Taiwan sees a really difficult political situation, where Ma Ying-jeou even resigns from the Kuomintang leadership, there’s new elections called in Israel and Japan to shore up political mandates, and the world seems to be at one type of turmoil or another wherever you look.
Now, if you’re thinking of going long, but don’t have enough capital to increase your positions because you’re already in for 100%, what to do? Shorting is risky in most cases, and you don’t know which market will go up next. Go long USD/SEK, or short Swedish government debt (if you’re not comfortable betting against Russia). I hate to laugh this manically about anything, but the political comedy has reached such epic proportions that it is the only thing I can do in this situation.
Background: a newly elected minority coalition government (between the centre-left Social Democrats and the leftist-green Environment Party) has to pass a budget, with either a majority for its policies in the Swedish unicameral parliament (Riksdagen), or at least a “largest minority” for its budget proposition. It could technically govern an opposition budget passing with a majority but that would be like throwing in more chickens in a hen house where there’s already a fox – acting completely against your interests when you’ve already suffered major losses. According to established procedure, the opposition parties normally vote for their own budget propositions (allowance of one per party outside the government + the government) or abstain unless they’re politically aligned with the government (as was the case before when the Social Democrats (S) ruled in minority – the Left Party and the Environment Party would vote for their budgets), allowing a minority government to rule with its budget intact, and the other parties to display approval or disapproval of it according to party lines.
In this election, two things changed. First, the party campaigning on a stance of immigration policy reform, the Sweden Democrats, gained about 13% of the vote, and the centre-right bloc will for the first time be in opposition and provide a unified, single budget between them that they will all vote for.
All political parties have sworn on their structure and name that they will not, under any circumstances, in any capacity, cooperate with the Sweden Democrats (SD), which are viewed as a xenophobic, anti-islamist (Sweden currently has active, radical islamist representatives in government), nazi-rooted and fascist party. As such, the Sweden Democrats have simply stated that they will do everything in their power to vote against fiscally irresponsible budgets. Until yesterday.
Then they stated that, because of the unsustainable costs of immigration (about 20% of the government budget previously, and with increases in this budget after everything is considered) budgeted for, they would vote for the opposition centre-right bloc budget, giving it a majority and giving the rather radical centre-left bloc an unacceptable position of ruling an opposing budget. For all the sound and fury, it’s pretty easy to see the political game: if you refuse to let a party have any power, and consistently attack it and its representatives, then what do you expect? If at every level of the political game you aim to sabotage a political party’s underpinnings, then… principle of reciprocal blows?
Yes, stating immigration as the reason and spending the better part of a few weeks to discuss it as the main problem of the budget was extremely dumb. If the strategy would have been “the budget doesn’t balance and leaves no room for inter-bloc arrangements, and thus we have to go with a budget that does and has a chance of getting a majority” then that would have been fine – this budget and the people running it are a colossal failure from start to finish.
This leaves the government two choices: calling a new election as they don’t have a public mandate for a budget they accept administering (considered the nuclear M.A.D. option for a few reasons), or cancel today’s vote, reform the budget, send it to review across the Swedish public authority space and political party and political committee structure, and then bring it to a parliamentary vote as if nothing has happened, hoping to pass this budget according to the majority or “major minority” rule.
The political commentary has been pure comedy gold thus far. Read on for more.
On election night, the Social Democratic party leader, Stefan Löfven (“l-uh-v-é-n”), spoke highly about “responsibility” for Sweden and the political system, on the first level a threat to the centre-right coalition that he would paint them political hypocrites and unfit for government if they sought support from the Sweden Democrats, and on the second level a plea to “please help me pass my laws without me having to give up any of the power I want so badly!” (what it looked like when he spoke, at least).
The problem: the Environment Party (MP) in Sweden has, for a very long time prior to the 2006 elections, been “master of the scales”, the political weight that was able to push Swedish policy towards a greener, leftist government, and they’re essentially young enough to have the political maturity of any other party’s youth division so “pragmatism” isn’t a word in their vocabulary. Them seeing a return to power in the crystal ball of the pre-election debate meant that they drummed up the rhetoric, and got cosy with Stefan Löfven who later rewarded them for taking political sides and supporting him openly by giving them government and ministry seats. A large part of the campaigning they did that gained a lot of traction was direct negative campaigning against SD, given that these two parties were fighting to be the bloc-dividing vote and becoming the third largest party in parliament, after S and the centre-right Moderate Party (M).
