from the hip

Four McDonald’s restaurants in Oslo were destroyed by pro-Palestinian demonstrators and the mobs they have attracted in Oslo today.

It started with a false SMS (text) chain message, which stated that “McDonald’s will donate all the money they are making today, Saturday, to Israel”.

That was enough. In the very tense situation in Oslo, the mob did not stop to think, nor check the sources of the message. They just acted. And totally wrecked all the McDonalds they came across in the center of the city!

For the third time there are riots and street fighting in Oslo over the conflict in the Middle East between Israel and the Palestinians. A demonstration against Israel at the Israeli embassy in Oslo turned into a regular street fight when demonstrators threw bottles and stones, and fired fireworks at the police.

As they have one two previous occasions, the police responded with tear gas and spread the crowds. Then the violent demonstration turned into more or less undisciplined street fighting, breaking windows, beating up bystanders, and wrecking havoc on the usually quiet and peaceful city of Oslo.

Norwegian public opinion has increasingly turned in a pro-Palestinian direction over the last few years. Some of the leading newspapers, most notably the once liberal Dagbladet, are relative extremist in its pro-Palestinian view-points. Also, the current left-wing government of the Social democrat party and the Socialist party is pro-Palestinian in its orientation.

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Danish newspaper Politiken reports that Danish car sales have dropped dramatically:

Private and business car sales in November 2008 were halved compared to the same month in 2007, according to the latest report from Statistics Denmark.
Businesses purchased some 3,600 vehicles in November 2008 – 2,200 fewer than in the same month last year. Private purchases also dropped dramatically – from 9,300 vehicles last November to 4,700 cars this year.
The biggest drop has been in vans and heavy vehicles. Sales of vans of between 3 and 3.5 tonnes have dropped by 60 percent compared with November last year.

It is hard to interpret this as caused by anything else than the financial crisis.

England’s debt is currently about 44 percent of GDP. In a BBC interview today, Mr Strauss-Kahn, the chief of IMF, was asked about the level of debt in the UK. His answer was interesting:

Shaun Ley, of BBC Radio 4’s The World This Weekend, asked Mr Strauss-Kahn: “Markets seem to have made their own judgements about this: it is cheaper to get insurance against big multinationals like BP and McDonald’s defaulting than it is to get insurance against UK government bonds going under. That is quite disturbing, isn’t it, when a country is viewed in that way?”

“Yes, it is,” Mr Strauss-Kahn said. “That is a good example of the fact that we are facing something which is almost unknown.”

He also said:

“We are in the biggest crisis we have experienced for 60 or 70 years and we have to take that into account,” he added.

So, that’s IMF’s viewpoint. I wonder a little bit about what kind of data the people on Wall Street or CNN have, who says this crisis will be over during the first quarter of 2009, that the IMF, OECD and the rest of us do not have?

First we learned that the recession was deeper in the US than had previously been told. Now we learn the same about the UK. It is somewhat strange that the bias of these numbers seem to consistently be in the same direction?

Anyway, here is what Times writes about this issue today:

OFFICIAL figures this week will confirm that the economy has been sliding into recession for months and could show that the downturn is deeper and started earlier than first thought.

Revised figures for gross domestic product (GDP) in the third quarter are set to show a fall of at least 0.5%. Several analysts believe that subsequent information, particularly on the dire performance of manufacturing, will see a sharper quarterly fall of 0.6%.

Whitehall officials are also braced for a revision of earlier data, which could change the timing of the recession.

Economists are getting gloomier about the outlook. The Centre for Economics and Business Research, a consultancy, predicts that Britain will contract by 3% in 2009 and a further 0.7% in 2010, implying a long, deep recession.

Capital Economics, another consultancy, now predicts a fall of 2.5% in GDP next year, with a further drop of 1% during 2010.

This compares with the Treasury’s prediction of a decline in GDP of between 0.7% and 1.25% next year, followed by a recovery in 2010, when it expects to see the economy grow by between 1.5% and 2%.

As you can see, the new figures, as well as the updated outlooks, point in the direction of a recession that is both deeper and of longer duration than has so far been indicated by official sources.

