Sunday 28 September 2003

Pic of the day: Repossessed.

Servant to the lender

One of my favorite topics has again come to the surface, courtesy of the most famous rich man in Norway (not counting the royals, at least). Kjell Inge Røkke is such a rare thing as a Norwegian capitalist and self-made man. Over the last few years he has been in control of various large companies (by Norwegian standards at least) and living the American way of life in Norway, showing off his riches in a country where such a thing is considered bad luck if not outright obscene. When I grew up, people would still mutter "The big guy in the sky will see it" if people showed pride.

Well, someone has seen it. The banks may have seen it coming, but there were also so many business opportunities. These last few days, Røkke has been scrambling to get cash to pay off loans that are falling due. It's not that he hasn't been doing reasonably well in his business, nor even that he has burnt too much money on his boats and plane and big properties and stuff. Rather the problem is the good old one, that long term investments are tied to short term credit. When I was in trade school (kinda like high school but more specialized) our teacher told us about this, and I never forgot. But I never needed to forget in order to chase my goals, either.

No matter the outcome of this particular crisis, the guy is already getting a lot of attention he would have preferred to be without, I dare say. And he is forced to make moves that he would have preferred not to, deals that make less sense business-wise than other deals he could have waited for. If worst comes to worst, the banks will divide his business empire between them and fight like vultures over a cadaver. It has happened before. It will happen again. We just don't know when and to whom. Well, usually we don't.

The rich rule over the poor, and the borrower is servant to the lender. (Proverbs 22,7. The Bible, New International Version.) Some things don't change much over time ...

***

Like many Norwegians, I have friends and relatives in the USA, and don't want bad things to happen to the country just for fun. This makes it kinda unpleasant to see it sink into debt at a horrific rate. There are many good things to say about tax cuts, and I can see the need for a country to defend itself from what it perceives as a threat (although it might be a good idea to check better first). But if you want gigantic tax breaks, a rapidly growing military, and the public services of a developed country ... well, there is only so much money to go around. The rest you have to borrow.

That's right, dear reader. The United States of America is borrowing money, right now. No matter how you twist the numbers, no matter what nice names you use ("direct investment", "capital inflow" etc) the bedrock of truth in the case is that the country as a whole is setting itself up to borrow humongous heaps of money from the rest of the world. I guess it speaks well of the separation between church and state, then, that nobody seems to have remembered the Bible verse I quoted above. "...the borrower is servant to the lender..."

The USA has, collectively, done many things they can be proud of. I would not mind if they continued that way. But it does not matter how much you show off, if you keep borrowing money then you will be humiliated. It is the word of God, it is a law of nature, and it is the bitter experience of hundreds of thousands of common people already. There are times when borrowing money is simply your only option. But there are limits to how much you can borrow and for how long, before you start to lose control. And then you start to become a servant, or "thrall" as the Norwegian translation indelicately puts it. It starts in your head. You start to look around for ways to handle the debt, things you can do and things you can do without. There are things you can no longer say because people would point out unpleasant facts. There may be places you no longer wish to go, people you no longer wish to see. The mindset of the slave begins to settle down on you.

Repent ye! Repent ye!

OK, that's all for today. I'm off to pay bills.