markets.
Bond prices fell in markets across the continent and European
currencies rose against the dollar as investors speculated that
other countries would raise their rates.
Sweden's central bank, the Riksbank, said it would raise its
lending rate to 8 percent from 7.5 percent and boost the repurchase
rate to 7.2 percent from 6.92 percent, effective Aug. 16.
An increase in European rates, on the heels of similar moves by
the U.S. Federal Reserve, would be an attempt to keep the
continent's recovering economy from overheating.
But the hikes could stifle growth and exacerbate unemployment,
particularly in Scandinavia. The official jobless rate tops 8
percent in Sweden and 17 percent in Finland.
Major European bond markets reacted immediately to the news
with sell-offs. Bond prices plunged in Britain, Germany, Italy, France
and elsewhere.
Analysts said markets would settle down after digesting the
reasons for the Swedish move. Riksbank chief Urban Baeckstroem said
high prices and a soaring budget deficit made the rate hikes
necessary.
The bank needs to ``counterbalance a tendency toward rising
inflation at an early stage,'' Baeckstroem said.
Said Michael Dicks, an analyst at Morgan Bank in London: ``To
tell a story that rates are rising in Europe would be a little
far-fetched.
``(Riksbank officials) are basically hinting that there is no
actual sign of inflation heading higher. They are concerned that
fiscal policy won't be tightened.''
========================================================================
STOCKHOLM, Aug 12 (Reuter) - Currency speculators pounced on
the Swedish currency on Friday, spooked by Thursday's shock
interest rate rise, and Nordic neighbours also felt the heat.
Speculators bullied the crown down nearly 1.5 percent past a
psychological level of five crowns to the mark. By 1130 GMT it
stood at 5.03, near its lowest level since its November 1992
float, after ending Thursday at 4.96.
``Sweden's Central Bank (Riksbank) has painted itself into a
corner. It has shown its weakness by raising rates to defend the
crown and the speculators will see how far they can push it to
see what it does next,'' a currency-market chief trader said.
In Sweden and Finland especially, the combination of market
doubts about governments' ability to deal credibly with major
economic problems amid political uncertainty, pushed already
soggy currencies and weak state bonds further into the mire.
Bond and currency market analysts said the Swedes had
completely missed the point by trying to tackle a problem with
its roots in state borrowing by using a short-term monetary
instrument. Some feared the Finns might do the same.
``They are trying to be tough, but it looks more suicidal,''
said Lehman Brothers' analyst Keld Holm, drawing parallels with
the autumn 1992 crisis when the Riksbank's attempt to defend the
crown with 500 percent interest rates failed miserably.
``The Swedish Central Bank is not in touch with reality. It
can't be a surprise for them to see this reaction -- they've
seen it before -- so it shows their lack of skills,'' he added.
Virtually without exception, economists and analysts say the
reason for the crown's weakness is a crisis of investor
confidence in Swedish politicians' ability to take tough fiscal
policy decisions and reduce enormous state debt.
A dramatic bond-market boycott in July by Swedish insurer
Skandia, one of the Nordic region's largest investors, was
perhaps the clearest demonstration yet of this concern.
Yet when the Riksbank raised its rates, Governor Urban
Backstrom said the country's prevailing political uncertainty,
stoked by a general election on September 18 to be followed by a
referendum on EU membership in November, had not been a factor.
Backstrom said the bank increased its central repo rate by
28 basis points to 7.20 percent and its ceiling lending rate by
half a percentage point to 8.00 percent to make a pre-emptive
strike against signs of rising inflation.
Economists dismantled his carefully-constructed analysis of
the external and internal elements in the Swedish inflation
picture one by one and reached another conclusion.
``The Riksbank is seeing inflation ghosts that no one else
can see,'' Nordbanken's chief economist Olle Djerf said. ``The
move is counter-productive and dangerous,'' he added.
Lehman's Holm pointed to Denmark, where the government has
to deal with an economy growing significantly more strongly than
Sweden's, and where an alternative recipe might be tried.
``They have to do something about growth and move their foot
off the accelerator and onto the brake and they have to do this
via fiscal policy,'' he said.
