How Norway spends its $882B global fund • Hacker News Board

Re: How Norway spends its $882B global fund

#81

Post by bkanber » Thu, Sep 22, 2016, 2:31 AM UTC

harryh wrote: post #31

refurb wrote: post #30

Earlier quoted context omitted.

Norway also has foreign debt of greater than $600B or 75% of the Global Fund.

Interesting. Why do they choose to keep this money in a sovereign wealth fund instead of choosing to pay off their debt?

The Norwegian 10Y treasury bond has a coupon rate of 1.3% (lower than the US T-Note! suffice to say, very cheap).

The wealth fund has been growing around 8% per year.

Borrow money at a rate of 1.3%, reinvest it and make 8%.

It's one of the golden rules of banking: if you can borrow money for cheap, do so.

Re: How Norway spends its $882B global fund

#82

Post by seizethecheese » Thu, Sep 22, 2016, 2:45 AM UTC

terda12 wrote: post #79

Visiting Norway, I always thought it is kind of a weird country. On one hand it's one of the richest countries in the world. On the other hand, I've seen so many young Norwegian women work hard cleaning toilets and hotel rooms. Such jobs would be considered "low rung" at in the US but in Norway they treat their low rung jobs as something to be proud of.

Someone has to clean the toilets. You're expressing shock that Norway doesn't have a racial underclass like latinos or blacks in the US? Kind of a weird thing to comment on, Norway is a very homogenous country.

Re: How Norway spends its $882B global fund

#83

Post by maus42 » Thu, Sep 22, 2016, 2:45 AM UTC

dogma1138 wrote: post #15

harryh wrote: post #2

882 B / 5.2 Million ~= $170k for every citizen of Norway. At 4% a year that's $6,800 each in annual income. Not bad!

Not bad, but not enough to cover the current levels of household debt in Norway, while a large portion of the debt is tied to mortgages the mortgage debt in the Norway have been increasing faster than income for quite a few years now. http://www.tradingeconomics.com/norway/households-debt-to-gd... This isn't a problem unique to Norway, Norway is just one of the biggest offenders, even in the Nordic countries there is…

On the other hand, Nordics are not exactly clones of each other. I believe the mortgage terms are less crazy in Denmark and Finland.

Re: How Norway spends its $882B global fund

#84

Post by maus42 » Thu, Sep 22, 2016, 2:58 AM UTC

netcan wrote: post #26

Norway's oil money story is one of the weirdest. Are there any examples in history where a country has saved up such a big stash? Are they planning to retire young, as a nation?

>Are they planning to retire young, as a nation?

What an amusing thought. One big problem is that, one part of the idea of retirement is that you eventually die. I hope Norwegians aren't planning doing that, as a nation...

Maybe the term we are looking after is "living on the interest", as old middle class ladies plan to do in the 19th century novels.

Re: How Norway spends its $882B global fund

#85

Post by Retric » Thu, Sep 22, 2016, 3:01 AM UTC

bkanber wrote: post #76

Retric wrote: post #50

Earlier quoted context omitted.

Which is still less than someone who bought dell stock at IPO and held for 9 years.

So? Dell's market cap at IPO was $80M. You can't just pick one good company to invest in. What would these funds do with the other, oh, $10Bn they need to invest?

These funds are not getting that kind of returns on 10B. Often you see "fund not seeking additional investment."

Re: How Norway spends its $882B global fund

#86

Post by FullMtlAlcoholc » Thu, Sep 22, 2016, 3:15 AM UTC

kristofferR wrote: post #3

"It is run frugally and transparently" is a dubious claim, at least according to claims made on NRKs Folkeopplysningen (a show like Penn and Teller: Bullshit, just better). The fund spends a lot on being actively managed, one manager received ~$60 million in bonuses in 2010. However, they won't reply when people ask if bonuses are actually financially beneficial. https://tv.nrk.no/serie/folkeopplysningen/KMTE50009215…

If you're successfully managing nearly a trillion dollars, that's a bargain. There are CEO's who run billion dollar companies into the ground and receive more compensation than that!

Re: How Norway spends its $882B global fund

#87

Post by kinkora » Thu, Sep 22, 2016, 3:51 AM UTC

seizethecheese wrote: post #82

terda12 wrote: post #79

Visiting Norway, I always thought it is kind of a weird country. On one hand it's one of the richest countries in the world. On the other hand, I've seen so many young Norwegian women work hard cleaning toilets and hotel rooms. Such jobs would be considered "low rung" at in the US but in Norway they treat their low rung jobs as something to be proud of.

Someone has to clean the toilets. You're expressing shock that Norway doesn't have a racial underclass like latinos or blacks in the US? Kind of a weird thing to comment on, Norway is a very homogenous country.

Did the OP edit the original comment? I don't see any mention of race and the OP is just stating he is impressed by how Norwegian women take pride in doing even the most menial of jobs (which is something I noted too when I was there).

Just found it strange how did you come to the conclusion of a "racial underclass" when there was no mention of it so i was wondering if it is an american thing.

Note: While not as multi-cultural as the US of course, Norway is not exclusively a "homogeneous" society and in fact, I just noted that almost 1/3 of my Norwegian friends are not "Nordic born". You obviously haven't been there if you made that conclusion yourself.

Re: How Norway spends its $882B global fund

#88

Post by rer » Thu, Sep 22, 2016, 3:52 AM UTC

In the "Top of the World" graph in the article, there's a dip for Saudi Arabia. Does anyone know why?

Re: How Norway spends its $882B global fund

#89

Post by meric » Thu, Sep 22, 2016, 4:16 AM UTC

kinkora wrote: post #87

seizethecheese wrote: post #82

Earlier quoted context omitted.

Someone has to clean the toilets. You're expressing shock that Norway doesn't have a racial underclass like latinos or blacks in the US? Kind of a weird thing to comment on, Norway is a very homogenous country.

Did the OP edit the original comment? I don't see any mention of race and the OP is just stating he is impressed by how Norwegian women take pride in doing even the most menial of jobs (which is something I noted too when I was there). Just found it strange how did you come to the conclusion of a "racial underclass" when there was no mention of it so i was wondering if it is an american thing. Note: While not as mult…

Who else would work those jobs if not Norwegians? It's implied if they didn't another group would do it.

Re: How Norway spends its $882B global fund

#90

Post by RestlessMind » Thu, Sep 22, 2016, 4:30 AM UTC

cs702 wrote: post #10

A little over decade ago, when Norway's fund was called "the Petroleum Fund" and had "only" $147B, an article in Slate magazine explained what was special about it: "Norway has pursued a classically Scandinavian solution. It has viewed oil revenues as a temporary, collectively owned windfall that, instead of spurring consumption today, can be used to insulate the country from the storms of the global economy and prov…

I (sincerely) wonder - what would happen if USA were to receive such a short-duration windfall? Will it be socked away in a rainy day fund, or will it be spent immediately in terms of infrastructure programs, or welfare programs or tax cuts/rebates?

In fact, California experienced such a windfall due to rising stock prices in recent years, and Jerry Brown had to fight with the legislature to save that in a rainy day fund instead of spending on welfare programs.