Sunday, 10 May 2009

Bank Of Finland Crispy Sense of Humour

"A few years ago, the Nobel laureate, economist George Akerlof heard that his distant relative had bought a house in Trondheim for more than USD 1 million. To him, it was a lot of money anywhere, but particularly a sign of high property values in Scandinavia.

He later told this story to Robert Shiller, another well-known economist. Perhaps this was not only a Scandinavian story. They decided to look at it at greater length for the insight it offers into the patterns of booms and busts and notably the twin crises of confidence and crisis that are currently everywhere in the world.", Erkki Liikanen

Not sure if Bank Of Finland through its Super Hero aka Liikanen, Erkki Liikanen, want to send a message to the people buying property of more than half a million Euro...

Bear in mind that today, most "unware" people -first time buyer- are requesting housing loan of more than a quarter million while the "veteran" buyer are easily flirting with the half million Euro. The Rich (not so many, and not for long considering this type of investment) are then trying to buy asset of well over a million (you wonder why?) .

Never underestimate the sense of Humour of the legendary super hero of Finnish Finland, Mr Liikanen, Mr Erkki Liikanen...

Although, sometime Mr Erkki can be quite serious and raise very important question...please raise your hand if you have an answer to the following:

"The second angle is one of crisis management. At the time when the decision to join was made, Finland’s deep depression of the early 1990's was fresh in our memories. At that time, our recovery was aided by a substantial depreciation of the Finnish markka. How would the loss of exchange rate policy affect our ability to survive truly adverse economic circumstances?", Erkky Liikanen

Indeed Finland got out of the previous recession by devaluating the currency, at the time the Finnish Markka.
Today the strategy is being somehow employed by Sweden (Our Friendly enemy), by Russia (our ) and then UK and the US...

So what can Finland do? in fact nothing much...a bit like a boat in a storm..just wait for the storm to end and on the way hope that no Iceberg are on site. Regarding the Icerberg, that reminded me Mr Jurky "Di Caprio" Katainen, that was saying the economy is sound in the same way that one said that the Titanic is unsinkable...

PS: for the one that think that we are out of the wood, have a look at this chart, to really understand the kind of situation we are in.

1 comment:

HousingFinland said...

here is part of the answer given by the legendary, no need to name it:

Finland stood apart from the euro area also with respect to its geographical trade specialisation. Only one third of our exports went to the euro area, which made Finland particularly vulnerable to disturbances outside the currency union.

"Exchange rates were seen as a particular risk: fluctuations in the external value of the euro could have a disproportionally strong effect on Finnish production.

This concern was magnified by concerns that Sweden and the UK, our most important trading partners, might stay outside the currency union – or even the exchange rate mechanism – as in fact happened. "