Economy Minister Marianne Jelved told Reuters on Friday she
would be prepared to tighten Denmark's fiscal policy in her
draft 1995 budget due later this month, ``if it proves necessary
to dispel inflation fears.''
Analysts said they were not surprised that Finland, with a
political and economic situation very similar to Sweden's, was
being hit by the wave of speculation almost as strongly.
The Central Bank intervened there to try to support the
markka by buying the currency but it still fell a hefty 1.0
percent against the German mark to close at 3.3280 from 3.2970.
In Oslo, where the Norwegian crown softened slightly, Aamund
Lunde, chief analyst with Den norske Bank, said the market
jitters would only stop if Sweden took fiscal action.
``If not, we could see turmoil until the EU referendums,'' he
said. Finland will vote first on EU membership on October 16,
Sweden on November 13 and Norway on November 27.
Lunde said he saw the crown as considerably weakened if it
remained at 105 points on its inverse Ecu index for some time.
It has strayed there from nearer 103 in recent weeks, driven
partly by the prolonged debt market troubles next door.
``When there is turmoil in Sweden, this always has a knock-on
effect on Norway. There are no fundamental factors in Norway
which justify a weaker crown and higher rates,'' he said.
|
| 47.35 | Exports profit from weak krona | TLE::SAVAGE | | Mon Aug 15 1994 13:51 | 8 |
| From: Torkel Franzen <[email protected]>
To: International Swedish Interest discussion list
<SWEDE-L%[email protected]>
Actually Swedish export industry is booming, profiting greatly by the
weak krona. While it seems to be largely agreed that the roots of the
present crisis are mainly domestic, there seems to be little agreement
on what those roots are, or how to deal with them.
|
| 47.36 | Economists concerned | TLE::SAVAGE | | Wed Aug 17 1994 14:53 | 67 |
| STOCKHOLM, Aug 15 (Reuter) - The Swedish central bank's move
last week to raise key interest rates to fight off inflationary
tendencies could actually make the bank's fight against
inflation more difficult, economists say.
The Riksbank took markets by surprise last Thursday by
lifting its central repurchase rate to 7.20 percent from 6.92
percent and its ceiling, or lending, rate to 8.00 percent from
7.50 percent.
But the economists said this had had the exact opposite
effect to that intended -- debt market yields rose and the crown
took a dive.
``The Riksbank move is a second-best approach to trying to
prevent inflation from rising and attacking the fiscal deficit,''
said economist Michael Dicks at JP Morgan.
``Indeed, higher rates may simply make things worse in the
short run, leading to a further drop in the crown and thus
making it even harder to hit the inflation target.''
The target is for inflation of 1-3 percent from 1995 and
onwards. The bank said four factors had led to an increase in
inflationary pressure in the spring and summer:
-- the weakening of the crown
-- the rapid upturn in the international economy
-- high industrial capacity utilisation
-- higher prices of raw materials and a greater than
expected impact of increased import prices on consumer prices.
Economists say the rising commodity prices are part of a
current international trend and all the factors are to a certain
degree related to a weak crown.
The crown's fall by one-third against the German mark since
it was floated in 1992 had inevitably brought some inflationary
tendencies by boosting imported inflation.
Although the weakness would add to inflation in the near
term, in the medium term its impact would be minor as the
currency was boosted by strong export growth.
``The inflation target is becoming a straitjacket for
Sweden,'' economist Keld Holm at Lehman Brothers said. ``Instead
of having a smoother monetary policy, you end up responding too
vigorously to short-term moves.''
He attributed the crown's weakness to lack of political
action on cutting massive state debt, so it was not a good
inflationary indicator.
``I think the weak currency reflects a lack of confidence in
Sweden more than inflationary expectations,'' said Sven-Arne
Svensson, economist at United Securities.
Darren Cullen, economist at Salomon Brothers, said: ``The
root cause of Sweden's currency weakness and inflation problem
is the huge fiscal imbalance and consequently is not directly
affected by monetary policy.''