Now, after the election, given that the Social Democrats don’t want to work with the Left Party (V), they reached out to some of the smaller right-wing parties for support (but no concessions). These parties are in some cases even further away from the centre than M, and they have had rather deep division lines against the Environment Party (schooling and education with the People’s Party (FP) and environmentally against the Center Party (C)) and these parties have a clear right-wing profile, which matters since they’re close to the 4% parliamentary threshold of the popular vote. Losing their right-wing core voters by joining in on a left-leaning government without clear offers simply wasn’t on the table.
Now Löfven goes back to solidify his support in forming a government, giving MP a lot of ministerial posts. They also secured the leftist government-support parliamentary vote by giving V a bone by abolishing profits (but not risks) in the social security and welfare sectors “while still seeking private innovation and involvement” and overturning the schooling system agreements as much as they can, thus further alienating the centre-right bloc to the idea of ever supporting S in piecemeal legislation. At the same time, we have a finance minister describing Sweden as a banana republic, the previous policy as making Swiss cheese of Sweden’s finances, and generally doing as much as she can to discredit the current financial strength of Sweden. Ahead of the budget presentation, the finance minister even went so far as to not even comment on the budget review and areas of policy changes suggested, since all criticism was “politically motivated by entrenched right-wing interests but forth by structures put in place by the right-wing bloc to enable them to further run Sweden’s finances into the ground” (rough paraphrase, but not out of thin air or hyperbole – she has stated stuff like this in post-review interviews).
Then, in development after development, it has kept on like this: S/MP blaming the centre-right opposition for “intransigence” and “not shouldering responsibility” because the centre-left-greens can’t build support for their policies since compromise and pragmatism are so foreign to MP or V, which turns the prospects of cooperation on future policies even lower, which means that support needs to be further built and ensured on the left. Meanwhile, of course, no one talks to SD like they’re even in the room, mostly looking to go into shouting matches about which bloc hates SD more. Meanwhile, no substantial progress is being made in parliament, and Löfven who campaigned on broader bloc-spanning agreements to keep SD at bay is essentially not seen as having won a single point of contention in the budget. Thus, the budget being proposed is seen as a V + MP budget, not an S budget.
So now, when the government budget debate in Riksdagen will begin in a few hours (8 am GMT) the centre-lefts are standing at a political crossroads, blaming the centre-right for putting together a unified budget, and lambasting SD for “not taking the responsibility for Sweden” that S/MP has done everything they possibly can to strip them of! You expect a party that the current members of government have personally gone to vast lengths of negative campaigning for to keep low in the polls, to just lie flat and let you steamroll them while you’re calling them idiots, disgusting excuses for human beings and the second coming of the Third Reich? Are you expecting them to just kiss your dumb sorry asses all the way to an uncontested budget if you won’t ever even talk to them?
A large part of the controversy is that current parliamentary procedure (of voting for your own budget or abstaining, unless you vote in support of the government) will be broken. Swedish media and politicians are piling over themselves to state the consequences of foregoing parliamentary procedure and how bad this would be for whatever government rules Sweden, thus implicitly threatening the centre-right bloc to force their budgets to fail in the future, especially if a snap election is called. “Abstain from voting on the budget you have created, or we will work against the current parliamentary procedure every chance we get when we’re not in power.” The comedic part of this complete political farce however, is that the centre-lefts have already broken parliamentary procedure on a budget vote, which occurred for the 2014 budget when a threshold level of earnings to fall under state taxation was “broken out” of the budget and lowered. That on its own is a break of parliamentary procedure (budgets are normally passed in full since that is what the calculations are built on and the policy package promoted) while the centre-left bloc then got support from SD in doing this.
