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Ignoring low inflation, Sweden's Central Bank takes a stand against rising asset prices, jacking...

Ignoring low inflation, Sweden's Central Bank takes a stand against rising asset prices, jacking rates 4 times since July. A Swedish bank executive agrees, noting that "central banks are 'printing money' while virtually all prices except consumer prices in industrial countries are increasing rapidly."
Comments (6)
  • wyostocks
    , contributor
    Comments (7708) | Send Message
     
    Wow, nice to see that some government's get it right. Lets send Ben there for a refresher course.
    29 Dec 2010, 11:38 AM Reply Like
  • MarketGuy
    , contributor
    Comments (3983) | Send Message
     
    good to see there's some common sense still in the world.
    29 Dec 2010, 11:49 AM Reply Like
  • mdmrjsds
    , contributor
    Comments (502) | Send Message
     
    How did this guy escape the brain washing? Did he not attend an economics school?

     

    Economics professor with tazer, to student looking at glass of water 1/3 full.
    Is that glass half full or half empty?
    Neither.
    Zzzzzzaaaaapppp!
    YOOOOWWWWW!
    Is that glass half full or half empty?
    Half empty.
    Zzzzzzaaaaapppp!
    YOOOOWWWWW!
    Is that glass half full or half empty?
    Half full.
    Well done, soon we will have those false notions removed from your awareness.

     

    :-)

     

    A joke, but sometimes it seems the suspension of reality some of these economists exhibit could only be instilled by a method like the above.
    29 Dec 2010, 01:20 PM Reply Like
  • bob adamson
    , contributor
    Comments (4557) | Send Message
     
    Having experienced a major banking crisis in the years following the collapse of the USSR and Soviet Bloc (and the resulting implosion of the economies of those countries during the transition from communism to market economies and with which with which Sweden had many trade links and Sweden’s banks held a high volume of loans), Sweden experienced a major domestic recession and was forced to nationalize and refloat its banks. Having come through that experience successfully though at great cost, it does not want to relive that experience now that many Baltic and Eastern European neighbours are in deep recession and is therefore being especially prudent.

     

    Being a relatively small economy on the international stage with strong international trade ties based in many cases on unique products it produces, Sweden can rely on foreign demand to support its domestic economy at present (i.e. domestic monetary and fiscal stimulus is a relatively low priority) but it will be interesting to see whether the exchange rate of the Swedish krona appreciates under these stated policies thereby undercutting foreign trade and the basis that allows the tight money policies described to be followed.

     

    In short, don’t be too quick to assume that Swedish practices in this instance are either:
    (a) suitable for adoption by other countries that don’t currently experience Sweden’s unique circumstances, or
    (b) will be sustainable by Sweden itself over the next couple of years.
    29 Dec 2010, 08:49 PM Reply Like
  • wyostocks
    , contributor
    Comments (7708) | Send Message
     
    I don't think they made a decision for "the next couple of years" and also this ain't the same as the fall of the USSR.
    29 Dec 2010, 08:53 PM Reply Like
  • bob adamson
    , contributor
    Comments (4557) | Send Message
     
    wyostocks -

     

    You're correct that Sweden currently intends to stay the course. My point was thar if the exchange rate for the krona rises, Sweden might have to reconsider its tight money policy or face significant loss of foreign markets.

     

    On your second point, it wasn't the collapse of the USSR as such that caused Sweden's earlier difficulties but rather the collapse of the economies and the default on the loans of many Eastern European States following the USSR collapse. My point is that many of those same neighbours of Sweden are currently having economic difficulties (Poland being a notable exception) and Sweden is concerned that if the economies of those States collapse again, this will put a strain on Sweden's economy and banks. Sweden is therefore trying to butress its economy and banking system against that possibility.
    29 Dec 2010, 09:31 PM Reply Like
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