Reinfeldt's Point

A while ago the Swedish prime minister took up the problem of the projected increases in eldercare and pension costs in a speech. Yesterday he went out prime time with the message that we should start thinking of working to an age of 75. This message comes when the Northern States of Europe including Great Britain is convening in Stockholm for discussions. He is probably saying that it should be possible to work that long, not something all people have to do. The current average retirement age in Sweden is 63 years and that is high in Europe.

Swedish TV gave Reinfeldt a critical response with the selection of interviews down town. He took a little beating but it was a brave move. Most interesting is the comparison with Southern Europe and a large country like France which have a 35 hour week and early retirements with riots occurring when talk about raising the retirement age a couple of years. Reinfeldt is talking 10 years and speaks from a position of having among the best government finances in Europe. He is also quite tough with the comment that if you have had a heavy job, physical or psychological, you should aim to reeducating to a lighter one instead of retiring in a burnt out position.

On top of this Anders Borg, the Swedish finance minister lectured banks on not taking profit from people with mortgages when the interest rate had been lowered by the Central Bank. The question is how much profit is needed to increase growth and if private consumption or jobs in the banking sector is what is most important. Borg threatened with tax increases on the banks if the margins were not lowered. I am not sure but it seems like the government is creating a conflict with business also in Sweden. The prime minster has called business for a “särintresse” as if business doesn’t seem to have a responsibility for the country.

The mood is rapidly changing. Mario Monti, the non-elected prime minister of Italy, is talking about increasing growth after two years of austerity. The problem is that macroeconomically this is straight forward problem. Germany has to increase consumption to boost foreign demand in the Southern European countries for growth to establish itself. However, Germany is split between those who want to integrate the Eurozone, and perhaps all of Europe with the new 25 country pact, and those who want to opt out of the Euro while there is time. They are against transfers like those made in the US between rich and poor states and they don’t believe in monetary expansion due to the risk for inflation although the ECB just printed some money for banks that were not called quantitative easing. A round sum of some €500bn.

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