Transcription
NES, a podcast from the news.
Welcome, Jan Ludvik Andreassen, chief economist at Eikruppen. And Jan Ludvik, I've called you in for crisis help here, because I reacted to the diesel rebellion, eh, and expressed my support for the Labour Party and asked people to eh, remain calm in the face of this shock. Yes, you should get a ministerial post for this, but eh, so now the resignations are raging and and in. Yes. Eh, so then I thought I'd patch up the wound a bit, because from a chief economist's standpoint, how should we approach this? The Strait of Hormuz is closed, pump prices are galloping away. What needs to be done?
My overarching title for this week's events and leading into Easter week, and in the blog post I'm writing, is "The Elite's Nervous Breakdown." Eh, meaning this can go any way now. Eh, and if we return to your future fate as some kind of Uriaspost in this government, because this is not going to go well. But for poor eh, Jonas and the gang. But we must start a bit with the big picture, eh, because a lot of strange things are happening. And one of the things that was really peculiar was that Donald Trump came out and said that eh, in 48 hours we will start bombing if the Strait of Hormuz is not open. And then he has no clear goal or meaning other than he wants to bomb, with that Norwegian Peter Egeset by his side, who is truly a character. Eh, but the point here is, I have eh, read up on Iran's history and know a lot about it, and the Ayatollahs' religion, Shia Islam, and its biblical roots back to the 600s, which laid the groundwork for the current and modern political conflict with Israel and the Zionists, back and forth, and oil here and there. And so it boils down now, as we enter Easter week, to the Strait of Hormuz. Is it now all about that it must be kept open? Eh, so there's a book called "Choke Points," meaning bottlenecks. And it's like eh, the Chinese have a grip on critical minerals. The US has a strong grip on the dollar. And the third on the list, on the podium, eh, is the Strait of Hormuz. So if one of those three things goes completely wrong, most things will collapse. And we haven't really thought about, at least I haven't, how many strange things go through that Strait of Hormuz, eh, aluminum, eh, oil products, eh, fertilizer, and also helium, which the semiconductor industry is completely dependent on. And then I don't think the countries down there really thought about it either, that they really have something to eh, bet on here. And for Iran, it's almost like creating a toll station in the Strait of Hormuz and demanding, with a pistol to their heads, of course, eh, ransom to get out of the Strait of Hormuz forever. So the Iranians have now suddenly discovered that they have something of great value. They have the ability to shoot down and sink absolutely everything that comes through that strait. It's 40 km wide. Shipping lanes are only 11 km. 100 ships pass here a day. They can't do that without the Iranians saying eh, okay. And that market power has suddenly discovered that this is something we can live off for many years to come. And then I think there will be a bit of a nervous breakdown in Washington and around. Eh, and for now, Trump has taken a little break until April 6th for so-called peace negotiations. Eh, but eh, how to actually get out of this without it becoming a violent bloodbath, or just going home with their tails between their legs? It is eh, very difficult to see now. So this is like the big thing now. Forget all the religion and all those things. Now it's about Hormuz, pure, pure, pure physics. 20% of the world's oil, eh, 20% of the world's LNG, lots of artificial fertilizer, urea, eh, eh, lots of helium, eh, lots of everything. Yes.
And now eh, yes, even if they are bombed, they will always be able to send a drone towards a tanker, as they move at a speed of, well, about, yes. Eh, I think it's about 15 knots. So that's about 25 km per hour. So you can eh, eh, a ship that is 100 meters long, moving at a snail's pace through the strait. It's impossible to miss. No, even I could hit it with a shotgun and a catapult, you know, you can take that. But what will be the effect if I try to think about the effect here? Because I eh, listen to my reasoning, because I thought that now there will be a eh, a supply shock, a negative supply shock. This oil is gone, this gas is gone. Maybe some reserves, but at least roughly speaking, 10% of the world's oil is gone. And there's nothing we can do about that in the short term.
