Why Scandinavian countries do not experiance crisis… (part 1)
GDP per capita shows the average salary of each person in the country. Well, i don’t know if for you guys its weird but for me it was expected. Most of the Scandinavian countries are high in the table with Norway being 3rd, Denmark 7th, Sweden 8th and Finland being 13th.
What goes wrong with the other European countries? Every night we listen to the news that Europe and the whole world has a really big problem with the economy! Economists had expected and politicians promised that in 2011 the economy will get better. It’s 2012, and people don’t know what to expect and believe anymore. Each day unemployment is rising. If a person hadn’t lost his job, defently he had a salary decreased (up to 50%). With the combination of raising taxes, and a salary being decreased up to 30%-50%, a family would not be able to survive, especially if there are children in the middle.
I heard about Greece and it’s debt, I’ve heard about Spain, France and Italy. i have also heard about Cyprus and Portugal, but i never heard about Norway, Sweden or Finland. You know why? because they have policies that work! Because everything works fine there!
One reason why most of the countries do not have money to pay back their loans, is that when the economy was during a boom, each government was spending their money and not save them. Why? the reason is simple! They were not expecting a crisis! On the other hand, Scandinavian countries were spending money on public goods for example roads, education, health but lots of money have been saved too! So crisis for most of the Scandinavian was nothing, “No problem, we have saved lot’s of money and we can can deal with this kind of situations”
Further more, most of the countries in Europe have the euro currency. If you noticed the countries that have the euro currency are those which have the problems right now! (Greece, Cyprus, Italy, France etc). Inflation! The right word! Inflation is the sustained and increase in price of goods and services. The exports of these countries seem expensive to their foreigners! The means X-M (Exports – Imports) gets worse. That’s why UK has not a problem with it’s Balance of Payments! They have Exports! The exchange rate plays a big role to the balance of payments and Inflation. On the other hand, even Scandinavian countries act as a union they have different currencies! So if one currency has a problem, the other Scandinavian countries would not ! Very simple!
The other thing that I don’t understand is that Europe puts a policy for all the European countries. All the countries have to follow the same policy? Each country has a different economy! How can one policy fix 27 countries? I mean it’s not logical! Sweden has survived, and it’s economy goes better. The answer is again simple! They did the opposite that Europe said! If all the European countries did (Y), Sweden did (X)! They had the money to use expensive polices, which require a lot of spending that will affect the country positively in the long run and not short run policies that most of the European countries do.
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