insignificances » finance

Norwegian government in a pickle

Jarle Petterson — Thu, 09 Apr 2009 13:20:27 +0000

Norwegian Minister of trade and industry Sylvia Brustad (Labour) finds herself in a bit of a pickle following the partly government-owned company Aker Solutions‘ NOK 1.39 billion acquisition of other companies in the Aker system, controlled by industrialist Kjell Inge Røkke. Acquisitions resulting in the Aker Solutions shares’ substantial drop on the stock exhanges.

These highly disputed transactions led Ms Brustad to carry out a speedy inquiry concluding that the transactions were a matter for the general assembly.

The deal is also seen as an embarrassment to the government, which came to Aker Solutions’ aid in 2007 with a capital injection to ensure the company remained in Norwegian hands and to secure jobs in Norway. Trade and Industry Minister Sylvia Brustad has called for an independent investigation.

— Reuters

In a press conference Wednesday afternoon Trade and industry minister Brustad informed the media of her intentions to nullify the deal, which in all likelihood is not about to take place.

The government’s financial loss is however not what makes the entire affair so interesting. These transactions, mere peanuts, really, have made more waves than the Pension fund’s NOK 633 billion loss, mainly because of PM Jens Stoltenberg‘s (Labour) close ties to Aker’s Kjell Inge Røkke, as well as DnB NOR bank’s CEO Rune Bjerke, whose bank incidentally carried out the companies’ valuation. These relations have raised speculations whether or not it’s all a matter of near-corruption, allowing the Aker system to load its losses onto the government – via its Aker Solutions ownership.

The opposition demands the Trade and industry minister’s resignation, but the question remains: How involved is the PM himself, known to create scapegoats and pushing his ministers up front in turbulent times, the latest example being the Minister of justice and the police Knut Storberget, committed to hospital following harsh criticism for mistakes made by the government collectively (in other words; by the prime minister)?

While accusations wave back and forth some have even dubbed Aker Solutions the Aker group’s dustbin.

The thriller, possibly resulting in a minister — if not a government’s — resignation, is expected to resound throughout Easter.

Recent news coverage (in Norwegian):

Photo: Norway’s Minister of trade and industry Sylvia Brustad (Labour). Photograph from the ministry/Scanpix

Norwegian car making: Contradiction in terms

Jarle Petterson — Mon, 15 Dec 2008 09:31:33 +0000

According to Norwegian newspapers, the electric car manufacturer Think‘s financial reserves will last only a couple of days. It isn’t the first time, though, as the company, dating back to the early 1990′s, was sold to the Ford Motor Company in 1999, to an international car manufacturing group in 2003, but has been on Norwegian hands for the last couple of years.

Even if the implications of a bankruptcy are serious for those involved, they really aren’t that many. Comparing with the international auto industry crisis just isn’t fair, but it is rather ironic that an environmentally conscious car manufacturer threatens to go belly up at a time when just those considerations are of such great importance.

In spite of the environmental aspects and the rocketing fuel prices, Think may soon find themselves out of business, which, to be perfectly honest, is more to do with the country of origin than anything else. Basing manufacturing — any kind of manufacturing — on Norwegian labour simply will not do. Norwegians, labourers included, see themselves as representatives of a premium stock, worth twice or thrice the wages of industrial workers anywhere else (in that perspective you really can’t blame the Nazis for once holding us in such high esteem — after all; we do).

No wonder even Norwegian companies go overseas for manufacturing. Take a recent example; Kongsberg Automotive, employing some 11,000 in 20 countries, of which only 600 at home — of whom, by the way, most are likely to be laid off, of course. Which should come as no surprise, considering the wages we claim. Granted, the cost of living far exceeds that of other countries, but comes as a result of high incomes.

Catch 22 indeed, and one that, under the circumstances, isn’t about to resolve some time soon.

After all, they can’t be serious if they mean that we, the apex of human worth and evolution, should compete on equal terms. I’m sorry, but we’re too good for that.

If it means bankruptcy, then so be it:

www.youtube.com/watch?v=650bujVrw7o

Late update: In a press conference Monday afternoon (in Norwegian), the Think management announced a temporary leave of the entire working stock, while trying to raise the NOK 200 million needed for continued operations.