No, but that's when you see the contours of a real World War III. Because then, so we have to take a step back into previous history. Eh, Shah of Iran was on the decline, so he went on TV and apologized to the Iranian people that he had done a bad job. And then Hamenei, who was not the leader then, because it was Khomeini, who is called Komini in Norwegian, eh, who was the big boss, but he was a bit under him and then for some strange reason was chosen as his successor. But at that time, the young Hamenei said it was a mistake, one must never give an inch to the enemy. And I thought about that when this war broke out, that trying to think that you can bomb Hamenei in his time, eh, or his son, into some kind of willingness to negotiate, eh, then you haven't understood the man. I understand the whole thing, and for now, they have had great success in just denying everything. They are not participating in anything. They have not an inch to give. But that leads to many countries in the Gulf saying, can't we now join forces with the US and Israel and try to take down the whole thing and do something about it? So, properly, like, clean out the nest with tens of thousands of heavily armed people around Iran, right? And then, poor thing, bloodbath and hundreds, maybe thousands of American soldiers dead and so on. So, like, there are so many scenarios now that are suddenly becoming possible, and it's no longer a war about Iran, it's a war about the Strait of Hormuz. Mm. And then eh, and then I think that here, and then we come to Norway, where eh, yes, it's fascinating how this crisis immediately becomes a Norwegian political crisis. The government shows decisiveness and says that now eh, the state must step in here and remove the taxes so that we can continue more or less as before. And it's very funny that eh, the only country in Europe that doesn't benefit greatly from this is where there was almost a government crisis. But does Norway benefit greatly from it? Because I think that yes, we benefit from oil and gas, but our oil fund is down 1500 billion the last time I checked. So we have lost 1500 billion there.
Yes, but isn't it true that here, of course, war and such are bad, but here we must remember that we are going to use 3% of the oil fund. eh, you know, to have fun with, and then leave the principal to the next generation because we expect a real return over time of 3%. So we eat that up, but eh, our descendants will then have the oil fund inflation-adjusted as it is today. So when the oil fund falls by 1500 billion, eh, we have to cut consumption by the corresponding 3% of that, and that is 45 billion. Eh, now I have to be very careful with the calculations here. I'm almost 62, and I've been corrected on mental arithmetic before by some people, so I did it off the cuff. I think 3% of 15 billion is 45, so we lose that. And then we get about 300 this year as income. And then you can say we can't spend all of that, and so on, but we have to put it in perspective. No. Eh, so, so one thing is then Trump and the gang are having a breakdown, but some things have also happened around here. So I'm writing a blog post about this, and do you want to hear about this blog post?
Gladly. Yes. So I actually started in my student days, and then I met Jens, and Jens barely visited the library. He was simultaneously the leader of AUF and got top grades. It was so easy for him. I got better grades than Willock. Eh, we had a system back then. You could compare these grades over time, all the way back to the 50s, the same grading system. And we did it, you know, we sat there drunk in the middle of the night discussing how I was doing compared to Vock and so on. And he was already a superstar then, and there were many politician's children there and so on. He was the son of Torvald Stoltenberg, but no one else was like Jens, you know. He sat in the library at 88 with that huge book, nose buried in it, had great concentration difficulties. It was really like an attempt to break through the impenetrable, to use Dag Solstad's expression, that I couldn't do that, you know. I was never a great student. I skated through with mild grades. So I sit here at some hour of the day, and there's a huge library, you know, hundreds of seats, and then the whole hall is drained of women because Jens is going to drink coffee, and then he sits on a chair drinking coffee with flocks of women around him, and then Ingrid Skullerud, his fiancée, is there to make sure no women come near. So his life was completely absurd, you know. And then he moves on to state secretary, to ministerial posts, and prime minister, and of course, NATO Secretary-General. Before he now returns to eh, his old position and becomes Minister of Finance, and in a sense, saves the entire famous Jonas Gahr Støre project. So that's where we are now, you know. And then this crisis comes. And I've been thinking, how much time does he actually have to deal with fiscal policy? He always had to have his mobile phone on in case Donald Trump, while he's peeing in the middle of the night, calls him because that's what Trump is known for. And the only Norwegian Trump calls is Jens. So anyway, we had a debate about food taxes, and I tried to tell people in the Ministry of Finance that just cut that food VAT. We have money for it, and the customer gets to keep all the money, and it's not true that it's a few billion, and the Ministry of Finance was determined not to give an inch on the VAT. But otherwise, VAT is a very popular tax in the LO system now, I've understood after stumbling around the corridors there. Eh, I don't know why, it's very regressive, you know, it hits all the King Ung Salmon and Jørgen Hattbaker, who pay 25% VAT. So, but anyway, food VAT was completely out of the question. And now you're getting it in the face that Sweden is cutting VAT. Every penny of that cut goes straight into the consumer's pocket. And not only that, the stores are so eager that they are cutting VAT even before it's supposed to be cut. So they have already incurred losses for the last days of eh, March, you know, because that VAT cut in Sweden comes on April 1st. So it's a huge success for the Swedes, and the Ministry of Finance has messed up, and they will never admit it. And the people who have worked on this for years must be getting more and more new arguments that this is just nonsense, they are probably having nervous breakdowns. Then we come to the petrol tax thing, and I watched the debate, you know, it's Thursday the 26th, I think.
