Last year I wrote about the state of the Swedish economy. I called it “Swedish economy in free fall.” It was a bit crude, though many things on the Internet are. I miscalculated the speed of the fall and anticipated the economy would sort of land in April this year. It didn’t. Things move slower than I thought. Still, how have things gone since? Well, not exactly ssssuper.
First. The Swedish economy is (finally acknowledged, bring out the champagne!) in recession. It has contracted, albeit not much. Reasons for this acknowledgement? The interest rate has left the 0-mark and entered the realm 4 % (compared to nearly 16 % a brief period in the 1990’s), which leaves lots of households with even greater problems paying mortgages. Many households have spent too much money on houses in the last decades, rendering them very vulnerable to 2 % interest rate.
Second. This effects the housing market and the construction companies. Approximately 25 % of all contractors have filed for bankruptcy or been obliviated this year. One person working for a construction company mentioned this to me in April, so it’s no surprise to hear news mentioning this number now.
Third. The housing market is dropping like a stone. Houses/flats aren’t sold. The drop in price is about 15 %. People can’t sell their “expected yield”.
Fourth. This, in turn, renders more people unemployed, straining the economy of the municipalities and regions (who make austerity decisions in each and every place these days) in the end and decreasing the consumtion, straining the national economy. People use more of their savings on spending, consumtion contracting, even in times of “Black week” and Christmas shopping.
So, things are getting grim. Finally, some argue that unemployment will grow next year. That’s shocking! Who could’ve thought people would become unemployed in an economic crisis? It hasn’t, like, happened before it seems, although that’s exactly what happens each and every time an economic or financial crisis comes.
Listening to certain “experts” is like watching a very bleak comedy, French style (French Noir). They seem bent on negating anything that proves a crisis is coming. The employment rate is going strong, the housing market will soon rise again, Riksbanken (the central bank) won’t increase the interest rate further… These unfounded, even dumb, arguments are more like rational people attempting to make sense of something they do not understand, I’m sorry to say: If you borrow too much money, one day you’ll have to pay. It might be sooner, it might be later, but the day will come. And events and things are interconnected, like I’ve stated above. Even if the inflation rate is lessening, the fact is that companies, municipalities and regions have begun to turn lots of people unemployed this year. One thing leads to another. Many people will be tempted to spend money they do not have for decades to come on things they actually can’t have, but pretend to have. Build an economy on such thoughts and you will find yourself in a crisis. Just add time.