Bank governor Urban Backstrom wrote in the daily Dagens
Nyheter that improving state finances would be a vital factor
determining the direction of monetary policy.
Economists say the Riksbank's fight should be against
domestically-generated inflation rather than imported inflation.
``They should try to target underlying inflation in the
domestic economy and there is no inflation there, so it (the
rate rise) doesn't make sense,'' Holm said.
While capacity utilisation is high in the export sector, it
is still lagging behind in the domestic sector where demand is
still relatively weak.
Economists are worried that the higher rates will hurt the
area of the economy that most needs stimulus -- domestic demand.
``The risk in Sweden is that the central bank, by trying to
be tougher than tough, has set a dangerous precedent for the
future,'' Holm said.
``If Sweden continues to fight inflation with the same rigour
it could risk driving the domestic recovery into the ground and
preventing much-needed improvement in the budget deficit.''
|
| 47.37 | Financial markets lock horns with Social Democrats | TLE::SAVAGE | | Thu Aug 18 1994 09:51 | 57 |
| ========================================================================
STOCKHOLM, Aug 17 (Reuter) - Financial markets hammered the
Swedish crown and interest rates on Wednesday, panicked by leaks
of the opposition Social Democratic Party's plans for the
economy if it wins a general election next month.
``Foreigners are selling...they're getting out of Sweden,''
said one foreign exchange trader as the crown slipped to its
lowest level for many years, to 5.06 marks from 5.00 on Tuesday
and 12.15 against sterling, compared to 11.99 on Tuesday.
``People are simply scared stiff of the crown,'' another
dealer said.
The Social Democrats are tipped in opinion polls to win the
September 18 election and are due to present their election
manifesto on Friday.
Financial markets are desparate for an indication that party
leader Ingvar Carlsson, prime minister from 1986 to 1991, will
make a start in hauling back total debt that stands at a
whopping 1.13 trillion crowns ($143 billion) and bringing the
190-billion-crown ($24-billion) budget deficit under control.
Markets were presented with a detailed leak of the Social
Democrats' economic plans by a Stockholm daily on Wednesday --
and did not like what they saw.
Instead of detailed spending cuts combined with tax
increases, the daily Aftonbladet predicted opposition finance
spokesman Goran Persson would indulge in old-fashioned pump
priming if he becomes the next finance minister.
The daily predicted a five percent income tax increase from
20 to 25 percent for all Swedes earning over 200,000 crowns
($25,000) a year and increases in other direct taxes that make
Swedes some of the highest-taxed citizens in the world.
It said Friday's manifesto would show the Social Democrats'
main weapon to restore financial stability would be to reduce
unemployment and bring interest rates down.
Swedish financial markets have been in a state of high
anxiety since last week, when the Central Bank shocked European
markets by increasing its key interest rates, sending the crown
into a nosedive which looks set to continue.
Central Bank governor Urban Backstrom said the move was
aimed at heading off fears of higher inflation, but markets say
it was badly timed.
The Enskilda investment arm of Swedish bank S-E Banken, in a
grim report on the national economy issued to its clients,
predicted on Wednesday stagnant economic growth and rising
inflation -- stagflation -- if interest rates remain high and
the Social Democrats win the elections.
``Something will have to give,'' the bank said, pointing at
``rapidly increasing tensions that will cause the political risk
premium for Sweden to remain high.''
The report predicted that economic tension could even force
the Social Democrats -- if they win an outright majority in
parliament -- to eventually seek coalition partners and launch a
sweeping austerity programme.
Financial market criticism of Sweden's Social Democrats is
not new. The two groups have traditionally been at loggerheads
for many years, although some market players say instability is
so high now that any clear election winner would restore some
calm to the currency and debt markets.
|
| 47.38 | Strong earnings but stiff competition | TLE::SAVAGE | | Thu Aug 25 1994 12:49 | 54 |
| STOCKHOLM, Aug 23 (Reuter) - Sweden's two leading commercial
banks, S-E-Banken and Svenska Handelsbanken, announced strong
improvements in six-month profits on Tuesday on the back of a
sharp drop in loan losses.