Yes. We are recording this on Friday. Yes. And eh, actually eh, the 27th. Yes. And eh, Jens has completely lost touch with reality. Oh, you see he's actually wearing a suit while the truck driver he's debating with is wearing a t-shirt, you know, and the truck driver says, I was about to go crazy, and this is not working, and Jens, I need help tomorrow, preferably yesterday. And Jens talks about vague things, and we'll come back to the revised national budget, and of course, we'll lower some taxes here and there as we see some overall connections in September sometime. And this good day man about the fuel tax conversation continues with more and more truck drivers and so on. So it would have been comical if it wasn't so tragic. Eh, so it's completely out of touch. And then my namesake, Har Magnus Andreassen, who is a much better economist than I am, and so on, says nothing negative. The ultimate, this is the ultimate argument everyone uses. No, if we cut taxes now and increase, increase diesel consumption in Norway, it will be at the expense of humanity, which has lost access to eh, diesel and petrol. And we must take our pro-rata share of that reduction, otherwise we are exploiting humanity. And this is completely clear. Yes. And then, actually, this is eh, IM should, to some extent, be credited for him being in the country at all. Because the Prime Minister, he has disappeared far away to Finland, somewhere in Finland. Finland is a fantastic place. I'm going there for Easter. It's a very good place when you're on the verge of a nervous breakdown. Just escape. It's quiet and nice there. Everyone is happy. And Bart Eide is down in eh, Moscow with his clowns from the Ministry of Foreign Affairs, trying to sort things out. And that's where Jens is, at least. But it's completely hopeless. It's completely hopeless. First of all, the case itself. We get x number of billions in increased expenses for businesses and households as a result of this supply shock. Then there are reliefs, but they are less than eh, the increase in expenses. So even after all these tax cuts have come, the net result is that the eh, bus driver, and the truck driver, and the farmer, and the fisherman, and so on, pay more than they did before January this year. So there is still a reduction in purchasing power. People are nagging, this could lead to increased interest rates and so on. The point is that what has happened since January 1st is that we have to revise our GDP growth forecast downwards because there is a reduction in purchasing power. And of course, we have to revise inflation forecasts upwards. That's because the net, even after distributing those 7 billion, is that people, I don't know what people pay, it's 10 to 12 perhaps, gross, net. But eh, then they get a deduction for VAT, so it's five that eh, remains. And then we don't even calculate things like, everyone who doesn't have Norwegian prices will get higher electricity bills. Because when the price of petrol and diesel and gas rises, people will seek towards the electrical grid and so on for more heating and for industry and so on. They will try to cut down on their use of hydrocarbons. So what I'm trying to say, and it's impossible to get through in the Norwegian debate, is that even after these cuts, there is a net expense for households and businesses and contributes to lower GDP growth. And then there's that thing. We could have used the money differently, and so on. And that, that is completely insane. So eh, eh, we eh, go through the others that are insane. That eh, that we could have used the money more effectively, and so on. And the other is eh, that we could now, now we're taking the petrol that African children would need.
Precisely. Then we go to the third eh, thing. No, we can't do that until we see all the effects. Eh, now I'll tell you something. In my younger years, not very young years, about 10 years ago, we were involved in creating model calculations for the Norwegian economy at Statistics Norway. So we paid Eika to create our own model calculations. And simulating a tax shock, seeing how it impacts the Norwegian economy, takes an hour. And then you can say that you're not satisfied with the results the first time, so you fiddle and mess around with the equations for another hour. But to do that in a long weekend, a proper, thoroughly researched, proper calculation of how it impacts all facets of the Norwegian economy as well as it can be calculated, is indisputable. And Jens knows that because he is actually still a research fellow at Statistics Norway. He's just on perpetual leave from his position. So, and he is one of Norway's best economists, and he has used these models. He must know that calculating the impact of this tax shock, including all the energy shock, the impact of the tax cuts, how it affects almost every aspect of our economy, you can do that in a long weekend. And then just imagine the absurd argument that we can't do anything until the revised budget. Imagine this was in April 1940, or February 1940. Hitler is threatening war, and you have increased defense spending, and then the field marshal says, no, you know what, we have to wait for the revised national budget in May. That's how it is, and we've never operated like that. In all crises, we've always coughed up money and thought about the income later. So, like, how it came up as the main thing, I think it was Moflag and Jens were completely panicked, we have to wait for the revised budget and all that. Then the most absurd of all was that very capable guy, and I must also say, I have great respect for Tuva, I think she's really good, actually all these people are much better than me, you know. He has Hatlebken. No, we can't lower the petrol tax because these petrol stations are such bloodsuckers that they take the entire tax cut themselves. Eh, the tax cut itself. That is, the variant of the same thing we had with food, you know, that no, we can't lower the price of Jarlsberg by 10 kroner, because then Rimi and Reitan and Coop will raise the cheese price by 11, you know. That's the Ministry of Finance's brilliant idea. So this is actually completely insane. And then you come eh, on the same day. Yes. Almost simultaneously, in fact, Norges Bank has a completely absurd interest rate path. But it's not possible to store more artistically, I was about to say. We will have two interest rate hikes or something, and then we will have a lot of interest rate cuts. So within 12-18 months, the interest rate will go from the ceiling to the floor. And why? Eh, because it's a supply-side shock, or that's what's going on in people's heads at Bankplassen now, I have no idea. So I'm a middle-aged academic, but I actually feel quite good today. So it is eh, so it is eh, yes, to summarize a bit, that it is eh, it's just nonsense eh, to look for coverage for it. Yes, we have 45 billion less to spend, but we have eh, if it lasts a year, we will have over 300 billion more to spend, so forget that. Yes, but that means eh, now we have to put all that into the models.
