Svein Gjedrem: Economic perspectives
Address by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), at the
meeting of the Supervisory Council of Norges Bank, Oslo, 12 February 2009.
* * *
Introduction
The poet Øyvind Rimbereid from Stavanger - his works already awarded a place in the
Norwegian literary canon1 - has been nominated for this year's Nordic Council Literature
Prize for the collection of poems entitled Herbarium. The poem "Tulip" starts with the tulip
bulb market bubble in the 1600s. A futures market for tulip bulbs had emerged in Holland
when growers discovered that infecting the tulip with a virus could produce stripes and
beautiful colours. In a short time, bulbs were trading at 25 times the normal value before the
market collapsed. A hundred years later, a tulip bulb cost less than one per cent of the price
before the collapse.2
In the words of Rimbereid:
" The year 1635
and on pollen-yellow paper
flutter tulip bulbs grown in places
unknown to most.
Or grown only in the signature
on the bill of exchange
of a seller who himself has bought
a signature from a seller
with money that itself exists
only as a signature."3
Downturn in the global economy
In September 2008, the turbulence in financial markets erupted into a full-blown global crisis.
Just before, it had appeared that the US government rescue of the mortgage corporations
Fannie Mae and Freddie Mac would calm the markets. Then on 15 September, a major US
investment bank, Lehman Brothers, with extensive operations in Europe and Asia as well as
the US, filed for bankruptcy. The next day, money markets seized up. Confidence between
banks evaporated. Liquidity dried up, interest rates rose sharply and equity prices fell.
Exchange rate volatility - the daily fluctuations in the exchange rate - showed a marked rise.
On 25 September, a major US savings bank, Washington Mutual, was placed into
receivership and its creditors incurred losses. Bond markets in turn shut down.
In the days and weeks that followed, banks tightened credit standards on new loans to
households and enterprises.
Global economic growth was already slowing, but the situation deteriorated in the last few
months of 2008. The turnaround hit hard, with synchronised effects on virtually all financial
and goods and services markets, not only in the US but also in Europe, Asia, Latin America
and Oceania.
Iceland was more vulnerable than most. There were wide swings in inflation and inflation
expectations were not well anchored. As a result, the impact on the Icelandic krona was also
considerable. The sharp depreciation of the krona left many borrowers with foreign currency
loans facing higher debt. For a time, exchanging Icelandic krona for another currency was
impossible. Nonetheless, the decisive factor was the collapse of Iceland's oversized banks.
Although they were taken over by the Icelandic authorities, there was no confidence that
Iceland's finances would be able to cope with the accompanying high level of debt. Iceland
was obliged to seek aid from other countries and from the International Monetary Fund (IMF).
Output is now expected to fall by 10 per cent this year, and private consumption to drop by
35 per cent over the next three years. At the same time, the Icelandic state will be bearing a
debt burden equivalent to more than NOK 1 million per family.
The global crisis soon affected Norway. Our banks and the flow of credit and money are
closely interconnected with global markets. Banks' foreign financing became expensive and
almost came to a halt. Banks responded by raising interest rates on corporate and household
loans and restricting lending. As the autumn progressed, an increasing number of business
sector segments were feeling the impact of contraction. In August 2008, manufacturing
enterprises in our regional network reported that they expected growth to remain high. In
November, they described the turnaround as a "heart attack". Manufacturers of automotive
parts in Farsund, Høyanger, Raufoss, Kongsvinger, Kongsberg, Hvittingfoss and Rollag felt
the impact of the slump in car sales. The engineering industry began to doubt the quality of
their order books. Prices for oil, gas, aluminium and ferro-alloys fell, as did freight rates.
The fragility of the Norwegian krone was illustrated when investors fled the currencies of
small countries, and the krone weakened considerably. When speculators withdrew, daily
fluctuations increased and hedging against exchange rate volatility became more expensive.
On Christmas Eve, the krone fell to its lowest level in ten years.
We are now in the deepest downturn in OECD countries in the postwar period. The US
economy may already have shrunk by around 21⁄2 per cent since the crisis erupted in
September. Output has fallen at the same rate in many European countries, and perhaps by
twice that rate in Japan and Korea. For a long period there were hopes that growth in China
and other emerging market economies would hold up. But they are also now severely
affected by the crisis.
Output is also contracting in Norway, but so far probably somewhat less so than abroad.
