2 posts from June 2009

Bad Loans to Baltics Drag Down Sweden

Sweden's famed bank takeovers in the early 1990s have received lots of publicity, but now two of its big banks -- SwedBank and SEB -- are dragging down the economy because of bad loans to Baltic nations.  The kronor is likely to weak, loans will tighten, and unemployment will probably surpass the forecasted 11.3%.  
http://www.wsws.org/articles/2009/jun2009/balt-j15.shtml

The "Swedish Dream" may be over.  Like other nations, Sweden faces the daunting task of rebuilding its banking system and economy, while cutting social, health and educational programs.  But that only reduces deficits.  To rebuild its finances, Sweden needs to increase revenues by expanding exports of its small and medium enterprises (SMEs), which are weak in global marketing.  For export-shy SMEs, that will be no easy task indeed. 


1 comment

End of the "Socialist Nightmare"?

The Christian Science Monitor just published an article arguing that Sweden is moving away from the "socialist nightmare" by privatizing many industry sectors, which has triggered a lively volley of comments.   

http://features.csmonitor.com/globalnews/2009/05/14/sweden-hardly-a-socialist-nightmare/

The article is half right.  Sweden has privatized numerous sectors and semi-privatizing others.  For example, SwedFund and ALMI recently reduced their funding to half of business projects.  Increasingly, the Swedish government expects companies to find private investors.  Tuition is being introduced for foreigners and EU residents in 2011.  With aging baby boomers retiring and burdening pension and health programs, Sweden has to move fast to cut its budget and generate new revenues from business and foreigners. 

Nevertheless, Sweden still tightly controls many sectors and personal income taxes still reach or exceed 50%.  Dismantling a century of Social Democratic rule will not come quickly or easily, especially with small companies and regions seeking government structural funds to survive the current downturn.  Like many nations, I expect Sweden to protect its citizens and shift as much of the costs to companies, foreigners and immigrants, which could make it a less friendly place to do business and live.  

Like the rest of Europe, Sweden is undergoing major economic and demographic changes so the transition will not be easy for sure.  Nevertheless, the government is facing it in a typical Swedish way:  calmly, systematically and holistically.  

Post a comment