Yes. Eh, that there were no interest rate cuts. That you got a petrol price shock with some discount due to tax reductions. That there is chaos in the Strait of Hormuz suddenly, that's what's the focus now. It's the umbilical cord of the entire world economy we're talking about, right? Eh, with dangers and opportunities and so on. And that we then, but how we then end up in the revised budget, whether we need new tax revenues of 10 billion or whether we need tax increases of 10 billion, it's completely unclear. So I think this must be viewed completely independently of eh, what has now happened, that is, how the Norwegian economy looks eh, in May, it's almost impossible to know given what is happening now. It's also completely absurd, what Norges Bank, I just heard that guy Beckmon, or whatever his name is, at Norges Bank, who is also much better than me. He is the head eh, of the monetary policy stability report. No, eh, the strategy report. Ehm, that this will lead to a boom in the oil country this year, the plans are laid. So in the long term, this means increased activity in the North Sea and probably also in the Barents Sea, and that's very good for the entire oil industry. But that's an effect that will come in '27, '28, when Norges Bank intends to cut interest rates to the floor. So the whole thing doesn't add up, which makes me feel even better. So that eh, yes, to put it simply, the government eh, should have seized the opportunity to cut, remove the food VAT. Eh, and and it's wise of the Storting to cut petrol and diesel taxes. Yes. Eh, and even after this, consumers and businesses would eh, have experienced that things became more expensive because the shock is there despite the tax increase. We can afford it fine. Yes. Eh, and when Norges Bank comes and says that inflation is picking up, so we have to raise interest rates, then you don't understand anything, because eh, this is not an inflation that comes because of eh, easy credit or monetary policy. It is a, it is a real price increase due to oil shortage. So raising interest rates to deal with that is making it even worse. It's like pushing people into the cold after they've peed their pants, to put it that way. Yes.
And that's very well summarized. Yes. But in addition, it's strange, even in Norges Bank's reasoning, that you should raise interest rates now and then cut them sharply in '27, '28, like. That is, within like 12, 12 months, you will have a real rollercoaster on interest rates. Now we will, now we will, I like this choking point, because then we will first fleece people. I've never seen, never seen such an interest rate path. You have to, it's almost unbelievable. So I, and but I think all of this is, of course, partly a result of us living in chaotic times, but then I must say there's something strange about Norwegians. Why is it that then they become very proactive, really have a strong sense of reality in Finland, you know, and eh, there's war on TV like there is here, and people sit and drink coffee or wine and watch this, and then they think about, like, what should we have for dinner, you know. In Norway, you become agitated, and this must be, let's go away and so on. Eh, so I think there's something typically Norwegian eh, you know, that you become agitated and strange and and shake your fist and so on. It's really a miracle that we two, who are also Norwegians, are so calm and rational all the time. I think eh, maybe we are proof that we are crazy Norwegians. I think some would say that about you, but I think most people consider me relatively agitated and hot-tempered. But what about, what about this argument that we're taking petrol from African children?
No, how they come up with that, I don't know. Maybe they paid well for Trygve Slagsvold Vedum's first house cruise or something to come up with that. I just think it's completely, I had no idea, how is it possible, you know, to think that little us, we are less than a promille of the world's population, you know, there are 8 billion, we are 5 million, and like, that group of these old geezers who drive diesel and petrol cars, that their consumption should, like, affect the world's eh, population group, a large part of the world. That's just, that's just pure nonsense. They're putting African children in the tank.