The Scandinavian countries are known all over the world for their welfare states. The Scandinavian countries have provided their citizens with low priced kindergartens, free education, great universal care programs, social security, care for the elderly, and much more.

But the current international crisis challenges the welfare states of the Scandinavian countries as well. The Danes have now started discussing the future of the Danish welfare state. Danish newspaper Politiken writes:

The prospects for the Danish economy are so bleak that reforms are needed if the country is to avoid cutbacks in schools, elderly care and other public services according to Minister of Taxation Kristian Jensen (Lib).

“With the current state of the economy there are two choices for the future – either less welfare or extensive reforms. The economy is not sustainable in the long run with the reforms and agreements that we have introduced to date,” says Kristan Jensen.

The Danish government is planning to enact a tax reform that will increase the already very high taxes in Denmark substantially. However, the secretary of Finance does not think even this will be sufficient in the currently difficult situation:

“The first step is that we carry through a hopefully ambitious tax reform this spring – and then, when that has been enacted, we must see what the status is. But my view is that a tax reform is not the only tool needed to move forward,” says Kristian Jensen.

The question now is: Will the welfare state of Denmark as we know it surivive? And: Which is the next Scandinavian country to reform its welfare state? My guess is Sweden!

The Danish newspaper Politiken writes that Denmark now is the most expensive country in the EU as far as consumer prices for goods and services is concerned! They write:

Statistics Denmark 2007 figures show Denmark to have the highest consumer prices for goods and services in the 27 European Union countries – 38 percent above the EU average.

Number two on the list is Ireland with 25 percent above the average. The lowest consumer prices among the old EU countries are to be found in Greece and Portugal where prices are 11-15 percent below the average.

The lowest prices are to be found in the new EU countries, with Bulgaria coming in at 53 percent below the EU average.

Denmark is also the most expensive country in the EU for foodstuffs and non-alcoholic beverages where Danish price levels are 43 percent above the EU average.

I am sure those numbers are correct. The only country in Europe more expensive than Denmark is Norway, which is not a member of the EU and thus not included in these statistics.

The mobile operator 3 has will now further increase the speed of its Swedish turbo wireless broadband. The new Swedish net will support turbo-3G, also called HDSPA. Theoretically it will have a speed of 21 Mbps.  Along with its network supplier Ericsson, it will also continue to extend network coverage.

Using HSDPA Evolved 3 will be one of the first mobile broadband suppliers to offer such a high speed. The new high speed net will be launched commercially during the second quarter of 2009.

The purchase of Wachovia is turning out to be quite costly for Wells Fargo, most likely much more so than the bank anticipated.

Wells Fargo will take a $40 billion charge in the fourth quarter for the Wachovia purchase, according to a report from Richard Bove, an analyst in Lutz, Fla., for Ladenburg Thalmann.

Wells Fargo is planning to take care of this by some smart balance sheet adjustments. However, Wells Fargo also has another $10-11 billion in charge due to write downs. That essentially means losses on their own load portfolio.

To fix the capitalization problem that arises, Wells Fargo intends to do a $12.6 billion equity offering and take $25 billion from the government’s troubled assets relief program, among other benefits. However, Wells Fargo is also required to close the $ 15.1 Wachovia deal by the end of the year.

I have a strong feeling Wells Fargo is entering a rough week with on Wall Street!

Also, I am certain there are more skeletons still hiding in the banks’ closets.

The Norwegian shipping magnate and multi billionaire John Fredriksen, the owner of several billion dollar shipping and oil rig companies, is canceling 4 chemical tankers ordered at the Alcock Ashdown yards in India. These tankers were ordered by Fredriksen’s daughters Kathrine and Cecilie.

The Fredriksen controlled oil drilling company Seadrill is also negotiating cancellation of four floating oil rigs, valued at 850 million dollars, with the Keppel Fels & PPL yards in Singapore. As well, Fredriksen’s Golden Ocean is negotiating cancellations of some of its ordered ships at yards in China and South Korea.

There is no indication that Fredriksen’s businesses is suffering more than other businesses due to the current crisis. Rather it is assumed that the cancellations reflect Fredriksen’s view that the next few years may be somewhat tougher than the previous years in shipping.