121–130 of 159 posts
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?
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?
i think they want to avoid the resource curse/paradox of plenty by taking the oil money out of circulation.
https://en.wikipedia.org/wiki/Resource_curse
Countries that rely on income from natural resources are worse off because they tend to neglect everything else that might generate wealth; also with these countries a small elite tends to get hold of the oil well, this leads to authoritarian rule and other goodies.
A windfall from oil often turns out to have many toxic side effects, so it was a very wise decision to stash it far away, as far as possible.
"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…
I'd venture that at that scale you don't really have much of an option except going active. Passive is essentially swimming with the stream, but what if you're big enough to affect the stream...you're kinda active in a way already right there.
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> is worth it if that person worth $60M can eek out even a few extra basis points in returns [...] and no one else could/would have performed better for less than $60M.
That's not the point. The way compensation works, usually, is that you say, "if you do well, we'll pay you this much", where "this much" depends on how well the person does. You can't change your mind post-fact, "well, anyone could have done this well, so we won't actually pay you this much".
The parent comment sort of implied that the fund couldn't possibly have overpaid, because 60M$ is such a small fraction of profits. All I'm saying is that they might have overpaid, at the time of signing the contract, if another equally skilled manager would have taken the job for a smaller compensation package.
Earlier quoted context omitted.
It's kind of funny that the classically Scandinavian solution was mostly the work of an Iraqi geologist http://www.cbc.ca/radio/thesundayedition/the-public-god-foru...
I think similar ideas are found all over the world, but few countries outside of Northern Europe have the necessary political responsibility and lack of corruption to actually execute successfully on these ideas.
The government raided it to pay for budget shortfalls caused by offering a blanket, virtually unconditional guarantee to (private sector) bank debts, even unsecured bank debts, caused by the collapse in the Irish property market in 2008. The insane loans issued were made whole by the taxpayer at enormous cost to the wider economy. Of course, very little of those involved actually went to prison, although some higher ups in Anglo Irish (described as the worst bank in the world, even worse than Icelandic banks) were eventually, after many years, sent to prison [2]. The CEO of Anglo was even acquitted by a jury!
"The NPRF’s asset base had increased to over €22 billion in 2009. However, following the economic and banking collapse, its assets have been diverted as successive governments raided it to fund programmes or help meet the State’s fiscal commitments during the crisis."
This is a long way of saying that even in Northern Europe incompetence and fraud is possible. I wish we had the competence and level of societal trust the Norwegians have.
[1] http://www.irishtimes.com/news/politics/national-pension-res...
[2] http://www.irishtimes.com/business/financial-services/anglo-...
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.
Though I am not sure I share you opinion on who does the cleaning though. Maybe in a more rural hotel that is the case but whenever I go back to the Oslo especially more recently nearly all the "low rung" jobs are done by recent immigrants.
I noticed hotels seemed to be mostly eastern Europeans, offices a mix of Somali, Vietnamese etc and in restaurants mostly Swedes. There certainly was often discussions in the media of Norwegian youth being too spoilt for those jobs and the country depended on over qualified immigrants to fill these necessary roles. This may also be the case in many other countries.
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.
Norway has a very tight pay distribution. Most people earn close to the average/median, and those who earn more get hit pretty hard by progressive taxing.
[1]: http://www.dn.no/nyheter/energi/2010/08/30/her-tjener-renhol...
Earlier quoted context omitted.
I think similar ideas are found all over the world, but few countries outside of Northern Europe have the necessary political responsibility and lack of corruption to actually execute successfully on these ideas.
In Ireland we had a sovereign wealth fund for pensions, called the National Pensions Reserve Fund. The government raided it to pay for budget shortfalls caused by offering a blanket, virtually unconditional guarantee to (private sector) bank debts, even unsecured bank debts, caused by the collapse in the Irish property market in 2008. The insane loans issued were made whole by the taxpayer at enormous cost to the wid…
>There are five features of the Norwegian resolution I would like to highlight:
>Private solutions were explored before the government intervened.
>Share capital was written down to zero before committing public funds.
>The government acted swiftly to limit contagion, but did not provide a blanket guarantee. Liquidity support was given to illiquid, but solvent institutions.
>The government did not use an asset management company - as the other Nordic countries did later on.
The "Share capital was written down to zero before committing public funds." seems smart. At least if you wipe out the shareholders it's an incentive to behave better the next time.
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We have been taking a small cut of the hundreds of thousands of barrels of oil we have been producing daily for the past 100+ years and spending it as fast as we possibly can. Right, but the money was spent on something tho'. So the question - and I don't know the answer - is whether having that thing, at the time, was worth more than having something else, in the future.
It just seems like if we had of kept the money and re-invested it... like Norway did... that we would have been much better off in the long run.
http://www.spectator.co.uk/2008/04/why-hasnt-britain-got-a-s...
I'm curious to know: 1) Why do we have a savings Fund with double of the annual GDP? Should we have a limit? Why the excess is not invested locally? 2) Is there an existing plan to define when the money will be directed to the Norway economy? The current GDP per capita is around $68K which doesn't seem that much compared to the amount of money in the country's saving account. Why not invest in education and/or technology? 3) Why there are a few people earning so much money (e.g. ~$60M bonus) to manage the country's assets? Is the real purpose to make money or save the money for future generations?