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1000 Volvo's for 300 million, that's 300,000 euro per Volvo. Granted, the article says 'adjusted for interest and inflation'. But that seems wrong, if you had t

1000 Volvo's for 300 million, that's 300,000 euro per Volvo. Granted, the article says 'adjusted for interest and inflation'. But that seems wrong, if you had the choice in the 70's to buy a Volvo but instead you put the money on the bank, you would have only the accumulated interest by now, not anything else to offset the inflation. Calculating backwards with an average 4% interest rate for 45 years gives an original price of about 55,000 euro in 1971. For that money you could buy a villa in Sweden around then.

varjag 10y ago
You know what's truly wrong? Stealing. One doesn't get to complain for the interest on penalty they deserved half a century ago; most assuredly you don't get to keep it at national bank refinancing rate. Remember it's a penalty, not a bailout. Some commercial insurer had to absorb the cost. I'm sure if they were bought properly in the first place, the figure would be a lot less.
- michaelmrose 10y ago
  Stealing is of course wrong but if a commercial insurer paid them for the loss why would they be due perpetual interest on the insured loss?
  - varjag 10y ago
    Because the insurer wants their money back..? I'm not even entirely sure if there was an insurer involved or was it Volvo itself who had to hold the bill.
    - berntb 10y ago
      The Swedish state demands the money back, because they were the insurer and this is part of that process. (Are state insurance policies for export sales fair competition? I really don't know.)
  - deleted 10y ago
    [deleted]
hjnilsson 10y ago
They didn't not only purchase the volvos. They deal also involved mining & shipping equipment.
paganel 10y ago
The Swedish Government are as good as professional loan-sharks at getting back what they are due, and sometime using similar tactics. Case in point, my country was paid $28 million in 1929 by the Swedish Government (or a specific Swedish company, not sure) so that the Swedes would take over control over the entire matches market in Romania, becoming a monopolist, in fact. This by itself is no thing to brag home about, but that's how capitalism works. 20 years later a new regime is installed, the communists, who don't have a pretty view on capitalism much less so on monopolistic practices in which they are not the main actors, so they decide to nationalize the Romanian matches industry from under the Swedes' control. Come 1989 and the fall of Communism the Swedes become active again and now ask us for $800 million as compensation, never mind that most probably the initial investment had most certainly paid by itself in those 20 years in which it had monopolistic control over a quite big market. To make sure that they get their money back a Swedish official even bribes one of our economy ministers with around $600,000 (for which said Swedish official had some issues at home, probably nothing came out of it), and it all got settled down for "only" $120 million in 2003. This only happens because countries like Sweden have a disproportionate influence on the world stage. We (Romania) also got swindled out of $1 billion by Saddam's Iraq, the cost of us selling things and services to them in the 1980s. After Saddam fell the Iraqi Government and its babysitters (the US) never felt the urgency of paying us back, our Government also closed their eyes because the US is "actively protecting us against the bad Russian Bear from the East", plus, if a country like Romania would ask for such a big sum of money back you can be pretty sure that no-one in the Western media would pick the story up like it happened in Sweden's case.
- berntb 10y ago
  Come on, there were lots of cases in Eastern Europe where previous owners wanted compensation for property that was stolen by the communists. (This gets extra weight when demands come from inside the EU when the country wants to join the EU, of course.) Not saying the official Swedish policies aren't disgusting in their shameless double standards, of course. References to that bribe would be interesting for me, to put on FB for my Swedish friends? (I'm Swedish and have been quite a bit in Romania. This is the first time I hear about it. I don't doubt you, news like that don't really show up in Swedish media -- see previous paragraph.) I should add -- if you want to talk compensation, talk about how the whole western Europe left the eastern Europe to rot as slaves for generations. :-( Edit: After the 1980s, the US and Saddam weren't on the best of terms. :-) Edit 2: lostlogin is correct. Forget previous Edit please, I read sloppily. The comment talks about after 2003, not after the 1980s.
desdiv 10y ago
Commercial invoices have late payment penalty clauses in them. The effective interest rate in these clauses are much higher than commercial interest rates since they are meant to be punitive in nature.
amelius 10y ago
But if those 1000 stolen Volvos put the company in a rough financial situation, eventually leading to a major competitive disadvantage, then the losses could be a lot more than 300 million.
markvdb 10y ago
The '70s, '80s and early '90s had unusually high interest rates though. Through compounding with those high interest rates early on, it suddenly becomes more reasonable... 6.7% over 42 years would get you to over 300k already... Source: http://www.riksbank.se/en/The-Riksbank/Research/Historical-Monetary-Statistics-of-Sweden/Volume-II-House-Prices-Stock-Returns-National-Accounts-and-the-Riksbank-Balance-Sheet-16202012/ http://www.riksbank.se/en/The-Riksbank/Research/Historical-M... http://www.historia.se/VolumeIICh6Stocksandbonds.xls http://www.historia.se/VolumeIICh6Stocksandbonds.xls
- geon 10y ago
  Not to mention late payments often have an interest of 10 %.
deleted 10y ago
[deleted]
mickronome 10y ago
For a good part of that time the interest was actually quite a bit higher than 4%, so it wouldn't surprise me if the calculation with actual interest rates is absolutely spot on. Swedish government tends to be like that more often than not: Unreasonable, but rarely completely wrong in a way you actually can point out - or prove - for that matter.
quantgenius 10y ago
4% is probably a reasonable rate given current market interest rates for a debt you expect to be paid back. We are in the middle of an epic central bank created bubble for debt securities. Rates have never been this low. 4% is nowhere near a reasonable average rate over the period concerned. In the 70's, the yields on US Treasuries were in 10% range. As late as the early 1990s commercial real estate loans backed by good collateral were in the high single digits. What seems like a small difference in rates can easily make an order of magnitude difference over a 40-50 year period.

