Monday, 26 January 2009

A Fake Interview With Mr Katainen...

(...that's coffee which make me nervous...)

Heipa, Mr Finance Minister.
How are you?

Well, hard to evaluate. Uncertainty is high.
(someone whispering at his ear)...
Humm... I'm very fine, thanks. (*)

I heard that you went into a communication exercise lately, what it is about?

People are getting too negative. So we thought it will be good to change attitudes. (*)

How did you do that?

First in coordination with statistics Finland, we decided to change the sample people we use to get the confidence data. They were too negative. We might as well review the way we calculate our inflation data, it's getting too negative too... (*)

So we could indirectly influence people by providing them better number. That's the message we want to send. (*)

A message? or a try to massage the figures??

What do you mean?

Nothing...Back in September, you put a report that forecasted a 1% growth in 2009 and stable unemployment level. Now, here is what you have to say:

"Katainen put forward three possible scenarios. In the likeliest of these, Finland’s GDP will shrink this year by more than two per cent and the unemployment rate will rise to eight or nine per cent. In the worst possible case, GDP could decline by four per cent."

Why this U-Turn?

Our models are not working. They all broke back in Mid-September. The "Lehman" butterfly effect hit our mathematical formulas right in the face. Our mathematical team has thrown their old formula and broken models and are now following stars and moon to predict where the global economy is going. (*)

Global Economy, how about Finnish Economy?

"Comparing the current situation with the previous recession, the crisis this time as being the result more of cyclical than structural reasons.

Finland is in trouble because the activities of Finnish companies are affected by factors from outside the country. This means that the recession will not turn around through actions taken by Finland itself.

It doesn't sound very good, doesn't it?

The economy is "sound" and our finances in good shape...relative to other. (*)

Everything is "sound", so why do you look nervous?

I 'm drinking too much coffee lately... (*)

(whispering something in my ear: it's all about psychology, the situation is not good... and we have no clue whatsoever how it will evolve. ...sniff, sniff...) (*)

"Finland will not make it through the slump if Finns themselves do not believe in themselves, and in the possibilities afforded by the Finnish economy"

Ok, so a Placebo strategy?

"These actions will not change the cyclical picture, but we can alleviate the symptoms of the disease, and build a bridge over the worst period"

Building a bridge?, you mean a real one?

Yes. Highway too, that can bypass at very high speed the economical problems. (*)

So you don't try to cure the disease, but you put a bandage? Curing the private debt disease by taking more public debt? is it not dangerous in the long term?

"With the additional loan, state debt will rise to 45 per cent of Finnish GDP. This is not nearly as high as in the depths of the recession of the 1990s, when the state debt peaked at 67 per cent of GDP."

Dangerous if a recovery does not happen quickly. But I agree what is the other alternative.

Thanks, and good luck.

(*) fake answer, you would have guessed :->, the rest taken from HS article.


Anton said...

About Statistics Finland, My wife has been contacted to participate to the confidence survey...(For information, we don't have any loan).

HousingFinland said...

Hi Anton,

I suppose this kind of survey can provide whatever "accommodating" result though what one need to look at the trend, not month to month data...

The data is showing something worse than 2001 and something approaching 1990's, so let's see the outcome. i suppose this time they are better prepared and hopefully they understood the true reason of the previous big recession.