In a crippling ripple effect of the Wall Street market meltdown, Norway’s special “oil fund” may have lost nearly all of its profits garnered over the last 10 years in the space of a few months. A decade ago, the government invested around NOK 1,000 billion in the stock market. Steep drops in the market this year have potentially wiped out all of the wealth fund’s gains.
Economists suggest that the sovereign wealth fund would have more money in it today had the government simply placed the cash in the bank. The newspaper Aftenposten figures that at the end of 2007, the oil fund had earned NOK 302 billion over the first 10 years since it was established. By June 2008, the fund’s gains had been cut to NOK 165 billion.
Although Norway’s central bank managers aren’t commenting yet on third quarter losses, Aftenposten estimates that the oil fund has lost a further NOK 175 billion, effectively erasing all profits earned over the last decade. The oil fund discloses its true holdings only once a year and the third quarter figures won’t be posted until 25 November. Should the losses be accurate, it would be a staggering blow to Norway’s fund, which invests much of its money in sustainable, morally-conscious projects.
“Economists suggest that the sovereign wealth fund would have more money in it today had the government simply placed the cash in the bank”
Must . . . resist . . . Landsbanki . . . joke
As Jan says, they’re long term investments. I still can’t believe that any western government actually managed to save money instead of using it to bribe voters. Well done Norway!
Norway should have used the money to build better infrastructure (fast trains, better highways, better hospitals, LOWER TAXES, etc.) now the money is gone, shame.
Sure, it still is a rich country, but when the Piggy Bank is too large, it will always attract unscrupulous investors (swindlers)
One notes that there is no actual loss until the stocks are sold. And since it is a svings fund, that is probably not going to happen.
So the oil fund will recover its value at the same rate as the markets do. Meanwhile, a still-high oil price means more and more stocks are purchased, now at a discount price…
Ha,ha! Thats good news for all Swedes! Schadenfreude is it called in German.
I think Norway should give some of their money to the Icelandic people now if they want to show that they are so good hearted as they like the think of themselves in Norway.
A pity. Norway’s careful investment policy was highly thought of in Britain. Still, at least you’ve still got the oil & gas.
[…] which likely means that it is building up its liquid holdings abroad. I am also fairly sure that Norway’s fund isn’t the only fund in the unfortunate position of having lost a lot of money over the past […]
That’s a very good point. If only that were not a typo, we’d all be very happy!
As it is, we have corrected the error.
Thanks for reading IceNews.
Yeah, even I have that in my wallet:)
NOK 165 certainly isn’t much, just a few euros.
Economists suggest that the sovereign wealth fund would have more money in it today had the government simply placed the cash in the bank. The newspaper Aftenposten figures that at the end of 2007, the oil fund had earned NOK 302 billion over the first 10 years since it was established. By June 2008, the fund’s gains had been cut to NOK 165.