‘Socialist Paradise’ Sweden suffering from swelling debt levels, employee absenteeism
Sweden has long been celebrated as a place that the United States should mimic. A country that maintains a strong government, “free” healthcare and various safety nets to help every single Swede in the nation. Of course, much like what is often purported by Venezuelan apologists, Sweden is slowly collapsing at the seams.
The
latest news coming out of Stockholm is that about 40 percent of mortgage borrowers are not paying off their debt, while those who are paying the principal are doing so at a rate that would take roughly a century to completely pay off.
Johan and Alejandra are the kind of Swedes the IMF has been warning about - piling up debt to keep up with an ever-rising property market and fund a lifestyle of travel, maids and nights out.
The couple plan to buy a flat in Stockholm for 5 to 6 million Swedish crowns ($724,000 to $869,000), initially with an interest-only bank loan, among other spending plans.
"I may travel, I may want to invest in a new business," said Alejandra, who runs a cafe in the city centre.
Less than a month away from a general election, there are no votes in campaigning to stop the credit flowing, but there are fears that such Swedes could be the Achilles heel of a country that boasts a coveted AAA score from credit rating agencies Fitch and S&P.
Four in 10 mortgage borrowers in Sweden are not paying off their debt, and those that are repaying the principal do so at a rate that would on average take nearly a century.
Swedish property prices have nearly tripled in just two decades. In July, home prices rose at a double-digit pace from a year ago - the first time in more than four years.
The IMF has warned financial instability in Sweden is an increasing concern and urged a comprehensive set of macroprudential measures to temper soaring mortgage debt.
With Sweden's household debt-to-income ratio above 170 percent - among the highest in Europe and rising - the issue is worrying Riksbank policymakers. Out of fear of spurring more borrowing, the central bank has kept interest rates higher than warranted by inflation, but they are nevertheless at historic lows.
The main concern is that private consumption - which makes up nearly half of Swedish GDP - would suffer if rates rose or property prices fell, which could spell problems for the lenders and the economy, which is only just finding its feet.
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[All that above and we haven't even begun to add in the rapefugees]
(IMF) Financial Sector Assessment Program Update: Technical Note on Household Indebtedness: Implications for Financial Stability (Apparently, the IMF site is undergoing some work and the article cannot be accessed at this time.
Very interested in reading this because I have a feeling that the IMF is going along with the 'Unchecked mass migration from the 3rd-world is fricken awesome for everyone!) has recently chimed in and warned that financial instability is becoming a major concern in the land of Ingmar Bergman, Ikea and meatballs. The Riksbank notes that Sweden’s household debt-to-income ratio is more than 170 percent, one of the highest numbers in all of Europe.
One of the primary worries among policymakers is that private consumption could take a hit if interest rates started to climb and property prices declined – housing prices have nearly tripled in the past 20 years, which has led many to warn that Sweden is in the midst of a substantial housing bubble.
With Sweden nearing a general election, much needed remedies are being avoided entirely. Neither political side wishes to talk about raising property taxes or reducing interest rates. High private debt levels, bubbles and indecision are what define Sweden at the moment.
Over the past several years, median incomes among Swedes have been dwindling – ranked 14th in the latest OECD statistics. A declining number of Swedes are working; it maintains an unemployment rate of 8.2 percent. Sweden has also been described as the “sickest workforce,” a jest portrayal considering that the government has created incentives under the Swedish model of socialism not to work at your position of employment.
[But this... this is just sad]
It isn’t necessarily surprising that 10 percent of working age Swedes are in early retirement, 16 percent of national government’s expenditures are allocated to subsidizing workers’ sick days and employee absenteeism is at one of the highest levels in the region, or the developed world. Of course, as Swedish journalist Ulf Nilson writes, Sweden has the “sickest workforce in the world” as absence from work has doubled during the past five years.