Sweden Should Sell More Bonds to Tap Foreign Demand, SEB Says
Posted by WARREN MOSLER on January 19th, 2012
Total nonsense.
The do have their own currency, last I checked.
Sweden Should Sell More Bonds to Tap Foreign Demand, SEB Says
Jan 19 (Bloomberg) — Sweden should borrow more to take advantage of demand and increase investments in the largest Nordic economy, SEB AB Chief Economist Robert Bergqvist said.
The Nordic region has emerged as a haven as European leaders struggle to contain a sovereign debt crisis now in its third year. Swedish 10-year bonds are trading at a yield of 14 basis points less than benchmark German debt as of 10:56 a.m. in Stockholm.
“If you look at other countries in Europe that now must save money, cut budget deficits and bring down government debt, in Sweden we can make investments for the future, so I hope the government is using this very nice situation to borrow money to make investments in infrastructure, education,” Bergqvist said in an Jan. 17 interview Stockholm. “This would strengthen the Swedish position in the long term.”
Some foreign investors are concerned about the level of liquidity in the market, he said. “They want to see more government debt.”
January 19th, 2012 at 9:23 am
Yeah, but to them, a sovereign currency is a “foreign” concept ;)
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Tom Reply:
January 19th, 2012 at 10:36 am
@wh10,
Ha ;D
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Art Patten Reply:
January 19th, 2012 at 1:20 pm
@wh10,
Shouldn’t there be an MMT joke page??
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Unforgiven Reply:
January 19th, 2012 at 3:20 pm
@Art Patten,
It’s called Mises.org.
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roger erickson Reply:
January 20th, 2012 at 12:56 am
@Art Patten,
Or simply Orthodox Economics.
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January 19th, 2012 at 9:36 am
They should sell more bonds in foreign currency. That would be really brilliant.
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Neil Wilson Reply:
January 19th, 2012 at 9:50 am
@Geoff,
They could take Will Hutton’s advice for the UK to sell more Euro-denominated bonds and thereby help out their fellow EU members that are struggling…
I reckon Will’s completely lost it..
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RWJ Reply:
January 19th, 2012 at 4:12 pm
@Neil Wilson,
Does the UK have any euro-denominated bonds? If so, what is the rationalization for this?
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Neil Wilson Reply:
January 20th, 2012 at 6:07 am
@RWJ,
Only at the Bank of England as EuroBills and there are there (AFAICT) to provide Euro liquidity for the UK’s commercial banks.
The Debt management office only issues Sterling Gilts.
roger erickson Reply:
January 20th, 2012 at 12:58 am
@Geoff,
Is someone, somewhere bribing CBers & politicians worldwide, or were they actually approached in a quid-pro-quo scheme?
I keep feeling this many people don’t get this dumb this fast, by accident.
If they do, is that worse?
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January 19th, 2012 at 9:59 am
Foreigners want to buy SEK, want interest income and want govt as counterparty.
Looks like Sweden wants to become the next Switzerland.
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January 19th, 2012 at 10:04 am
He should just say “The government should invest more in education and infrastructure.” The government debt will follow automatically.
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walter Reply:
January 19th, 2012 at 3:13 pm
@pebird, yes, SEB got it backwards.
They can do the deficit spending they want. It would also counter the upward pressure on SEK.
Their export though seems rather capital intensive, not so labor intensive.
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January 19th, 2012 at 10:06 am
@Neil Wilson,
Nice!
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January 19th, 2012 at 10:39 am
Seems there is a shortage of government debt in Australia as well. See:
http://ftalphaville.ft.com/blog/2011/11/25/765031/manufacturing-quality-collateral/
Isn’t the private sector worldwide effectively saying it wants more net financial assets? If that’s the case, then responsible governments are in a position to cash in on this demand. They can issue debt at a negative real rate of interest (which I think the US, UK and Japan are already doing).
Also doesn’t this tie up with Warren Mosler’s claim that the natural rate of interest is zero?
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Dan Kervick Reply:
January 19th, 2012 at 2:17 pm
@Ralph Musgrave, Wouldn’t it be even better and more efficient for governments to get rid of the self-imposed constraints that require their treasuries to run positive balances in their accounts? They should just let themselves spend a certain percentage more in each period than they receive in either tax receipts or from borrowing, and inject additional net financial assets into the economy that way.
Whether the government “profits” or “loses” from its financial transactions with the private sector – in terms of the monetary assets whose quantity the government itself controls – has little to do with the public purposes served. If they are borrowing at a negative real rate then aren’t they draining financial assets from the economy over time?
Also, I don’t know that it is the role of government to provide unlimited low-risk savings instruments to the private sector, simply because there is a great demand for them. Government could be spending money directly into real activity. And if it limits the availability of government savings instruments for the money, they can force the recipients of the money to buy consumption goods, labor or capital equipment with it.
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Ralph Musgrave Reply:
January 20th, 2012 at 2:12 pm
@Dan Kervick,
Dan, I agree with your first paragraph. What I was thinking was that responsible governments / countries can profit at the expense of the less responsible. E.g. if Greeks or Zimbabwians want more net financial assets, but don’t trust their own currencies, they’ll try to acquire e.g. dollars by exporting stuff to the US. As for paying for this stuff, the US just prints dollars (which costs the US nothing to do, plus the US doesn’t pay interest on those dollars). But should Greeks or Zimbabwians want to buy Treasuries, they’ll find the real interest rate is zero or negative. So the US profits at the expense of Greeks and Zimbabwians.
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WARREN MOSLER Reply:
January 22nd, 2012 at 8:32 am
Not to forget the exports are the real costs
WARREN MOSLER Reply:
January 19th, 2012 at 4:34 pm
they ‘cash in’ by cutting taxes and or increasing public spending
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roger erickson Reply:
January 20th, 2012 at 1:05 am
@WARREN MOSLER,
You would think so, if “they” were smarter! However, that would require cashing in by further distributing public initiative. That level of logic doesn’t seem to be adequately distributed anymore.
What we have is a failure to grasp emerging context.
Our distributed options are scaling faster than the quality of our distributed decision-making. That means we’re becoming less rather than more than the sum of our parts … and faster.
That’s the only way that MORE people run out of fiat currency.
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January 19th, 2012 at 11:20 am
Creating government debt doesn’t require running a deficit; they could invest in stocks and corporate bonds, and pocket the spread. Why not?
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WARREN MOSLER Reply:
January 19th, 2012 at 4:36 pm
they already get 30% of all corporate income via the corp income tax. if they want more they can raise the tax. they don’t have to buy stock
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Max Reply:
January 19th, 2012 at 7:06 pm
They don’t have to, but why shouldn’t they? What’s the worst that can happen?
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