Bubbly pour les enfants

Jarle Petterson — Sun, 30 Nov 2008 11:09:10 +0000

Talk about bad timing, financial unrest considered and all. Nevertheless I stumbled upon these bottles of “champagne” for kids in the neighbourhood’s #1 supermarket yesterday. It goes without saying that the children of well to do areas need to acquire basic skills in handling bare essentials, such as the prescribed number of Dom Perignons a day (if not necessarily extra brut — initially, anyway), but, as mentioned, the timing could have been better, of course.

The local chief constable reported several credit crunch-related, self-inflicted homicides over the last month, the other day, with numbers expected to soar as we approach the festive season, just like the good old days (i.e. the great depression), which is as one might expect in the country’s wealthiest suburban area. Not a situation which calls for champagne, as you will understand. It’s really quite sad, of course, and I suspect that our supermarket’s kiddy-bubbly turnover is likely to flop big time.

But seriously: Credit crunch or not, what were they thinking? Not that I do groceries in other parts of the Oslo area, but I suspect bubbly for the kids is hard to come by elsewhere. Have the better-off parents gone completely off the rails? Granted, we’re talking nouveau riche here, but as Jim Williams puts it in John Berendt’s Midnight in the garden of good and evil,

I’m what they call “nouveau riche,” but then, it’s only the “riche” that counts.

I wonder. No matter what, I suppose that these days those among us who didn’t make it big on the stock exchange – and everything related – should be glad. It feels strange to say this, but I think it’s time we pay a little attention to those less fortunate: The rich, that is, and pray they make it through Christmas. After all, the “bigger” they are, the harder they fall. The funny part is I’m not even being sarcastic (there’s a first time for everything, I suppose).

Even Russia’s infamous Millionaire Fair appears to be affected. I guess Hell just could freeze over after all.

New New Deal™ for America?

Jarle Petterson — Tue, 25 Nov 2008 11:30:01 +0000

Amid daily news of an ever-crumbling US auto industry, there’s been much talk of the bailout the automaker CEOs tried to negotiate in Washington DC the other day, among so many bailouts that it’s beginning to get increasingly harder to believe in the Federal Reserve’s ability to carry the weight. President-elect Barack Obama acted pretty swiftly on the matter, too, on the first possible occasion – during his wife’s and his guided tour of The White House the other week.

If action isn’t taken, and taken fast, the entire industry is in peril, potentially hurling millions of Americans – and the industry’s employees overseas – into unemployment, if the ripple effects are included in the equation (as they should). The global consequences are likely to exceed the effect of the ongoing credit crunch, not only beacuse it affects America itself, but as a result of how the global auto industry is intertwined, by ownership, alliances and partnerships — the symbol effect not withstanding.

Of course, the current or the soon-to-be U.S. administration isn’t likely to let that happen, but, bearing the overall American economy in mind, for how long will The Fed be able to bail out global corporation upon corporation, seeing as the country itself is, in effect, technically bankrupt?

U.S. President-elect Barack Obama (D).

Film-maker Michael Moore introduced an idea the other day, reiterated in yesterday’s Larry King show on CNN, which implies taking drastic measures, Franklin D. Roosevelt-style, advocating a principle whereby the government bails out the auto industry, provided that its managements are replaced and that they replace huge American cars with smaller, less fuel-demanding vehicles, focusing on hybrids, as well as cars running on alternative fuel. Given the declining US household economy, the cars should be affordable, too, of course.

There’s a lot to be said about Michael Moore and his conduct, but this just could be it. Cheaper cars are in demand – stateside and on a global basis. If GM, Ford and Chrysler are to survive, you just can’t tell them to delve into the food and beverages market. Sustainable car-making, on the other hand, sounds like a plan.

I would like to pour some ice on your expectations, though: The American administration simply cannot go on bailing out one business after the other.

They’re in dire need of one themselves.

www.youtube.com/watch?v=j0bbOZ-nkJs

Turn down Norwegian EU application

Jarle Petterson — Mon, 06 Oct 2008 11:23:51 +0000

The Norwegian population said no to EU membership, not once, but twice; in the 1972 and the 1994 referendums. Why? Only years before the 1972 referendum it became clear that Norway’s economy was in for a major boost, facilitating unprescedented wealth for one of Europe’s up until then poorest nations. A wealth which definitely had taken effect by 1994, at which point we turned down membership once more.