Handelsbanken saw a three-fold increase in its operating
profit to 2.3 billion crowns ($303 million) after loan losses
dropped 60 percent in the first half of this year.
The figure was above analysts' expectations of 1.98 billion
($261 million) and sharply higher than the 768 million ($101
million) in the first half of 1993.
S-E-Banken made an operating profit of 2.2 billion crowns
($289 million) from a loss of 298 million ($39 million) -- an
improvement of 2.5 billion crowns ($329 million). Analysts had
expected 1.8 billion ($237 million).
The strong earnings provided further confirmation that the
country's banking problems are under control and stand in sharp
contrast to the early 1990s when a lending spree sent loan
losses soaring.
Handelsbanken Chief Executive Arne Martensson said, however,
he did not believe that Swedish banks would regain the same low
levels of loan losses reached before the financial crisis. Banks
face much stiffer competition now.
Before the financial crisis, loan losses were around one
percent of lending in an economic slowdown and a quarter of a
percent of lending during good economic times, Martensson said.
``One could expect to come down to a half percent when things
go well,'' he told reporters, but added this would take time.
Loan losses at Handelsbanken, seen as the most conservative
lender among the Swedish big banks, fell to 1.46 billion ($192
million) at the end of the first half or one percent of lending
on a full-year basis compared with 2.4 percent of lending in the
year-ago period.
Martensson said be believed a profit before loan losses of
two billion crowns ($263 million) per quarter would a reasonable
ambition for Handelsbanken. The bank made a profit before loan
losses of 2.07 billion crowns ($272 million) in January-March.
Problem loans at Handelsbanken, widely regarded as Sweden's
strongest large bank, fell more than 40 percent to 7.96 billion
($1 billion). The capital adequacy ratio was 12.5 percent at the
end of June, well above a required eight percent threshold.
Net interest income fell by 15 percent to 4.29 billion
crowns ($564 million) mainly due to falling lending volumes and
shrinking margins between lending and deposit rates.
Handelsbanken gave no full-year 1994 forecast.
Analysts polled by Reuters expect Handelsbanken to report an
average operating profit of 4.02 billion crowns in 1994 ($529
million) against 1.8 billion ($237 million) in 1993.
S-E-Banken also showed a drop in six-month loan losses -- 43
percent to 2.96 billion crowns ($389 million). Its operating
result received an extra boost from capital gains of 740 million
crowns ($97 million) from the sale of companies and shares.
S-E-Banken's problem loans were also lower, down 37 percent
since the end of 1993, but unlike at Handelsbanken the bank's
commissions fell by eight percent.
|
| 47.39 | End-of-century woes | TLE::SAVAGE | | Thu Sep 01 1994 09:31 | 94 |
| STOCKHOLM, Aug 30 (Reuter) - Swedes are getting poorer.
After decades of hearing they are among the richest people
in the world, Swedish voters are now hearing a bleak message of
hard times ahead from politicians in the run-up to next month's
general election.
``People cannot expect their real incomes to rise for a few
years,'' Finance Minister Anne Wibble said in a recent interview.
The country's model economy hit the rocks in 1990 and,
though it is now heading out of recession, it stayed there long
enough for a huge hole to open up in the state budget.
Traditionally-generous public spending in all areas of
social and economic infrastructure was allowed to exceed tax
income for several years and the shortfall was simply borrowed.
So much attention is being focused on Sweden's economic
future it seems the whole election is being fought on the issue.
Politicians from all sides say filling the hole will need
more money from taxpayers, either private or corporate, and each
of the five main parties has an austerity programme designed to
bring in more money from citizens and help reduce state debt.
It is a message that few Swedes listening to election
speeches or reading the papers can have missed, yet many find it
hard to see how the problems can be solved.
``I don't think any government will be able to fix this
economy. What we need is a miracle; what we'll get is more of
the same,'' said teacher and mother-of-two Kerstin Skyrman.
Like many others, she said she had no idea who to vote for
on September 18.
Nils Melin, a retired waiter from the south of Sweden, said
he was not going to vote at all. ``Perhaps I will leave my ballot
blank,'' the pensioner said.