What is happening now is more than a normal fluctuation in the business cycle. The world is
facing a crisis of confidence, with faltering faith in the future and a loss of confidence in
banks, counterparties and contractual partners. The authorities have taken extraordinary
action, as in a state of emergency, deploying a wide range of established and new policy
instruments.
Five different sets of measures have been implemented:
First, central banks have supplied liquidity to banks on a much larger scale than usual and
providing loans with longer maturities. Central banks are also providing foreign currency
loans to their banks.
Second, key rates have been aggressively cut. The US entered the downturn first and had
already reduced the key rate in early autumn 2007. And as the crisis developed, the Federal
Reserve continued to lower its key rate. Here in Europe, key rates rose up to summer 2008
before being lowered substantially from October.
Third, credit policy instruments have been introduced. Several countries are guaranteeing
loans to banks. The Federal Reserve is buying mortgage-backed securities, asset-backed
securities collateralised by student loans, credit card loans and loans to small businesses, as
well as commercial paper issued directly by large businesses, a measure the central banks
in Japan and the UK also intend to implement. The UK government has announced that they
will guarantee loans to small and medium-sized firms.
Fourth, the authorities in a number of countries felt compelled to supply risk capital to banks.
Some governments have assumed ownership of financial institutions. In the UK, the
government is now a majority stakeholder in the Royal Bank of Scotland and owns over 40
per cent of Lloyds. In Germany, the government is increasing its stake in Commerzbank,
which is acquiring Dresdner Bank. In the US, the authorities have provided capital in forms
other than ordinary share capital, but in such a way that large banks are operating to a great
extent for the government's account and risk.
Fifth, to cushion the fall in output and employment, governments are increasing their
expenditure and lowering tax rates. The US government is preparing measures equivalent to
almost 5 per cent of gross domestic product. Active measures in Europe are not as
extensive. However, Europe's taxes and the public safety net act as shock absorbers.
A wide range of instruments is also being used in Norway. Banks have been provided with
short and more long-term loans by Norges Bank. Banks have also been given access to
liquid government paper in exchange for mortgage-backed securities. The key policy rate
has been lowered substantially.
As in other countries, money is not finding its way to businesses, but is accumulating in
banks. The government has therefore provided increased loans and guarantees to
Norwegian export industries, has raised lending limits for state banks and is allowing
Folketrygdfondet (Government Pension Fund - Norway) to increase its purchases of bonds.
The government is now also providing Norwegian banks with risk capital. In order to curb the
fall in activity, the government has proposed an increase in government expenditure of over
10 per cent in 2009.
What went wrong?
The current downturn followed a period of very high global and domestic economic growth,
supported by favourable trading conditions. Emerging market economies in Asia, Europe and
Latin America have accounted for an increasing share of global output. Several hundred
million people have been lifted out of poverty.
So what went wrong? Or in the words of Rimbereid:
"And the cause of the depression?
Theories conflict, as if surrounding
a virus not yet discovered.
Was it due to the far too unrestricted life of share trading?
Or was it because the hand of the state
constantly interfered with its unnatural contagion?
Or did the virus worm its way
into the calculating machine itself?"4
Substantial trade imbalances developed between industrialised countries, particularly the
US, on the one hand and emerging market economies, particularly China, on the other. This
is partly due to government budget deficits and low private saving in the US since the 1990s,
and partly due to export-led growth in China, particularly over the past few years, combined
with strong competitiveness and a managed exchange rate. In short, rich countries borrowed
and developing countries saved. The imbalances grew when oil and other commodity prices
rose markedly. Financial market participants found it too difficult to channel capital.
Longterm interest rates were too low, the search for yield too aggressive and compensation for
risk-taking too meagre.
With long-term loans in ample supply, demand for residential and other property became
excessive in almost the entire western world. The first clear signs that these developments
were not sustainable emerged in 2007 - in the US housing market, in the money market and
in banks.
Few countries benefited more than Norway from the economic upturn, which drove up prices
for oil, gas and other export commodities. At the same time, an increasing number of cheap
consumer goods were imported from new EU countries and from Asia.
In addition, EEA enlargement provided Norway with large inflows of labour, particularly from
Poland. Moreover, Norwegian firms were also quick to make use of new technology and
organise their activities effectively. Norway's disposable income increased by more than 50
per cent from 2002 to 2007, more than that of any other western country. Not surprisingly,
economic agents in Norway were optimistic about the future. Saving fell, and euphoria
spread through the housing market. Household and corporate debt surged.