varjag 10y ago

You know what's truly wrong? Stealing. One doesn't get to complain for the interest on penalty they deserved half a century ago; most assuredly you don't get to keep it at national bank refinancing rate. Remember it's a penalty, not a bailout. Some commercial insurer had to absorb the cost. I'm sure if they were bought properly in the first place, the figure would be a lot less.

michaelmrose 10y ago
Stealing is of course wrong but if a commercial insurer paid them for the loss why would they be due perpetual interest on the insured loss?
- varjag 10y ago
  Because the insurer wants their money back..? I'm not even entirely sure if there was an insurer involved or was it Volvo itself who had to hold the bill.
  - berntb 10y ago
    The Swedish state demands the money back, because they were the insurer and this is part of that process. (Are state insurance policies for export sales fair competition? I really don't know.)
- deleted 10y ago
  [deleted]

hjnilsson 10y ago

They didn't not only purchase the volvos. They deal also involved mining & shipping equipment.

paganel 10y ago

The Swedish Government are as good as professional loan-sharks at getting back what they are due, and sometime using similar tactics. Case in point, my country was paid $28 million in 1929 by the Swedish Government (or a specific Swedish company, not sure) so that the Swedes would take over control over the entire matches market in Romania, becoming a monopolist, in fact. This by itself is no thing to brag home about, but that's how capitalism works. 20 years later a new regime is installed, the communists, who don't have a pretty view on capitalism much less so on monopolistic practices in which they are not the main actors, so they decide to nationalize the Romanian matches industry from under the Swedes' control. Come 1989 and the fall of Communism the Swedes become active again and now ask us for $800 million as compensation, never mind that most probably the initial investment had most certainly paid by itself in those 20 years in which it had monopolistic control over a quite big market. To make sure that they get their money back a Swedish official even bribes one of our economy ministers with around $600,000 (for which said Swedish official had some issues at home, probably nothing came out of it), and it all got settled down for "only" $120 million in 2003. This only happens because countries like Sweden have a disproportionate influence on the world stage. We (Romania) also got swindled out of $1 billion by Saddam's Iraq, the cost of us selling things and services to them in the 1980s. After Saddam fell the Iraqi Government and its babysitters (the US) never felt the urgency of paying us back, our Government also closed their eyes because the US is "actively protecting us against the bad Russian Bear from the East", plus, if a country like Romania would ask for such a big sum of money back you can be pretty sure that no-one in the Western media would pick the story up like it happened in Sweden's case.

berntb 10y ago
Come on, there were lots of cases in Eastern Europe where previous owners wanted compensation for property that was stolen by the communists. (This gets extra weight when demands come from inside the EU when the country wants to join the EU, of course.) Not saying the official Swedish policies aren't disgusting in their shameless double standards, of course. References to that bribe would be interesting for me, to put on FB for my Swedish friends? (I'm Swedish and have been quite a bit in Romania. This is the first time I hear about it. I don't doubt you, news like that don't really show up in Swedish media -- see previous paragraph.) I should add -- if you want to talk compensation, talk about how the whole western Europe left the eastern Europe to rot as slaves for generations. :-( Edit: After the 1980s, the US and Saddam weren't on the best of terms. :-) Edit 2: lostlogin is correct. Forget previous Edit please, I read sloppily. The comment talks about after 2003, not after the 1980s.

desdiv 10y ago

Commercial invoices have late payment penalty clauses in them. The effective interest rate in these clauses are much higher than commercial interest rates since they are meant to be punitive in nature.

amelius 10y ago

But if those 1000 stolen Volvos put the company in a rough financial situation, eventually leading to a major competitive disadvantage, then the losses could be a lot more than 300 million.

markvdb 10y ago

The '70s, '80s and early '90s had unusually high interest rates though. Through compounding with those high interest rates early on, it suddenly becomes more reasonable... 6.7% over 42 years would get you to over 300k already... Source: http://www.riksbank.se/en/The-Riksbank/Research/Historical-Monetary-Statistics-of-Sweden/Volume-II-House-Prices-Stock-Returns-National-Accounts-and-the-Riksbank-Balance-Sheet-16202012/ http://www.riksbank.se/en/The-Riksbank/Research/Historical-M... http://www.historia.se/VolumeIICh6Stocksandbonds.xls http://www.historia.se/VolumeIICh6Stocksandbonds.xls

geon 10y ago
Not to mention late payments often have an interest of 10 %.

deleted 10y ago

[deleted]

mickronome 10y ago

For a good part of that time the interest was actually quite a bit higher than 4%, so it wouldn't surprise me if the calculation with actual interest rates is absolutely spot on. Swedish government tends to be like that more often than not: Unreasonable, but rarely completely wrong in a way you actually can point out - or prove - for that matter.

quantgenius 10y ago

4% is probably a reasonable rate given current market interest rates for a debt you expect to be paid back. We are in the middle of an epic central bank created bubble for debt securities. Rates have never been this low. 4% is nowhere near a reasonable average rate over the period concerned. In the 70's, the yields on US Treasuries were in 10% range. As late as the early 1990s commercial real estate loans backed by good collateral were in the high single digits. What seems like a small difference in rates can easily make an order of magnitude difference over a 40-50 year period.