No, so I don't know, but I, and it's a bit like we are eh, if I'm to be honest, there is eh, also a seriousness here that when authorities and the elite break down a bit, then you open up for a bit of chaos, and again, it becomes a bit like Pandora's box, anything can happen. And I eh, I fear that a bit, that we are now, that now anything can go through that eh, Parliament, and Norges Bank can come up with anything, because it's a bit out of control, the whole thing. And of course, Trump, no one has any idea where it was, that oyster could be the beginning of World War III, and it could calm down in some way, what do I know? So there's a lot at stake these days. And the best example I have is actually from Tuva, because we had that big thing with many capable people plus Jan Andreassen meeting to discuss eh, fiscal policy, meaning taxes and duties and so on. Then Ragnar Thorvik, as the leader of such committees, presents his annual reports, and it's like, you have to adjust taxes and duties and seaman's deductions, and it's very educational, you know, and all the professors, chief economists, and so on. And then I just say, Tuva, remember what my everyday life is like. This was, I think, in January eh, the other day, then some guy in Parliament had stood up and said that no, this is not acceptable. We have cut departures from Steins station from 14 to 7 departures a day. People can't tolerate that. It's really not acceptable. And during that debate, he got the majority in Parliament with him that we should be instructed to increase from 7 to 14 departures, you know. That's completely Polish politics, you know. If you're down at that level, imagine you're sitting in the government and have made detailed plans for billions of kroner, and then you're just told that no, you're not allowed to do that at that train station. That's just completely. And then what this will lead to in the autumn and so on with all those tutti frutti parties except Rødt, and the Labour Party, but that's where I get really upset. I think that here we are not, aren't we becoming a banana republic? That when one, in this case, it's probably Julie Bråten, former colleague of Erna Solberg, who has become the leader of the machine contractors' association or something like that, who naturally eh, suffers from higher diesel prices. Yes. Eh, and then eh, I think it's not very coincidental that it's Høyre that then becomes very receptive to the machine contractors. Høyre. I thought that too, because she is actually damn good, so she has somehow had a finger on the wheel there. Yes. Eh, no, so I, I think there's something about being careful about tearing down these people too. Eh, but it is, after all, maybe it's just something, and again, eh, all these people are very capable. I've met them, and I must tell you that I once met Jonas Gahr Støre 15 years ago, he gave a speech at the British Ambassador's summer party. A venerable lady who had been all over the world. And she introduced Jonas, who had introduced Justin Bieber, and he didn't disappoint. He took the whole world situation without any script, and so on, elegantly navigated the whole thing. Everyone agreed. I stood next to Olsen, the central bank governor at the time. So this was fantastic. So these are very capable people. But there's something about maybe it's something about leadership and so on, but maybe it's also something about being 20% of the population supporting the Labour Party. Eh, it's difficult to run a government with that background, especially when the bureaucrats are out messing around with this newspaper politics, and they can't properly reason clearly and don't fully understand that after all, it's a net tax, a net tax increase that people are getting. Yes, it's a net negative for businesses and households, this, even after that tax package. Net negative for ecological growth. What is happening now, that they can't quite understand that it is common practice in crises and wars that you don't stick to budget times and dates. It's no longer May 8th that applies eh, when there is war. And in the central bank, they also have to learn that when there is a shock, you do nothing. You are not hyperactive. Eh, you know. So, like, the elections in Iran have 20% support, you know, so it's just not, maybe it's just that the foundation they have is too weak, because they have nothing to conduct sensible policy with. And there is also no clear alternative, and perhaps that is what I am most afraid of going forward, regarding fiscal policy completely breaking down. We have now entered a regime where eh, no, even train schedules can be changed on the parliamentary floor, you know. And then people can get completely stubborn.
But but I'm almost most worried about what you say about Norges Bank, because I think politicians are politicians. They are supposed to eh, go with public opinion, but when eh, when Norges Bank starts to seem irrational, then I get scared. Because they are supposed to be the adult professional economists who sit and are smart and make professional choices. Yes. But now eh, once again, all those people at Norges Bank are better than me, and there is a very strong academic team in that eh, board and management there, but I don't know if they, I'll tell you another story. I worked at DNC in my time, and there we had a legendary bank manager, Johan Manders, who ran that bank to great success. He had a chief economist named Bang. So he's deceased now, so I can talk a little shit now. But incidentally, he was the one who gave eh, Siv Jensen her inheritance because he had no children himself, but he died. He thought it was so great. Eh, but Manders, he said about his chief economist that he is probably the most intelligent person I have ever met. I'm a little unsure if he's completely sane. Something my boss might have said to me. No, not that I'm the most intelligent, but anyway. But the point here is, a bit of sanity, a bit of ability to just sit quietly and watch the battlefield before you like, fire off some interest rate decisions and try to be proactive and make some bets on how this will actually go, and so on. I must admit, I thought it was eh, lacking wisdom. Yes.