Inflation slowed for a long period. Norges Bank reduced the key rate when inflation fell and
approached zero in 2003 and 2004. Production capacity had increased markedly, providing
scope for strong growth in demand for goods and services. Low interest rates underpinned
the solid growth capacity of the economy. Well before inflation picked up, the Bank began to
raise the key rate in 2005. The pace of the interest rate rise was gradually increased.
The economic turnaround in Norway occurred just over a year ago. Growth in consumption
came to a halt and house prices began to fall. Up to autumn 2008, it appeared that capacity
utilisation in the Norwegian economy would most likely decline to a normal level, inflation
would stabilise around 21⁄2 per cent and the key rate ahead could be held at what we
consider to be a normal level - between 5 and 6 per cent. But the outlook was regarded as
uncertain. Commodity prices rose and pushed up inflation in many countries. At the same
time, wage growth in Norway had become high and productivity growth was slowing. On the
other hand, the financial turbulence, if it gained momentum, could have a severe impact on
the global economy and our exports.
Then, in autumn 2008, the turbulence led to a synchronised financial and real economic
crisis in virtually every country in the world. As a result, output and employment are falling,
and Norway is no exception.
The way forward
Since then, the authorities in many countries have shown that they are prepared to use
powerful tools to fight the crisis, but financial markets are still under stress. The crisis of
confidence and credit rationing are leading to a decline in output. Corporate earnings are
falling across the board and the number of unemployed is rising, prompting new rounds of
losses on securities and in banks' books. Every week there is a news story conveying the
impression that the action being taken is not enough to stave off the downturn.
But the measures being implemented are indeed having an effect.
The flow of liquidity has improved slightly, and interbank rates have fallen. In the US and
Europe, these rates were more than 2 percentage points above the key rate in October last
year, but now the gap has been halved. As a result, the low rates set by central banks are
having a greater effect. In the US, mortgages and corporate loans have become cheaper
after the Federal Reserve began to purchase bonds and commercial paper issued by
mortgage banks and firms. In Germany, Sweden and Denmark, mortgage rates have
decreased markedly. And in Norway, borrowing rates have fallen and credit to homebuyers is
flowing again. Equity and commodity prices are still fluctuating widely, but the decline is no
longer steep.
Lower key rates, higher public expenditure and reduced taxes will push up demand for goods
and services, gradually stabilising output and employment and preventing inflation from
becoming too low.
There are also strong self-regulating mechanisms in market economies that can easily be
underestimated when times are at their bleakest.
Corporate profitability is being squeezed, but the rise in unemployment will result in lower
wage growth, which will curb the impact on earnings. Investment is falling sharply, but there
will in time be a need for new houses and commercial buildings and to replace obsolete
machinery. Households all over the world are now increasing their saving and reducing debt.
When debt eventually reaches a sustainable level, consumption will pick up.
Low interest rates curb the decline in investment and make it easier for households to repay
debt. The change in behaviour can nevertheless take time and we cannot expect consumers
in the US and Europe to drive a new upturn. The public sector will eventually have to rein in
expenditure and increase tax revenues to prevent debt from increasing. If growth in the
global economy is to be sustained, public and private investment and consumption in China
and other Asian countries will probably have to absorb a greater share of output in these
countries.
In many industrial countries, export prices have risen relative to import prices. Lower oil and
commodity prices are easing the burden.
But Norway's terms of trade are deteriorating. Some of the gains of the past few years have
now dissipated, and Norway's disposable income might fall by close to 10 per cent in 2009.
Norway will move down on the list of the world's richest countries. (And perhaps this is not
altogether a bad thing.)
Norwegian firms are affected when households the world over buy fewer cars and furniture
and fewer ships are built. Lower oil prices will probably also result in a fall in investment on
the continental shelf in the years ahead. But let us not forget that petroleum prices are still
higher than the industry dared hope just a few years ago.
The competitiveness of the Norwegian business sector declined during the upturn. Although
the depreciation of the krone since September 2008 will redress the balance somewhat, we
must nevertheless expect job losses in manufacturing. Indeed, recent years' growth in this
industry was an unexpected break in the long-term trend.
