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A little over decade ago, when Norway's fund was called "the Petroleum Fund" and had "only" $147B, an article in Slate magazine explained what was special about

by cs702 10y ago

A little over decade ago, when Norway's fund was called "the Petroleum Fund" and had "only" $147B, an article in Slate magazine explained what was special about it: "Norway has pursued a classically Scandinavian solution. It has viewed oil revenues as a temporary, collectively owned windfall that, instead of spurring consumption today, can be used to insulate the country from the storms of the global economy and provide a thick, goose-down cushion for the distant day when the oil wells run dry."[1] Since then, the fund has grown six-fold. [1] http://www.slate.com/articles/business/moneybox/2004/10/avoiding_the_oil_curse.html http://www.slate.com/articles/business/moneybox/2004/10/avoi...

tim333 10y ago
It's kind of funny that the classically Scandinavian solution was mostly the work of an Iraqi geologist http://www.cbc.ca/radio/thesundayedition/the-public-god-forum-farouk-al-kasim-the-man-behind-norway-s-oil-wealth-listener-mail-documentary-the-tracks-1.2905028/farouk-al-kasim-the-man-behind-norway-s-oil-wealth-1.2905029 http://www.cbc.ca/radio/thesundayedition/the-public-god-foru...
- distances 10y ago
  I think similar ideas are found all over the world, but few countries outside of Northern Europe have the necessary political responsibility and lack of corruption to actually execute successfully on these ideas.
  - patrickk 10y ago
    In Ireland we had a sovereign wealth fund for pensions, called the National Pensions Reserve Fund. The government raided it to pay for budget shortfalls caused by offering a blanket, virtually unconditional guarantee to (private sector) bank debts, even unsecured bank debts, caused by the collapse in the Irish property market in 2008. The insane loans issued were made whole by the taxpayer at enormous cost to the wider economy. Of course, very little of those involved actually went to prison, although some higher ups in Anglo Irish (described as the worst bank in the world, even worse than Icelandic banks) were eventually, after many years, sent to prison [2]. The CEO of Anglo was even acquitted by a jury! "The NPRF’s asset base had increased to over €22 billion in 2009. However, following the economic and banking collapse, its assets have been diverted as successive governments raided it to fund programmes or help meet the State’s fiscal commitments during the crisis." This is a long way of saying that even in Northern Europe incompetence and fraud is possible. I wish we had the competence and level of societal trust the Norwegians have. [1] http://www.irishtimes.com/news/politics/national-pension-reserve-fund-should-now-be-revived-says-brian-hayes-1.2119297 http://www.irishtimes.com/news/politics/national-pension-res... [2] http://www.irishtimes.com/business/financial-services/anglo-trial-three-ex-bankers-jailed-over-7bn-fraud-1.2738637 http://www.irishtimes.com/business/financial-services/anglo-...
    - tim333 10y ago
      The Norwegians also had a very sensible approach to their banking crisis compared to the US and Ireland: >There are five features of the Norwegian resolution I would like to highlight: >Private solutions were explored before the government intervened. >Share capital was written down to zero before committing public funds. >The government acted swiftly to limit contagion, but did not provide a blanket guarantee. Liquidity support was given to illiquid, but solvent institutions. >The government did not use an asset management company - as the other Nordic countries did later on. The "Share capital was written down to zero before committing public funds." seems smart. At least if you wipe out the shareholders it's an incentive to behave better the next time.
RestlessMind 10y ago
I (sincerely) wonder - what would happen if USA were to receive such a short-duration windfall? Will it be socked away in a rainy day fund, or will it be spent immediately in terms of infrastructure programs, or welfare programs or tax cuts/rebates? In fact, California experienced such a windfall due to rising stock prices in recent years, and Jerry Brown had to fight with the legislature to save that in a rainy day fund instead of spending on welfare programs.
- hansjorg 10y ago
  See e.g.: https://en.m.wikipedia.org/wiki/Alaska_Permanent_Fund https://en.m.wikipedia.org/wiki/Alaska_Permanent_Fund The fund pays a yearly dividend to permanent residents. The article also mentions that one of the reasons for setting up the fund was dismay with how the initial $900 mill. of oil income was spent.
  - mbrameld 10y ago
    Now research the current state of the fund, there is a bit of controversy going on right now. The governor has unilaterally limited the payout this year and a lot of folks aren't happy.