But let's, let's try to think positively. The Strait of Hormuz closed until eh, June 1st. Yes. Eh, that's two months. How bad will it be? Eh, and then there are all the follow-up effects. Eh, and things never happen in isolation. Eh, so we also have a war in Ukraine going on. And maybe now Putin is getting more blood on his teeth because he's getting a lot of oil money and can become more aggressive there. Maybe he will become more aggressive towards the Baltics. Eh, send some rockets up there to keep them in check and tell them to shape up, guys. Don't interfere with Ukraine. Eh, what are the Chinese doing in all of this? It's very interesting eh, in this whole geopolitical game, you've always thought of it as a trio here. Eh, Iran, Russia, China. I don't know anything about it, but I listen to podcasts all the time. So what I've learned is that Russia actually thinks it's okay for Iran to be a bit down, eh, especially with oil production, because it keeps their own oil prices up. So Iran is also very dependent on Russia. And they've never had a very easy relationship, those two countries. So it's very good that Iran is dependent on Russia. And then they are both quite weak and dependent on China. And China has thought of being a bit like the big brother here and tried to control things. But then today, you know, and this was talked about on CNN and so on, how China tried to tell the Iranians, you must come to an agreement with the US and so on. This week, it was in the news that Chinese ships are not allowed through the Strait of Hormuz either. And I think it goes back to the eh, comment about Shan's fall. If someone pokes us, we give an inch. That's just an invitation to be asked for more concessions, more subservience, never give it. So that eh, it's going to be, it's going to be, it can go any way, that thing. It is eh. But then, like, what you read in the Gulf, so I try to follow that a bit. I read the Jerusalem Post, Al Jazeera.
Hey NRK, that stuff is useless. You need to follow international media, international commentators. And they say now Saudi and the gang, they are actually a bit mature, they are, to be part of a raid into Iran if they see the chance to remove the entire regime. Because it is to have such a wounded animal in Tehran with such an aggressive gang of tollers who want revenge. But to have eternity as a time perspective, that they can spend 3 years rebuilding themselves. That is also not a pleasant option for the Gulf states.
And then it goes quickly towards a long war, I think. That then, yes, it was long. How they will get out of it, I am unsure of, other than perhaps Trump just leaves with his tail between his legs and says that we've won the war, eh, and then he just goes home.
What, what do we Norwegian consumers have to prepare for now? So, what, what do you think will be the consequence, so, the growth will plummet? Will housing prices start to fall? Will, yes, everyone, every single safe place will quickly become the public sector.
Yes. So what I, or the oil industry then. What, what I think is a bit of a challenge. I was at a real estate seminar yesterday then. Eh, so yesterday was March 26th. Eh, and it's clear that, um, where very many big players were there. Eh, you become a bit paralyzed when, shall we say, the elites have a nervous breakdown, and it, it doesn't look good, and especially when you know that the authority is also so strongly weakened that whatever comes through, up and through Parliament, eh, and we have difficult wage negotiations, eh, so it's like no one took, like, the role of father of the nation or Ida Volden Bakke's role as mother of the nation, then no, we have this under control, calm it down. We will get through the war and so on, maybe raise interest rates, maybe lower interest rates long after all this is over. We will keep it calm as long as it is sustainable. So it is completely, it is a real risk sport to take strong proactive measures in a war situation that no one knows where it ends. Cannot know where it ends.
And it is also a bit strange that especially the people at Norges Bank did not take it to heart. I was hung out on the back of Finansavisen when I said that the future is so uncertain that anything can happen, right? Is that possible, they say on the back of him, is he even paid? Why, anyone can say that, he has no predictions. How can you pay such a guy? And then a week later, Jerome Powell says exactly the same thing repeatedly. We have no certain knowledge of how this will go. Anything can happen. We are dependent on the war, how the market reacts to it, and so on, and follow-up effects, and how Trump and the politicians react. We simply know nothing about the future. Rarely has there been such great uncertainty as now, he repeats and repeats, gets new questions, follow-up questions.