Norwegian households have built up debt over many years. In the mid-1990s, debt was one
fifth higher than income. In 2008, debt was twice as high as income.
We have no clear basis for determining what constitutes sustainable debt. People today
spend less of their income on basic necessities and have more to spend on their homes and
mortgages. Changes in credit markets have provided greater opportunities to spread
consumption over a lifetime. The public safety net is also gradually being expanded, which
may lead to lower saving.
The experience of recent years nevertheless indicates that the level of debt is on the high
side. Growth in private consumption slowed sharply when interest rates rose to more normal
levels through 2007.
Household debt is largely secured on residential property. When residential property falls in
value - and we are probably not at the end of this road yet - consumers have less leeway. A
larger number will want to reduce their debt, and banks will curtail lending.
All in all, it must be expected that households will deleverage and be more cautious in their
consumption and investment in the years ahead.
It is easy to bury one's head in the sand when the economic situation deteriorates.
But who could have foreseen in 1990 that we were on the brink of a golden decade that
would see a boom in the IT and communications industry? And who would have imagined in
2002 that Norwegian manufacturing would experience a new wave of growth?
Fortunately, there are also many examples of innovation, particularly when times have been
bad. Nokia managed to make the transition from rubber boots to new technology when the
Finnish economy collapsed at the beginning of the 1990s. In Norway, the Norwegian telecom
system was deregulated and Telenor developed into a large international company. During
the downturn at the end of the 1980s, Tandberg started developing video conferencing
systems.
In the industrial centres Mo i Rana, Raufoss and Kongsberg, rich technological communities
emerged after the collapse of government enterprises in the 1980s.
The merchants behind the grocery chains Rimi and Rema started business on a small scale
during the downturn at the end of the 1970s. The furniture producer Stokke - makers of the
world-famous Tripp Trapp chair for children - started operations in western Norway in the
midst of the economic crisis in the 1930s.
Economic policy
The measures now being implemented are intended to provide a bridge until market
economies generate new growth under their own steam.
The authorities in many countries are now testing the boundaries of active economic policy.
And some have overstepped them.
A number of countries have had their credit rating downgraded and have lost their economic
room for manoeuvre, obliging them to seek support from neighbouring countries and the IMF.
In the euro area, a number of states with high debt or large deficits are paying dearly for their
credit.
In monetary policy, the interest rate weapon is being deployed to the full. In the US, Japan
and Switzerland, the interest rate is close to zero.
But the instruments that are benefiting the economy now may weaken the growth potential
further ahead.
Large budget deficits must be reduced over time and growth in government debt preferably
scaled back.
Households may begin to save more in order to be prepared for higher taxes or lower state
benefits in the future. This will weaken the current and future effect of the measures now
being implemented.
Governments that have provided capital injections or loans to banks and firms are relieving
owners of risk. This may foster the idea that the government will also pick up the tab next
time. Risk may then again be priced too low, leading to a new round of debt accumulation.
Norway is more fortunate than most. Government finances are sound, with substantial net
wealth and a trade surplus. Unlike many other countries, our banks have not overexpanded.
The level of activity in the Norwegian economy was high without expectations of higher
inflation when the downturn occurred. Inflation was low and stable.
The state of our economy shows that the fiscal framework is sound.
From 2008 to 2009 - during the downturn - the government budget will stimulate the
mainland economy by the equivalent of 5 per cent of GDP, or NOK 90 billion. Half will
automatically be channelled through unemployment benefit, which will cushion the impact on
purchasing power for those who lose their jobs, and through lower taxes for households and
firms, without an attendant reduction in government expenditure. The remainder comprises
active measures and the gradual increase in petroleum revenue spending.
Credibility is enhanced when fiscal policy adheres to the same strategy over several years
and when the automatic stabilisers are also allowed to operate when tax revenues are high.
As a result, the Norwegian government can spend money during a downturn without
prompting a rise in consumer saving in order to meet future tax expenses and without
pushing up yields on government securities as a result. The government still has freedom of
manoeuvre.
The operational objective of monetary policy is low and stable inflation with annual consumer
price inflation of close to 2.5 per cent over time. Over the past ten years, inflation has
averaged 2 per cent, which is close to but somewhat lower than the target, and it fluctuates
to a lesser extent than previously. In the recent period of expansion, inflation rose to 3 per
cent in 2008, but was restrained without raising the key rate to a high level.5
The advantages of economic agents anticipating low and stable inflation are now clearly
evident. They can be quite sure that inflation over time will be close to 2.5 per cent. This
enables interest rate setting to be more effective. When the nominal interest rate is reduced,
the real interest rate falls accordingly, and it is this rate that influences decisions made by
households and enterprises.