``The parties are very similar in their economic policies. I
think they have started wrong with the welfare (system) -- they
cannot afford it and now they have to borrow money to pay for
it,'' he added.
By liberalising financial markets during the last boom
period in the 1980s, economists say several previous governments
set the country on course for its current crisis.
The budget deficit jumped in 1993 to about 15 percent of
Gross Domestic Product, the highest among members of the
Organisation for Economic Cooperation and Development, a
grouping of western industrialised nations.
According to most forecasts the government will spend about
200 billion crowns ($27 billion) more than it can bring in this
year, and the country's outstanding debt will stand at over
1,000 billion crowns (about $132 billion) by the end of 1994.
Opinion polls suggest that after three years in opposition
the Social Democratic Party (SDP), architects of Sweden's
gigantic welfare state and public sector, will now return to
power and begin the country's first four-year term of office.
Like the other big parties, the SDP is making no promises on
wealth. Equally, it shares with the others a clear unwillingness
to change the fundamental structure of the economy.
It is instead prioritising a twin-pronged attack on
unemployment and state debt, saying it will nudge up taxes and
gently ease welfare payouts to help balance the books in future.
``No government will be able to disguise the fact that we
have got poorer,'' party leader Ingvar Carlsson, preparing to
become the country's next Prime Minister, said on national
television this week.
``Sweden is standing on the threshold of a new, frightening
society where mass unemployment becomes permanent and the
divisions between people widen,'' the SDP wrote in its manifesto.
``For the first time in modern history children and young
people risk being worse off than the previous generation.''
These are scary words for those of Sweden's 8.8 million
people who have come to believe in their international
reputation as leaders in progressive thinking, equality and
social responsibility.
They also raise another spectre for the many Swedes whose
main concern is actually their own pocket -- more tax rises.
People like Tony Sjostrom, a 28-year-old builder, do not
trust the politicians to repair the economy without raising
taxes again.
``I think benefits should be cut. Many people receive these
benefits and then work black (paying no tax). It's too easy to
do. They should lower taxes, too,'' he said.
He fears that Swedish exports would lose market share if
taxes rise too much, and said all the parties had the same ``bad
attitude''.
``I think that the big companies like Ericsson, Volvo and
Saab will help Sweden recover, not the parties,'' he told
Reuters.
With about 600,000 people unemployed or in state-sponsored
job creation schemes the private sector will have to expand very
fast indeed to make a major impact on the jobless rate.
A report released on Wednesday (Aug 24) by the Swedish
Engineering Industries Federation said its members expect to
employ 5,000 more people during 1994, as export-driven output
rises strongly in sectors like telecommunications and vehicle
manufacturing.
If the kind of tax rises envisaged by the Social Democrats
come into effect then economists say low wage rises, high
interest rates (about 12 percent) and low inflation will mean
that few Swedes actually feel any richer next year.
|
| 47.40 | A very elegant construction | TLE::SAVAGE | | Thu Sep 08 1994 09:51 | 62 |
| STOCKHOLM, Sept 7 (Reuter) - Goran Persson, economic
spokesman of Sweden's opposition Social Democrats (SDP), said on
Wednesday reducing unemployment may need annual gross domestic
product growth of about 3.0 percent.
Opinion polls ahead of the September 18 general election
indicate the SDP could win nearly 50 percent of votes and would
be best-placed to form or lead the next government. Should it do
so, Persson is tipped to be the country's next finance minister.
Persson told Reuters in an interview that growth would be a
central objective of any SDP economic policy.
``I think we have even calculated it needs around 3.0 percent
(growth) to see a real change in unemployment and get workforce
growth,'' he said.
The SDP estimates total unemployment at more than 600,000
(over 14 percent of the workforce) including people on
state-funded training and temporary job programmes.
It is pledging far more proactive jobs and growth policies
than Prime Minister Carl Bildt's centre-right coalition.
Yet the SDP's election manifesto launched last month
contained only a broad description of the policies it has in
mind to ``kickstart'' the economy with incentives for investment
and new jobs.
Persson said this was deliberate, and that he could not be
more precise about what these plans may mean in policy terms.
