The Perils of Zero Inflation for Swedish Household Debt

Zero inflation in Sweden the last two years instead of 2 percent, the inflation target, has substantially increased real household debt. Borrowers have made a real capital loss of 4 percent in two years, and lenders, the banks, have made a corresponding loss. The Riksbank’s “leaning against the wind” policy to reduce household debt is […]

A Response to ‘Why Politicians Ignore Economists on Austerity’

Simon Wren-Lewis: … So why are politicians, in the Netherlands and elsewhere, pursuing a policy that most economists regard as an elementary error? This was a question raised by Coen Teulings, who is the director of the CPB, the Dutch fiscal council. He was commenting on an IMF sponsored conference in Sweden, at which most economists argued […]

Mr Market Feeling Better

Mr. Market is feeling a bit better today, and the dollar and yen’s safe havens are not as needed.  Global equities and emerging markets generally doing better.   Peripheral bond yields are mostly lower, and core bond yields marginally higher. The news stream has been favorable for risk taking.  The recovery in US shares yesterday, perhaps on […]

RBA Delivers, Is the Riksbank Next?

The Reserve Bank of Australia delivered a 25 bp rate cut earlier today. While the ECB, BOE and BOJ meet later this week, expectations are low for additional action. Sweden’s Riksbank meets on October 25 and could be the next central bank to cut rates. The Riksbank cut the repo rate 25 bp in early […]

Results of the Wordcomplete Contest

I had held a small contest in my Desperate Housewives column from two weeks ago: I asked readers to complete the last sentence of my column and offered a wife-beater! :) as a prize to my favorite. I was supposed to conclude that right after the column, but things continued getting in the way. I […]

Lessons from Sweden in Assembling a Recovery

Think today about two countries, both in Europe but not in the euro. They should, in theory, be facing very similar circumstances. But one country, having performed strongly since the worst of the global financial crisis, surprised the markets a few days ago with a 1.4% jump in gross domestic product in the second quarter. […]

Once Again, It’s Sweden (Sweden!) Showing the Way

Over these past few years of watching Banks collapse, get bailed out, and then falter again, I have had a consistent take on the matter: The banking system is more important than any single institution; If you as a banker are so incompetent as to blow up yourself and your firm, you should not be […]

Go Swedish, Part 47

For many years, I have been an advocate of going Swedish. In addition to a surplus of beautiful Scandinavian blondes, Sweden understands what to do in a financial crisis.  They do not rescue banks, they rescue the banking systems. They do not bailout creditors but instead, ensure credit can move freely through the economy. Lastly, […]