Interest rate setting still provides some scope for stimulus.
When inflation is anchored, economic agents do not expect inflation to accelerate over a
period in Norway even if the krone depreciates. The krone can then decrease in value
without monetary policy having to be tightened. This will curb the decline in our export
industry. In bad times, a marked krone depreciation might even be necessary to hold up
inflation close to 2.5 per cent. In the downturns in 1990 and 1998, the opposite action was
taken: the interest rate had to be increased in order to stabilise the krone and keep inflation
in check.
Even though fiscal policy and monetary policy have had the intended effect, there have been
fluctuations in output and employment. We have experienced a period of strong credit
growth. During the upturn, the housing market was increasingly marked by the belief that
house prices would always rise. Current cyclical developments reflect falling house prices
and a necessary deleveraging among households and enterprises.
Developments in Norway, and to an even greater extent in other countries, show that
economic policy instruments are not perfect. The interplay between credit and property
prices in particular poses a challenge.
Interest rate setting influences this interplay only indirectly. The interest rate rises in good
times when inflation is expected to increase and falls when growth and inflation moderate.
The interest rate is an approximate instrument, which can be used to keep inflation in check
over time and thereby stabilise output and employment. The instrument must not be
overburdened.
Attempts to tighten monetary policy in the growth period from 2003 would, for example, have
resulted in higher capital inflows, a noticeably stronger krone and a decline in manufacturing,
even lower inflation, higher growth in real wages and more foreign currency loans to
households and enterprises. The rise in credit and house prices would probably not have
been affected to any extent and the current turnaround in the domestic economy would have
been stronger and the fluctuations for our fragile krone even more pronounced.
I cannot discuss the interaction between the housing market and household debt without
touching upon housing taxation. Housing capital represents a large share of household
wealth. The taxable benefit for owner-occupied dwellings, which in any event was based on
setting the value of dwellings at a low level, was removed in 2005, while the deduction in
income for debt interest was retained. Owner-occupiers can thereby deduct expenses in
connection with earning income but are not taxed on the benefit. With this tax wedge, the
interest rate level that is right for households is too high for firms. It shields borrowers from a
higher interest rate in upturns and thus has a stronger impact on house prices.
It would not be appropriate to increase housing taxation now, but a reform is to be
recommended when the turnaround occurs.
Economic agents can be myopic. It is short-sighted to base assessments of sustainable
levels of debt on today's variable interest rates. Long-term, fixed interest rates provide a far
better guideline in this context. Homebuyers, and the banks providing their mortgages, must
take into account that variable rates over time will be around 6 per cent, sometimes higher.
There are also other sources of fluctuations in credit and property prices.
Banking is procyclical. In upturns, loan losses are low, increasing banks' profits. Access to
equity capital is ample, providing the basis for strong lending growth.
Losses increase in downturns, and the supply of equity capital can dry up, compelling banks
to restrict their lending. The impact is stronger since the value of property used as collateral
fluctuates in step with cyclical developments. At the same time, counterparties and rating
agencies may require higher capital levels. When credit is rationed by banks with large
market shares, in regional or national terms, sound investment projects are also postponed.
This results in an adverse feedback loop, with banks incurring higher loan losses and weaker
earnings - as economic activity stalls.
Banks operate with very low levels of equity capital. A manufacturing enterprise or a firm in
the service sector should preferably have an equity ratio of between 30 and 70 per cent,
depending on the level of risk involved. Banks can operate with a far lower level of equity
capital because they are supposed to diversify risk, have sound management systems and
be well regulated and under supervision.
6
In Norway, banks' equity capital makes up six per cent of their assets. Before the Second
World War, the ratio was over 10 per cent, falling to five per cent in the postwar period.
Government capital injections resulted in a rise in equity capital at the beginning of the
1990s, but the ratio has fallen again in recent years.
Equity capital in investment banks in the US and Europe was very low, as low as 2-3 per
cent of total assets. Many of these banks have now collapsed.
