Sweden Wrestles With an Economic Crisis Built at Home
This article from Bloomberg may be of interest. Here is a section:
Sweden has long fallen short on its constitutional pledge to provide an affordable place to live for all of its 10.4 million people, but until recently that was masked by the growing economy which had helped disguise flaws in the system.
The shortage of affordable accommodation is hitting recruitment. The Stockholm Chamber of Commerce reported last year that three out of four heads of human resources said the housing situation was making it harder for their firms to hire new staff.
Rents are negotiated annually by landlords and the tenants association. Advocates say the system helps create a rental market in Stockholm where teachers, police officers, street cleaners and other public sector workers can afford to live alongside bankers, software developers and government officials. Yet supply hasn’t kept up with demand for decades. Average waiting times for a rent-controlled apartment is now 9.2 years, but can stretch up to 20 years in some parts of the capital.
Socialism’s only hope of functioning is to ensure the cost of living never rises. That means creating a social contract where the only means of generating personal wealth is through ingenuity and productivity. It’s a high bar and apparently unachievable for long.
Sweden has successfully created several globally competitive businesses as a result of its citizen’s creativity. That is despite an exceptionally high tax burden. The big question today is how sustainable rising living standards can be when affordable accommodation is beyond the reach of a significant proportion of the citizenry?
Rent control only works when it is available/enforced on everyone, but that also removes property as an asset class from the economy which puts additional pressure on everything else to be productive. The fact multiculturalism is a veiled form of segregation is abundantly clear in the disparity of availability in rent controlled apartments.
The Euro continues to trend higher versus the Krona. A mild consolidation is currently underway, but a sustained move below SEK11 would be required to question the consistency of the uptrend.
Both Nordea and Swedbank continue to extend their massive reactions against their prevailing uptrends.
Meanwhile, major industrials like Atlas Copco or Sandvik should benefit from improved competitiveness as the currency weakens.