``Specific policies on growth don't belong to an election
manifesto...they don't need the same anchoring with voters.''
``What's needed is a strong motor,'' Persson said, adding the
party had no specific jobs or growth rate goals.
Asked how much the investment- and labour market-stimulating
policy package might cost, he declined to be specific.
``It's not difficult to see how to get the investment
programme to pay itself back. There will be some initial
financing to pay off,'' he said.
SDP economists said last week the initial costs to the state
budget would be at most 15 billion crowns ($2.0 billion) in all,
and added the calculated ``value'' of the investments triggered by
moves like a temporary tax break linked to depreciation would be
25 billion ($3.3 billion).
The other part of the SDP's economic platform, which Persson
said he would talk about without it appearing ``as if we've won
the election'', is a fiscal austerity package presented in great
detail and amid debt market panic in mid-August.
He said his main hope was that fiscal measures, which
include raising tax rates on high-earners and trimming back the
retail price index-linked element of many welfare benefits,
would not choke domestic recovery.
``The secret is to judge how much the economy can tolerate,
how much is needed to create confidence in markets. No-one would
gain from a fiscal deal that wiped out domestic demand.''
Assuring bond markets worried by state borrowing running at
around 200 billion crowns ($26 billion) was not the fundamental
starting point for the SDP's fiscal package, Persson said.
``In our case the motive is our own baby, the welfare state.
``We have an enormous own interest in dealing with the debt
problem if we want to protect welfare long-term,'' he said.
The plan to cut benefit indexation, if introduced, would put
a lid on many incomes but also serve as an anti-inflation tool.
``(It's) a political incentive to get low inflation that puts
pressure on all people, and on the trade unions.''
It is also linked to the level of the country's budget
deficit in what Persson called ``a very elegant construction''.
|
| 47.41 | 11th-hour warning from four big industries | TLE::SAVAGE | | Wed Sep 14 1994 11:52 | 57 |
| STOCKHOLM, Sept 12 (Reuter) - The heads of Sweden's top four
exporting companies threatened on Monday to pull future
investment out of Sweden unless a new government due to be
elected on Sunday gets to grips with the economy.
In an unusual joint statement, the heads of carmaker Volvo,
telecommunications giant Ericsson, forestry firm Stora and
engineering concern ABB warned of a brain drain out of Sweden if
Swedes' income taxes were increased again.
The four firms, which account for one third of the country's
exports, said they were planning investments in the next five
years totalling up to 50 billion crowns ($6.5 billion).
``We would like to see the majority of this happen in Sweden
(but) most investors face a Swedish or a foreign alternative
that have to be considered.
``Constant and well-known rules are necessary to create the
continuity we need for our planning,'' the four men said.
Swedes, who already have one of the highest tax burdens in
the world, vote in a general election on Sunday in which the
centre-left Social Democratic Party (SDP) is tipped to oust the
four-party centre-right government that has ruled since 1991.
The Social Democrats have indicated they will increase
taxation as part of a 61 billion crown ($8 billion) package
aimed at stabilising Sweden's budget deficit.
The company chiefs -- Volvo's Soren Gyll, Ericsson's Lars
Ramqvist, Stora's Bo Berggren and ABB's Bert-Olof Svanholm --
said higher taxes would weaken their chances of recruiting the
expertise they needed to develop their companies.
``The threat of higher progressive taxation is a serious
one...we must be able to compete for the best researchers,
technicians and other experts,'' the four men said in a
jointly-signed article in the Dagens Nyheter daily.
They said total income taxes of over 50 percent ``would
seriously weaken our ability to recruit and make it more
difficult to keep the necessary expertise in Sweden.''
Corporate Sweden has benefited from three years of
Conservative Prime Minister Carl Bildt's mildly monetarist
economic policies after several years of recession.
Sweden's 26 biggest listed companies delivered a profits
boom in the first half of this year, with their combined results
rising by a whopping 122 percent.
The pretax or equivalent profit from all the companies,
ranging from Volvo to insurer Trygg-Hansa, was nearly 42 billion
crowns ($5.5 billion) compared with 18.8 billion ($2.46 billion)
in the same 1993 period.