The authorities in many countries are working to enhance financial market resilience. For
Norway, it would not be appropriate to return to the regulatory regime of the postwar period.
Interest rate regulation, credit budgets, a wide range of state banks, regulation of
crossborder capital movements and a fixed exchange rate are not the answer.
Instead, new and higher capital requirements must be imposed on banks.
Banks calculate how much capital they need using their own risk models. The models
capture losses and gains previously generated by lending. Equity capital requirements are
determined by previous experience of the risk exposure of investments. One drawback is
that the historical basis for the models, and hence for the risk assessments, is too limited.
With losses now rising, as a result of the abrupt and pronounced turnaround, banks must
increase equity capital. Thus the rules governing capital requirements amplify the economic
cycle.
Three changes are particularly relevant:
First, for a given risk assessment, capital requirements must be higher.
Second, banks must not be able to reduce capital below a minimum level even if they extend
loans that, according to the models, seemingly involve low risk.
Third, banks must build up strong capital buffers over and above the minimum requirement in
normal times. Then the banks would not have to increase capital when the turnaround
occurs. On the contrary, they would be able to absorb losses, thereby avoiding the need to
ration credit in bad times.
Norwegian banks do not have sufficient buffers today to safeguard their own, their
shareholders' or the economy's best interests. That is why the government is now supplying
risk capital. There should be no doubt that banks have the capital they need.
In addition, banks' funding methods make them vulnerable. Earlier, Norwegian banks
primarily obtained funds through deposits by households and enterprises. In recent years,
banks have borrowed heavily in both domestic and foreign markets. During the crisis, this
proved to involve high liquidity risk for banks. Long-term credit markets have now dried up.
The government and Norges Bank have therefore taken on the role of lender. In the future, in
regulations and in practice, deposits must again take precedence as the largest source of
funding for banks. Bonds collateralised by high quality mortgages will probably also be
important.
Higher capital requirements and new funding terms will result in higher costs for banks.
Depositors and borrowers will have to foot the bill, and interest margins will probably rise.
Banks' competitiveness will also deteriorate. The bond market and other markets where
there is direct contact between borrower and lender will gain a competitive advantage. New
requirements for banks must also be followed up, again with improved regulation.
The group comprising the twenty largest economies in the world8 are now discussing how to
tackle the crisis and prevent it happening again. It will be important to avoid protectionism
and trade wars.
Moreover, the ambition is to establish a new and more sustainable financial architecture.
Markets are integrated and banks are global, while the supervisory authorities are national
and the application of rules varies. Supervisory authorities must be strengthened and adopt a
uniform approach to banks, and regulations must be improved. National supervisory
authorities have tended to be reluctant to impose stringent requirements on their banks for
fear that their competitiveness will deteriorate. It is important to avoid such slippage in the
rules towards an agreed minimum level that is too low. For Norway, it is essential that rules
are applied stringently and uniformly in all the Nordic countries since banks based in Sweden
and Denmark have large market shares in Norway and Norwegian banks have ambitions in
Scandinavia.
In recent years, there has been little cooperation across countries in the field of
macroeconomic policy. The view has been that all is well as long as each country keeps its
own house in order. This is an important point of departure, but we have now presumably
learned that imbalances and risk arise when large countries do not sufficiently take into
account that their own choices also influence those of others.
The International Monetary Fund (IMF) must be given a more important role. The Fund must
enhance its surveillance activities and its advice must be acted upon to a greater extent.
However, this probably requires changes in the IMF's governance structure. Countries that
are now gaining in economic strength are seeking greater influence. The IMF must also
improve its reputation in these countries.
Government wealth and saving
International capital markets have been a boon to Norway. We drew on borrowing
opportunities abroad when the petroleum industry was being built up. We did the same in
order to expand welfare schemes and to finance the countercyclical policy of the mid-1970s
and the early 1990s. National oil and gas resources are now converted into equities and
bonds abroad.
Other small industrial countries are also making active use of global capital markets. Our
neighbouring country Sweden has recorded large balance-of-payments surpluses.
Switzerland has a high level of saving and a recurring surplus. Australia, on the other hand,
has been able to record a deficit since 1975.
This year we are celebrating the works of the Nobel Prize-winning author Knut Hamsun. In
the small community of Polden, in the Hamsun trilogy August, far away from large capital
markets, the inhabitants live impoverished lives, subsisting on a little fishi