Even though we were stinking rich at the time, the debate revolved around this single issue: What’s in it for us? Of course it ought to be “How can we contribute for the European greater good,” but no. What we need to remember, is: This is Norway, strikingly characterised by playwright Henrik Ibsen in this very descriptive Peer Gynt quote:

Man, be thyself. Troll, to thyself be – enough.

There’s wide consensus that this statement in fact describes a very typical Norwegian trait: Egoism, which Ibsen himself criticised – by way of trolls. A trait very much alive even today, manifesting itself in our no to the European Union.

Now you turn us down

Keeping to yourself – and, by all means, keeping your wealth to yourself – is all just fine and dandy when things are going your way, but that just may not last for ever, which is what some have come to realise. We see it in Iceland, who, by the way, turned an EU membership down, too, is beginning to feel the credit crunch’s effect, only days after the nationalisation of its leading bank, Glitnir. According to Norwegian online daily VG Nett Icelandic trade unions have started talking of an EU membership as a means of support to Icelandic banks.

This in turn has lead the Norwegian European Movement to deem a renewed Norwegian application inevitable.

If so, please remember that we turned you down twice when you needed us. I suggest you do the same when we need you, which inevitably we will, once our oil and gas resources are out.

Serves us right.

When Wall Street coughs…

Jarle Petterson — Thu, 25 Sep 2008 09:52:33 +0000

When the very symbols of America and everything American – Chrysler, Ford and GM – need a USD 25 billion dollar federal rescue plan in order to survive… That’s when you know The Great Depression 2™ simply has to be just around the corner. I think we’d be well advised not to look at recent developments in the American economy as an American problem, as Wall Street (and the American economy as such) has a huge impact on just about any economy in the world. There’s a contradiction in there, if you think about it, as no country’s economy can be seen as a separate entity. We’re dealing with a vast organism, headed by the United States of America, whether we like it or not.

When America’s president George W. Bush pleads for congressional support for his USD 700 billion bailout, there’s every cause for the rest of us to pay attention. Actually, for the first time – as I recall – I feel a little sorry for the man. Did you ever see him so humble?

www.youtube.com/watch?v=YsDmPEeurfA

The main thing that I’m trying to put across here, however, is this: There’s no reason for the rest of us to feel high and mighty as the United States faces its worst economic crisis in a long, long time.

Remember the saying: When America coughs, the world gets a cold. And I fear this one’s going to be very hard to shake.

The great depression again?

Jarle Petterson — Wed, 17 Sep 2008 07:37:35 +0000

It’s a bit ironic, wouldn’t you say, that the current American administration (through the Fed), champion of the free market and freedom of enterprise, just recently nationalised Fannie Mae, Freddie Mac and, so far, AIG – a measure usually attributed to socialists like Hugo Chávez and the likes of him.

Still, you can’t blame them for trying to avoid a collapse, which seems more and more inevitable day by day. And then, of course, there’s the Lehman Brothers bankruptcy, just one day ahead of the AIG intervention. Norwegian banks and finance institutions saw a similar crisis some 15–20 years ago, culminating in a government takeover, prompting many conservatives to brand Norway a socialist state – for taking some of the steps now seen in America.

Needless to say, Chávez, whom the Lehman Brothers slammed for his economic, nationalising policy, is over-thrilled by recent developments:

“They were always producing negative reports about Venezuela,” Chavez told reporters. “They forgot about themselves … and ‘boom!’ they were bankrupt.”

— Reuters

I wouldn’t revel in the American recession, if I were him, or is he convinced that Venezuelan finances are invulnerable, unaffected by the American economy? Well I’ve got news for you, Mr. Chávez: This is most certainly going to affect us all, one way or the other, and it won’t be pretty.

Perhaps it’s time we pick up some of those good old tunes again (here performed by Bing Crosby)?

www.youtube.com/watch?v=eih67rlGNhU

Of course, that’d be overreacting, but these are difinitely scary times, and I’m afraid we haven’t seen nothing yet.

I overheard CNN anchor Adrian Finighan today, expressing concerns over the redundancies in Wall Street and London’s city. Certainly, there’s every cause for concern, but the financial centres constitute the tip of the iceberg, I’m afraid. What Finighan failed to take into the picture, is the vast amount of jobs at risk in industries depending on stock market and monetary prosperity, which more less amounts to every industry – or corporation therein.

Now that’s what I call depressing.