The four exporters also launched a campaign to persuade
Swedes to vote ``Yes'' in a referendum in November on membership
of the European Union, saying a ``No'' vote would be dangerous
considering the tiny size of Sweden's domestic market.
``In 1994 investment in research and development has
increased 40 percent compared to last year. We are employing
again. Our sub-contractors are working at full-speed,'' they
said.
``Staying outside Europe would unavoidably imply compromise
of our international credibility,'' they added.
Three Nordic countries, Sweden, Finland and Norway, will
vote on EU membership this autumn. If they agree, membership
will take effect from January 1, 1995.
|
| 47.42 | Market reaction to election results | TLE::SAVAGE | | Tue Sep 20 1994 12:02 | 59 |
| STOCKHOLM, Sept 19 (Reuter) - Swedish financial markets fell
on Monday in disappointment at Sunday's inconclusive general
election which opened the way for Social Democratic Party (SDP)
leader Ingvar Carlsson to form a minority government.
``The election has failed to clear the political air, with
the bond and currency markets likely to remain vulnerable until
the government's (budget) defict cutting credentials are
established,'' analysts at brokers Kidder Peabody wrote.
Economists and commentators called on Carlsson to clarify
his plans for turning his strong minority parliamentary position
into a functioning government as soon as possible.
Many said they wanted him to make a statement of his
intention to cooperate with the centrist Liberal party.
However, strong signals from Carlsson, who has pledged not
to dance to the markets' tune, that he would try to go it alone
brought gloom and Swedish bonds, shares and currency fell in
value.
By 1100 GMT, after several hours of trade, shares were down
about 1.0 percent, the crown was slightly weaker and the key
government bond yield had risen a quarter of a percentage point
to 11.41 percent.
The SDP won 162 of parliament's 349 seats, just 13 short of
an outright majority, but with at least three fairly friendly
parties with enough seats to be majority voting partners there
was an obvious chance of a minority government.
``Obviously, the outcome is no great surprise but the fact
the Social Democrats have no overall majority raises questions,''
said Ken Wattret, international economist at Midland Global
Markets in London.
Carlsson said he would make a statement later on Monday in
which he was expected to announce his initial plans for
government.
In comments on Sunday night, however, he implied that he
intended to go forward seeking informal support from leftist
parties on the key issue of tackling Sweden's budget deficit.
``It is the case that a number of parties have realised what
Sweden's economic situation means, and during the election
campaign the Left Party and Greens have shown that they
understand that we must bring in very tough measures to curb
state debt,'' Carlsson said.
The former communist Left Party took 22 seats, and looked an
obvious partner for the SDP. The Greens, with 18 seats, are less
likely as, unlike the Left, they have no history of cooperation
with the SDP.
Both are, however, strongly opposed to European Union
membership, an important consideration ahead of a key referendum
on November 13.
The markets were on edge at these possibilities, but
analysts thought prices would strengthen if Carlsson decided to
link up with the Liberals
``If we see a move to coalition with the Liberals the market
could certainly bounce,'' Wattret said.
Looking at the choice between these two alternatives, Kidder
Peabody wrote: ``The moderating influence of a stable Liberal
coalition would be most likely to result in further cuts to the
fiscal deficit.''
``A temporary or permanent coalition with parties of the Left
would raise serious doubts over the fiscal credibility of the
incoming administration,'' it added.
|
| 47.43 | Crown strong | TLE::SAVAGE | | Mon Oct 24 1994 12:53 | 39 |
| STOCKHOLM, Oct 21 (Reuter) - The Swedish crown, already a
strong performer on foreign exchange markets, is set to
strengthen further if opinion polls continue to show growing
support for EU membership, analysts said.
``The risk premium is reduced (with a likely Yes) and then
the underlying fundamental factors like the current account
appear,'' said Klas Eklund, chief economist at S-E-Banken.
Behind the strong crown lie a combination of political and
technical factors as well as the EU referendum on November 13
but many analysts believe the EU issue is crucial for the crown.
