Sunday, December 2, 2012

Did the Swedes get too cocky?

For the past year, the newspapers have been full of articles about how Sweden has avoided the economic crisis because of their saavy banking skills and good planning. Swedish banks were armed to the teeth (or atleast had good cash reserves) and Swedes just ‘knew better’ – despite loaning 2-3 million sek to buy the average house – up at least a million from 10 years ago.

But for the past year, those of us who work close to industry, have seen things have not been going as well as the newspapers would like one to believe. Because, in all honesty, if there is a recession in Europe, the Swedish export market is feeling it. Badly.

And then the news of layoffs started coming a few months ago. International company after international company announced they would be letting people go. And with that the economy started taking a nosedive.

Yes, Sweden still saw growth this year, but not even 1%. And while it is better than the rest of Europe, the signs all point to another recession for Sweden next year – despite all the fabulous banking skills and preparation.

Hopefully we are catching the tail wind of the European crisis and things will start looking up soon. And no, I don’t think the Swedes played their hand badly here –- although I do think, like pretty much every Western country out there, they shot themselves in the stomach by keeping interest rates way too low for way too long --- and lending way too much money to the middle class.

But I am not an economist. I don’t play one on TV. And my thoughts on the Swedish economy are just that, my thoughts.

The Moderates have been sitting pretty for a while, winning the accolades of Europe. But now that everyone is fighting to keep afloat, who knows what will happen?

I do know that I feel, although it may be an illusion, safer here in Sweden than I did while living in the US. I am not at risk of losing my health care insurance (I know, I know, there is Cobra, better than nothing but still often 6-800 dollars a month while you have minimal income). I also know I will be on maternity leave for about a year, which gives me, believe it or not, more financial security than most. 


  1. A model where the cycles of weak/strong economy are eliminated has yet to be invented. Remains to be seen if Sweden gets away with "only" the usual low tide, which is bound to hit all economies every 4-8 years, or if it hits rock bottom, like Greece and Spain.

  2. lagom cocky obviously

  3. I think it will be fine. Recession is a bit like survival of the fittest, the weaker companies get weeded out and the remaining ones get stronger and take on a few extra staff, but it causes huge upheaval for employees for a couple of years. I live near a very wealthy small city, and I saw my first homeless person in the five years I have been here the other night. It gets down to -10C here regularly in the winter, but being homeless in Sweden must be another league entirely.

  4. Anon: Yes, that maybe the case -- but the problem everyone is talking about now isn't a cyclical one, the last dip was only 2-3 years ago-- I don't think this is typical, but as I said, I don't know what anyone could have done differently (other than not drive the housing market up like crazy)

    Youma - Prisactly!

    Jane Rowena - I think in the long run Swedes are better off than many - just could do without all of the backpatting of the last months, I think Borg needs to take a moment and look around at what is actually going on. Sorry to hear about the homeless in the -10 degree weather. Hope he has somewhere to sleep.