The largest Swedish union yesterday went out and commented on Twitter on this budget debacle that’s occurring at the moment as a “right-wing and xenophobic conspiracy” against the parliamentary procedure. (I laughed so much from this I couldn’t work for a full ten minutes.) The media is essentially piling up on top of each other to condemn the irresponsibility of SD for not keeling over and essentially acting as slaves to the government that hates them, most likely on a personal level as well, and some of this lunacy is spilling over to the currently rather intransigent centre-right bloc. At this point even stating what you’d look for in policy to cross the bloc-dividing aisle is seen as a concession, so no wonder there is intransigence on both sides. The question: which party has the easier time making concessions, the opposition, or the government? On who’s responsibility is it?
There’s that ******* word again. Everyone’s been using it to support their position. You know that thing about how you will go to hell since there’s by definition always a religion that will condemn you to it for not being a believer? Well… judging by that stance, no one in Swedish politics understands the word “responsibility” since everyone is defining it differently. What takes the cake: the main criteria for being responsible? Rolling over and being a lapdog for the person that said you should be responsible!
Why should you short Sweden now? Because this political circus has a while to go, and if the vote goes as expected today, there are three rather centre-left unfriendly positions available:
- Go back on the budget, and send it for further review. But, since according to the finance minister, all review comments (that doesn’t elevate the eminence of the politicians responsible and the political proposals they have put forth) are politically motivated attempts at undermining the ruling coalition, this is going to be… interesting. (It’s not like the idea of “enemies everywhere, opinions are dangerous!” outlook is that new to me. After all, I have read up on the Cultural Revolution in Communist China!) This has been one of my main sources of entertainment the last 15 or so hours! The further review after another volley of “right-wing irresponsibility that damages Sweden” comments probably won’t be particularly kind to a strongly leftist budget.
- Kick MP out of the government (S could do this as they are the major party and try going at it alone, finding shifting majorities for all positions) and then send in a pure S-proposed budget. That budget would be rather interesting too, since they have acted so cozy with the left and MP, that going back on everything they have defended tooth, nail and claw to reach wider political consensus will be a hodgepodge and a sweep of turned coats the likes of which I have yet to see. Still, this might just be the best alternative that the Social Democrats are looking at, as they’d be in a very fragile power but at least have a closer focus on their own issues and the possibility of proving “statesmanship” for a long time that might give them a long-run boost. However, given that V has promised to go into political opposition and actively voting against any government budget that doesn’t support certain welfare profit ideas and other leftist core issues, that wouldn’t make majority easy for Löfven.
- The other issue with this approach is that the finance minister is close to a raving lunatic crusade to burn any semblance of dignity that the centre-right budgets had, and is so far off-base judging by the review reactions she gave, that cooperation on financial matters with that finance ministry would have about as much chance for success in financial policy consensus as they would have trying to light a Zippo at the bottom of the Atlantic…
- Go to a new election. This is a nuclear option mostly because the weak government in Sweden at the moment is extremely damaging for the Social Democrats, and many that were hoping to see proper bloc-transcending agreements are disappointed and essentially seeing left-wing policies getting voted through. The centre-right probably are not any better off, given that M’s party leader resigned after the election defeat stating that he would assist in the practical matters before March/April (I forgot when their party congress is) as a technical leader of the party, but that the ideological direction has to be managed by his successor. Anna Kindberg-Batra looks like the most likely leader at the moment, but the problem is that she won’t become the actual leader before March/April, and thus has no authority to press any policy of political decisions before the election, which needs to be held before the end of March! All the smaller parties were already dangling dangerously close to the precipice of the 4% threshold, and most likely they haven’t seen spikes of popularity when they’re not even telling the inept Social Democrats what to do to placate them and what type of centre-left arrangements they find acceptable to support. Also, having the media rage against you doesn’t help public opinion. The question is if they can gain more on people’s disillusionment with the S/MP government’s ability to govern than their own intransigence has lost them, and if the likely increase in sympaties from their voters that SD will see thanks to blocking a leftist budget and a government that has essentially called said voters a greedy, lecherous bourgeoisie class that hates welfare ever since said government got elected.