``It (the EU) is an important factor and chances of a Swedish
Yes have increased with a Social Democratic government,'' said
Nordbanken economist Olle Djerf.
A Temo opinion poll published in the daily Dagens Nyheter on
Friday showed the `Yes' to EU side at 41 percent and the `No'
side at 34 percent, mirroring the recent trend of increasing
support.
Since instability culminated this summer with Skandia head
Bjorn Wolrath saying the company had stopped buying Swedish
government bonds, the crown has strengthened from 5.05 crowns to
the mark to around 4.74 crowns. The Social Democratic victory in
September's election also helped.
``Behind this (the strong crown) is the fact that the general
election is over, that we got a strong minority government with
a circle of strong key cabinet ministers and weaker
(inexperienced) departmental ministers. This paves the way for
the government to do something (decisive),'' Djerf said.
Statements from Finance Minister Goran Persson and promises
of further spending cuts in the January budget have also been in
line with what the market has wanted to hear.
``He (Persson) has managed to create a certain amount of
confidence for his fiscal policy,'' said Handelsbanken foreign
exchange head Leif-Ake Svensson.
Several market players also talk of a snowball effect as the
crown gets stronger.
``There may be many players who have an interest (in buying
crowns) but have waited. With a weaker dollar, they may want to
decrease their exposure (in dollars),'' said Susanna Rumpler at
Electrolux Treasury.
|
| 47.44 | Cut spending. raise taxes, or both? | TLE::SAVAGE | | Wed Dec 14 1994 11:15 | 55 |
| STOCKHOLM, Dec 14 (Reuter) - Swedish government plans to
strike at the heart of the country's welfare state by cutting
child benefits look set to be dropped in the face of trade union
objections, a Swedish newspaper reported on Wednesday.
The Svenska Dagbladet daily reported that the minority
Social Democratic government, founder of one of the world's most
comprehensive welfare systems, was instead considering
introducing a new tax on banks.
Swedish bank shares dropped sharply on the report that the
government was considering a new tax. The Stockholm stock
exchange's banking index fell 2.6 percent in the first 30
minutes of trading.
``This is really negative for banks but also for the bourse
in general,'' said one bank analyst.
Interest rates rose slightly as Swedish markets expressed
fears that the government -- which has pronounced itself as
being fiscally tough -- was caving in to union pressure.
``It's more the principle that they are backing off from
spending cuts and giving in to the unions,'' one bond trader
said.
Trade Unions have attacked Finance Minister Goran Persson's
unpublished plans to include child allowances as part of a
20-billion-crown ($2.7 billion) package of spending cuts he
plans to introduce in his first budget in January.
Everyone in Sweden with children receives the same allowance
-- generous by comparison with most countries -- irrespective of
their income.
The allowance is 750 crowns ($100) a month per child, with
additional sums for families with three or more children. A
family with four children receives 4,125 crowns ($550) a month.
The government, under severe pressure to curb the
200-billion-crown ($27 billion) budget deficit, has said it will
cut spending and raise taxes in the budget.
However, financial markets have accused Persson of punishing
industry and consumers by favouring tax increases instead of
slashing state spending to attack flaws in the economy.
Svenska Dagbladet said the government was considering either
dropping child benefit cuts altogether or halving the amount
they are cut.
Persson has not said publicly that child benefits are under
examination, but the government has not denied the reports.
The daily said the government -- fearing a war with Sweden's
powerful unions -- was considering a tax on bank desposits, a
one-off tax on bank assets or a dividend tax.
``It's better to take billions from the banks than to reduce
child allowance,'' said Bertil Jonsson, Chairman of the Swedish
Trade Union Confederation (LO).
The Swedish banking sector, hit hard by crisis in the late
1980s and early 1990s, has bounced back with strong profits in
the past two years.
Persson also faces the spectre of Sweden being downgraded by
international credit rating agencies.
Moody's agency has put Sweden's sovereign credit rating
under review for a possible downgrade and a decision is likely
before the end of the year.
|
| 47.45 | Cut-backs in social programs? | TLE::SAVAGE | | Tue Sep 24 1996 10:10 | 18
|