Jerome Powell is, yes, he is the boss in the USA. Yes. When the world's largest central bank with the world's largest economy says he has no idea how it will go forward, then you read Norges Bank's report about it, it's completely, this here is under control. I don't think it seems so. It is not wise. This is not wise policy.
One thing I noticed was that Ida Volden Bakke, at least, did not talk about fiscal policy and how she felt about it. Yes. She is, in contrast to if you take a former central bank governor like Svein Gjedrem, he was always very clear. Yes, they call it the division of roles in the Norwegian economy, but I mean, for example, that she could have said what I said yesterday, eh, so she had a press conference on the 26th, that precisely that, ease up a bit on the tax stuff. Whether it's 5, 6, 7 billion, it's still less than what households have to pay. So it is precisely in that sense negative for households, what is happening now. It is precisely in that sense negative for businesses, what is happening now. Eh, she did not choose. I don't know if they, there is no sign that they have understood that point, by the way. Eh, I am very surprised, I am not the only one who has understood that. It is a trivial point, right? Eh, um, but that was not good. It, it was very, and it's almost like now that you wonder, should one change the regulations in Norges Bank if it is to be the case that inflation should be taken into account, shall unemployment and the labor market be taken into account, bla bla bla, you should take into account people who are even when there is a pandemic, when there is a war in Ukraine, when there is this, you should take it easy, right? Because we don't know. So, to put it bluntly, we risk now that, Hormuz is closed, say until June 1st, maybe August 1st.
Yes. We get the biggest negative supply shock of all time, and people get poorer, and then Norgesbank comes and raises interest rates.
I think in the last instance they will come to their senses again. These are, as I said, capable people. Depends.
So, so you choose not to believe what they say, to put it that way, that when it takes a few weeks, I understand that.
So it's a bit like I said that Jens is perhaps one of the most capable people I have ever met. I have actually said that to his family once when I met him at Aker Brygge. We were talking a bit, his family came walking, that this is your father. That was 20 years ago, then your father is one of the most impressive people I have met. And Ida Volden Bakke is not far behind. She is very capable, but can she manage to turn that around again? Ehm, so what I wish for is that everyone calms down for Easter and takes it easy and comes back and says, you know what, wow, we are entering the revised national budget, and the net of all this is slightly higher inflation than we thought, slightly lower GDP growth than we thought, more than enough oil money. How do we handle this going forward in a calm and nice way? Eh, given that there will presumably still be great uncertainty in the world. And then we actually forget all that silly talk we had before Easter. We forget everything we said before Easter and then we start with new cards. Eh, I think that would be very good because now it's not about preserving trust. It's about creating new trust after the old one is destroyed, right? New trust. That means you look at things with fresh eyes. The cards are dealt anew when we return after Easter. We will create a new policy based on how the world looks after Easter. So it's a bit like we are now on our way into Good Friday and doomsday, and then we come out after Easter, Easter Monday, and then it's Easter morning, and then we think a bit freely and anew about everything. Eh, otherwise, I think that the distrust of authorities and so on, that they say so many strange things and do so many wrong things, that it will just solidify, and then we are facing a more chaotic situation.
So, that's what I say, yesterday on, or at that debate on TV. You can all see it yourselves. It was the most absurd thing I have ever participated in and seen. It is really again, the good-natured man with the axe handle talking to working people, eh, and they understand that, and that's the reaction you've also gotten to this, eh, people are really upset about it, and again, there's no help to be found. I think, eh, Kirsli Berg, a great woman, eloquent as few, just cotton wool, right? Comes out there. There is no clear idea of what SV or the others actually want now. So, this, they must somehow come together and make, I think they must make something more. If this tutti frutti thing is to work, they must build this more firmly together. Eh, simply and create some kind of strategy for how Norway takes Norway forward.
Revised crisis budget, to put it that way.
Yes. I almost think they need some kind of new government declaration or something where people bind themselves a bit more together. And then it is very difficult because both SV and MDG, eh, and for that matter Senterpartiet, are like hovering near the electoral threshold. So they, they actually don't have much to give either without having to disappear.
It's probably one of those times you wish it had been possible to call for new elections in Norway. But, eh, it might not have made it much better either.
No, I don't know, eh. So, so there is something that, one thing was that Støre was out of the country while the government was in its deepest crisis. Another thing is, no one noticed he was gone. I mean, really, there is something about the leadership here also needing to be much clearer about where they want to take Norway. Eh, it's not just about tinkering with the budget here now. Give people confidence that we will ride out this storm, no matter how strong it gets, because we have more than enough oil money.
