Words of a Board Member CONTEMPLATING FINANCIAL CRISES Summer relaxing gives you plenty of time to reflect about things that surrounds you in a more hectic environment. Being a financial person interested in the stock market and the volatile finances of the world, I have enjoyed reading some interesting books and contemplating the conclusions. For example, the risk that Greece and other European countries would not be able to fulfill their international financial obligations: Has that happened before? Yes, according to the book with the ironic title “This time is different” by Reinhart and Rogoff, this has happened to many states since 1800, to be more precise 199 times! And it is not only what we call PIGS states or South America or during war time: France has defaulted 8 times, and most countries have had a couple of defaults. But bank crises we have had and might still be involved in, how common are these? Although the latest (not the last) financial crises might have been the largest so far, we have seen in total 270 bank crises since 1800, when every country concerned is counted as one. And this is not only history; there have been 100 of these crises after world war two! So my somewhat fatalistic conclusion is that country defaults and bank crisis are something we will see also in the future. It is very difficult to fully control risks and still have a vital financial system. Another related field is the stock market, which this year has been unusually volatile, although most companies show very promising improvements and results. Partly this is due to that more than 70% of the stock market is computer generated, and we know from the last collapse that sometimes the computer models used are too sophisticated to be understood properly. That was partly the problems with the ill-fated sub-prime loans. We see that the European Stock market (including The Netherlands and Sweden) reacts directly on what happens on the US Stock Market. Strange enough, if you look only at the stock movements per full year for the last 110 years, there is almost no correlation between USA and Sweden or the Netherlands. Probably this is due to the long term movements being more correlated to the different macroeconomic developments, while the short term movements are depending on quickly changing expectations of the financial market. For the last 110 years, the stock exchange cycles are also different: on average 52 months in the US, but 62 months in Sweden and the Netherlands. But the variations are huge. If you judge the present stock market cycle from history, you can claim with reasonable certainty that the zenith will come sometimes in the span between 2010 and 2018! So much for predicting out of historic data! Even if my personal view is that we are slowly improving our economy, there will still be problems with high unemployment. From my background in the Debt Collection business, I know that the payment pattern is important. Intrum Justitia has in their latest investigation over European payments seen that the delays in payments are now 17 days in the Netherlands and 7 in Sweden. Interesting is that although the Dutch Authorities has promised improvement, the authorities in the Netherlands are still among the worst payers, with a delay of 23 days (7 in Sweden). But that is still much better than Italy, where the Public Authorities pay after 186 days, 86 days too late! Luckily for the receivers the interest rate is low, but of course these delay cause unnecessary liquidity problems for many companies and individuals. Does all this influence the Swedish Chamber of Commerce? Of course our member companies will always feel the waves of the economy. But although this crisis has been difficult for some of our members, they have still stayed with us, knowing the importance of a good network. Especially the support from our Patrons meant that the Swedish Chamber itself has felt very little of the crises. Our financial are sound, and we feel confident to undertake the huge commitment of our 50 years Anniversary celebration.
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Dear Members, |
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The Victor(y) of Saab
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Thank you, Ambassador Hans Magnusson and welcome new Ambassador Håkan Emsgård
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The Swedish Chamber of Commerce for the NetherlandsPast events |
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