If your correspondent was a presidential candidate here in Finland, (a Presidential election is coming soon…), he would certainly make every effort to show that he was working for Finland and not for some employer who has very different interests!
Mr. Rehn, the head of the Finnish central bank, and a member of the European Central Bank (ECB) board, appears to have an agenda that is creating severe economic problems for Finland and many Finns because the ECB is once again messing about with interest rates and banks. Not only that, he sems quite happy to allow our banking supervisor to keep quiet about disturbing activities in our big banks… When any bank is being chided or breaks the rules, directives or laws, then we the ultimate taxpayers have the right to know. Cosying up to your mates in the banks is not acceptable.
As a presidential candidate he has not publicly commented on the ECB policies that are clearly creating serious problems for a country like Finland that has a very different economic position and situation compared to the big Eurozone members.
Here are the differences:
- Finnish borrowers, companies and home buyers, are highly exposed to short-term interest rates because the banks are not offering long term fixed rate loans. Construction companies and many shops have closed down because of the rapid increase in the cost of their own financing. People have stopped buying homes because we all expect house prices to fall, and even if they do the extra cost of borrowing make potential buyers more wary about borrowing more. Shops have closed down because consumers are facing rapid price increases in energy and food caused by Putin’s brutal invasion of Ukraine. More rate hikes by the European Central Bank have no or little impact on fuel or food prices. In fact their interest rate policy only makes things worse!
- Finnish consumers and companies are faced with high energy costs because we have a cold climate and a long country that is sparsely populated, that is cut off from land connections to the rest of Europe, except in the far north parts of the country. We have high transportation costs when exporting.
- Finland has a very long border with Russia that we seek to protect at huge cost – who can trust Russia as a friendly neighbour after their brutal invasion of Ukraine. This put us in a very different position compared to most other countries in Europe.
Yes, Mr. Rehn appears to be quite happy with what Ms. Lagarde is proposing by the fast increase in our interest rates and by continuing ECB generous financial support for our banks, even when they are making record profits!
The result of these policies is that the Finnish economy is past the brink of economic equilibrium and is sinking as the number of corporate bankruptcies increase and unemployment is about to rise – all while banks happily pay their senior folk huge bonuses and execute big share buybacks…
His relationship with banks is at best suspicious because his candidacy is backed by the Center Party which is married at the hip with the OP Banking Group, one of the largest banks here that lives off farmers and forest owners who effectively run its network of local cooperative banks.
His pet phrase is Austerity, Austerity, Austerity (except for himself and his banking friends in Finland and Frankfurt…)
… and “Austerity” here also means that he uses very few words to talk about recent suspicious banking activities. We have heard nothing from him about how our local banking supervisors have kept mum about the OP Banking Groups activities related to Russian money laundering. The banking supervision is part of the central bank’s organisation…
But we all know that some countries end up with when choosing their presidents… so his candidacy should be no surprise, no matter how galling!
Photo: Wikipedia CC from Γιώργος Α. Παπανδρέου Πρωθυπουργός της Ελλάδας (Greek Prime Minister’s Office)