Daily Update: Ode to Norway (Bailing Out Iceland) Edition

Norway. It's one of those countries we have always wanted to visit, lacking both money, opportunity, and, again, money. At a time when everyone is scrambling for cash (Iceland that's you, and you Turkey, and you Pakistan, and you GM, and you GMAC, and you Joe homeowner), Norway seems to be all casual and willing to spread the wealth.

In unneighborly (to Sweden) fashion, Norway has opted to reject Sweden weaponry and purchase a new batch of military jet fighters from the United States.  The F-35 Joint Strike Fighter was determined to be the better plane, which should give us here in the States some comfort, since the overall contract represents about $21 billion over its life.

The F-35 - a single-seat, single-engine jet - is being developed by Bethesda, Maryland-based Lockheed Martin, with engines made United Technologies Corp.'s Pratt and Whitney unit and General Electric Co.
A news release said the total cost of the deal over the aircraft's' expected 30- year life span would be about 145 billion kroner ($20.7 billion) for the fighter, weapons, maintenance, infrastructure and operations.

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News like the above makes you take a second look at Norway with a kind of "I never noticed you before" admiration. Obviously they are doing something right. (Russia, look at Norway, an oil state, and pay attention!), but how? One of the things they are doing now, unlike most everyone else, is buying stuff via their oil fund (aptly named "The Government Pension Fund Global). The fund's top manager Yngve Slyngstad had this to say:

"The market we are now in suits us very well. We are a large buyer in a market with a lot of sellers," he said.

According to U.S. News, they have $20 billion of the $286 billion fund set aside to begin buying real estate. Slyngstad also mentions that the fund is the largest equity investor in Europe, which just makes us respect Norway even more for brains rather than looks. Buying when others are panicking and selling is very novel, no? How this sensible ethic did not rub off on Iceland is anyone's guess, but we suspect that floating alone in the ocean, and being inches closer to the fun loving, carefree U.S.A. probably had a huge impact on their losing their sense of Nordic reserve.
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If Iceland did lose its better judgement, they have Norway, among other Scandinavian pals, to thank for bailing them out in their time of need:

Nordic countries followed up a $2.1 billion loan to Iceland by the International Monetary Fund with an additional $2.5 billion.
The finance ministers of Denmark, Finland, Norway and Sweden said in a joint statement that the money would help Iceland stabilize its economy and exchange rate, and reduce its public debt over the medium term.

(N.Y.Times)

Ah Norway. So quiet, so reserved, so serious. Oil and oil wealth like Russia, but not all in your face about it and wiser with the income from that oil.  Buying when others are selling, arming up and bailing out. Quiet, wise, sexy Norway.

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It would be wrong of us to leave without more oil chat. The price has now fallen below $50 per barrel, which means that certain nations in certain parts of the world are going to come under increasing pressure.

Some analysts predict oil could fall to $30 to 40 a barrel as the world economy worsens.


The pillars that had pushed up the price of oil and other commodities seem to be crumbling all at once: the American consumer is in full retreat; the Chinese economy is sputtering; financial markets are collapsing; developing countries are trimming their energy subsidies; and the dollar is strengthening.

(N.Y.Times)

So this is a good moment for you if you have a car. Just as you are losing your home, you will be able to get a lot more mileage out of living in that car of yours. But this is really bad news for others, the Times tells us:

But for oil producers, the collapse is bad news. The downturn will probably herald a depressed cycle for the energy industry as markets shrink and prices drop. Dozens of large-scale projects have already been canceled, or delayed, because of the fall in prices and financing constraints, including refineries in Saudi Arabia, tar sands in Canada and offshore fields in Brazil.

What's interesting is how hysterical people were getting not too long ago about oil prices, and it seems almost ludicrous when we think back to the Republican convention and the chants of "Drill, Baby, Drill."  It's not that we don't need to work on energy efficiency, but rather, that we need to formulate long term policy that is not based upon current and fleeting perceptions of reality.