Tuesday, January 19, 2016

Norway Pushes Panic Button: "We're In A Crisis Now, We Can't Deny That"

From ZeroHedge:
We’ve spent quite a bit of time documenting Norway’s precarious balancing act in the face of slumping crude prices.

On the one hand, falling crude puts pressure on the krone which essentially allows the Norges Bank to compete in the regional currency wars without resorting to the same type of deeply negative rates as the ECB, the Riksbank, the Nationalbank, and the SNB. In short, a falling krone preserves export competitiveness in a world gone Keynesian crazy.

At the same time, falling crude puts enormous pressure on the country’s economy, which is heavily dependent on oil production

Additionally, collapsing crude revenue means the country will soon be forced to drawdown its $830 billion sovereign wealth fund (the largest in the world) to plug the various budget leaks caused by “lower for longer.”
Now, Norway has declared that its oil industry has entered a “crisis.”

“[The] industry is in a crisis now, we can’t deny that,” Bente Nyland, director general of the Norwegian Petroleum Directorate, told Bloomberg who reminds us that “Norway depends on oil and gas for about one-fifth of its economic output and nationwide, the petroleum industry has cut almost 30,000 jobs.”


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