by cs702 10y ago

tim333 10y ago

It's kind of funny that the classically Scandinavian solution was mostly the work of an Iraqi geologist http://www.cbc.ca/radio/thesundayedition/the-public-god-forum-farouk-al-kasim-the-man-behind-norway-s-oil-wealth-listener-mail-documentary-the-tracks-1.2905028/farouk-al-kasim-the-man-behind-norway-s-oil-wealth-1.2905029 http://www.cbc.ca/radio/thesundayedition/the-public-god-foru...

distances 10y ago
I think similar ideas are found all over the world, but few countries outside of Northern Europe have the necessary political responsibility and lack of corruption to actually execute successfully on these ideas.
- patrickk 10y ago
  In Ireland we had a sovereign wealth fund for pensions, called the National Pensions Reserve Fund. The government raided it to pay for budget shortfalls caused by offering a blanket, virtually unconditional guarantee to (private sector) bank debts, even unsecured bank debts, caused by the collapse in the Irish property market in 2008. The insane loans issued were made whole by the taxpayer at enormous cost to the wider economy. Of course, very little of those involved actually went to prison, although some higher ups in Anglo Irish (described as the worst bank in the world, even worse than Icelandic banks) were eventually, after many years, sent to prison [2]. The CEO of Anglo was even acquitted by a jury! "The NPRF’s asset base had increased to over €22 billion in 2009. However, following the economic and banking collapse, its assets have been diverted as successive governments raided it to fund programmes or help meet the State’s fiscal commitments during the crisis." This is a long way of saying that even in Northern Europe incompetence and fraud is possible. I wish we had the competence and level of societal trust the Norwegians have. [1] http://www.irishtimes.com/news/politics/national-pension-reserve-fund-should-now-be-revived-says-brian-hayes-1.2119297 http://www.irishtimes.com/news/politics/national-pension-res... [2] http://www.irishtimes.com/business/financial-services/anglo-trial-three-ex-bankers-jailed-over-7bn-fraud-1.2738637 http://www.irishtimes.com/business/financial-services/anglo-...
  - tim333 10y ago
    The Norwegians also had a very sensible approach to their banking crisis compared to the US and Ireland: >There are five features of the Norwegian resolution I would like to highlight: >Private solutions were explored before the government intervened. >Share capital was written down to zero before committing public funds. >The government acted swiftly to limit contagion, but did not provide a blanket guarantee. Liquidity support was given to illiquid, but solvent institutions. >The government did not use an asset management company - as the other Nordic countries did later on. The "Share capital was written down to zero before committing public funds." seems smart. At least if you wipe out the shareholders it's an incentive to behave better the next time.

RestlessMind 10y ago

I (sincerely) wonder - what would happen if USA were to receive such a short-duration windfall? Will it be socked away in a rainy day fund, or will it be spent immediately in terms of infrastructure programs, or welfare programs or tax cuts/rebates? In fact, California experienced such a windfall due to rising stock prices in recent years, and Jerry Brown had to fight with the legislature to save that in a rainy day fund instead of spending on welfare programs.

hansjorg 10y ago
See e.g.: https://en.m.wikipedia.org/wiki/Alaska_Permanent_Fund https://en.m.wikipedia.org/wiki/Alaska_Permanent_Fund The fund pays a yearly dividend to permanent residents. The article also mentions that one of the reasons for setting up the fund was dismay with how the initial $900 mill. of oil income was spent.
- mbrameld 10y ago
  Now research the current state of the fund, there is a bit of controversy going on right now. The governor has unilaterally limited the payout this year and a lot of folks aren't happy.