Do you feel that Jens Berg is invested in that, or is he a bit tired, that rumors say he is barely in the office at the Ministry of Finance? Those are rumors. I don't know about rumors.
I don't know, but I, all these people are capable if they sit down during Easter or after Easter. I hope they get a good Easter holiday and then think a bit structurally about what they are doing. Ehm, and it is also something that we have a bit of a good-natured axe handle between, at least, people like me and Roger Bjørnstad, eh, and the economist who follows Norges Bank, and Norges Bank has that monomaniacal focus on the NAV numbers, which are low, but the AK numbers, the labor force survey, women are running around and asking people. Point 1, do you have a job? If not, do you want to work? And that is constantly ticking upwards. And for men, it is now over 5%. Eh, and it could well be people in my situation in their 60s, right, who, but who have unfortunately chosen to retire early. I intend to cling to the table until I'm 80.
Eh, but and then, and then I would like to re-enter the workforce, but I don't go to NAV, right? They lie on the sofa, get a phone call, yes, I would like to work, or students, or traditional wives who suddenly change their minds. So, so, like, there are a lot of available resources in this economy. Eh, Roger and I think so. And then they say, those who are at NAV, look at the NAV numbers and the foot traffic at the offices, NAV numbers are stable and low. And then there is also something that is a bit East-West, and that is this group of academics. What they don't understand is that what the hell is a worker who is going to become unemployed supposed to do, jump out of a second-story window, eh, go to the doctor and say I hurt my back, then they become disability pensioners. So it's not like that, disability pension numbers are completely independent of the economic cycle. Eh, that is also a strange thing people have. Because we are not supposed to talk about that happening, you know, that people voluntarily report themselves as pensioners. But it happens every time there are major problems in the labor market for unskilled labor, right? That group, when they are 50 years old. Are we really going to join that unemployment queue? Put me down, and I know that all employers would rather have people in their 30s, or should I jump out of a second-story window and go to my GP and become a disability pensioner? So it's very, it's completely strange because people talk about sick leave being high, yes, it is in normal years, but it was actually much higher in 2002 and 3. What was it in 2002 and 3? It was a recession, of course, it increased, eh, pensions. So if you look at the increase in unemployment, the acute numbers, those groups who are sitting at home waiting for a phone call, and the increase in the number of pensioners, then this is an explosive change in our labor market where many people are now falling through the cracks because of bad times. It's bad times in construction. And it will be bad times now in the transport industry because, even though there are reliefs, there are still net higher energy prices after the relief is given than there were on January 1st this year.
What, what do you think will happen there? I ask for my own sake. What do you think will happen to housing prices during the year?
No, now they have also adjusted that down to 4%, but this is a story of very geographical differences. It's boiling hot in oil countries. Eh, and then it's cool in Trøndelag, Innlandet, and Romerike, and Oslo. Now, the last week before Easter was a very good week because we have weekly numbers. It's like you say, there's a risk that the fear of, well, everything, Hormuz, political games in Parliament, interest rate hikes, makes people very calm here. What I can say after being at the real estate seminar yesterday is that at least the supply of housing and new construction activity is being choked, and again, I don't want to blame Volden Bakke for that. It's like, maybe the same would have happened if you had cut interest rates, what do I know, eh. But it certainly doesn't help the situation that now whatever interest rate hikes come will choke housing construction even more. More unemployment, more disability pensions, and in a few years, an even greater shortage of housing, which leads to higher inflation. Yes, that was a little cold shower before Easter. Shall we just, shall you summarize in a joint Easter message before we land, Ludvig?
Yes. Leading up to Easter, we have had elites, in a broad sense, also good Trump supporters. We have had a bit of a mental breakdown, and we wish them a speedy recovery and will return after Easter, first through Good Friday, so it can get worse before it becomes Easter resurrection. Eh, but I must say, eh, there is something with the old saying that one should invest when blood is running in the streets. Then one should, by the way, not invest where the blood is running in the streets, right? So it was on the battlefield at Waterloo that it was famously reported that Napoleon had lost. And the one who first got the news in London did very well. So, you should invest when blood is running in the streets, but somewhere else than where it is running. Eh, even I think Japan looks attractive. Then, then we put our money in Japan this Easter, and then we hope that our elites, eh, elites and podcast hosts, will return with fresh energy and blank slates and try to correct their mistakes.
Thank you very much for coming, Ludvig, and happy Easter.
Happy Easter, it was near. If you like this podcast, you can give support to iheter either by a Vipps transfer or to a bank account. You see our numbers on the screen now. Don't forget to subscribe to our YouTube channel and follow us on X, Facebook, and other social media. M.