Norway's $1.7T Wealth Fund Reports $40B Tech-Driven Loss
bloomberg.com
bloomberg.com
Sure, my (scrappy) portfolio went down by more than that percentually, so it looks like this Norwegian fund didn’t even get hit that hard.
[1] https://www.imf.org/en/Publications/WEO/Issues/2025/04/22/wo...
And I for one tend to agree, I hardly think Mexico’s GDP will experience growth lower than Canada’s and Canada is projected to have some growth. Compare media and reports from both countries and you’ll see a lot more worry and impact in Canada than in Mexico.
GDP is an output variable, Assets are resource variable.
If you own a forest. GDP is how much you cut the forest. Forest growth is growth of the assets. Norwegian wealth fund has similar time horizon as someone growing forest, several decades. Fluctuation in 6 quarters barely registers at the end.
So there seems to be a limit in how much these trillions in assets abroad can benefit the welfare of the Norwegian people. This has always confused me a bit, but I'm not well-versed enough in economics to articulate it correctly.
Probably the same must be true for most export-oriented economies, just that there the assets abroad are held by companies and individuals instead of a government fund.
How do we spend our savings? https://www.nbim.no/en/about-us/about-the-fund/
>Each year, the Norwegian government can spend only a small part of the fund, but this still amounts to almost 20 percent of the government budget.
>There is a broad political consensus on how the fund should be managed. The less we spend today, the better the position we will be in to deal with downturns and crises in the future. Budget surpluses are transferred to the fund, while deficits are covered with money from the fund. In other words, the authorities can spend more in hard times and less in good times. So that the fund benefits as many people as possible in the future too, politicians have agreed on a fiscal rule which ensures that we do not spend more than the expected return on the fund. On average, the government is to spend only the equivalent of the real return on the fund, which is estimated to be around 3 percent per year. In this way, oil revenue is phased only gradually into the economy. At the same time, only the return on the fund is spent, and not the fund’s capital.
What does the cycle look like here? Maybe Q1 is a lull in a statistic that affects this loss calculation.
Maybe fluctuations of less than one percent are to be expected quarter to quarter.
If, in the future, Norway will not deliver enough value to the USA in some way to justify that the USA pays them part of the value generated by those companies, why would the USA continue to do so? Wouldn't the USA just make their companies stop paying dividends to Norway or void Norway's shares in some way? There are probably many ways in which a country can prevent value flowing to foreign investors.
You might say "That would lead to a decline of foreign investments in the USA". True. But does the USA of the future care? If the "United States of AI" produces everything themselves, they might not care. They have a stronghold on ASML, TSMC is starting to build companies in the USA, they have Nvidia and all other GPU/TPU manufacturers, and they are investing big time into energy production.
What can keep the USA from becoming completely superior via AI and then stopping to deliver anything to the rest of the world?
What are you on about?
If the US voids foreign property rights, then the rest of the world will have no problem with voiding US property rights in retaliation.
Including, for example, the cash that a lot of US companies hold in Ireland to avoid US taxes? :)
And ... any claim to ASML shares? ASML is a Dutch company in case your LLM forgot...
https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?location...
As for ASML, read up on the ownership structure and why ASML for example cannot sell up-to-date tech to China. ASML is actively expanding and operating production and R&D facilities in the United States. So the USA will not be dependent on the Netherlands for photolithography.
The ownership structure only holds if the US respects other ownership structures, eh?
> If the US keeps outpacing Europe in terms of production of real stuff
What real stuff, social networking?
The ownership structure only holds if the US
respects other ownership structures, eh?
What real stuff, social networking?
Smartphones. Computers. Servers, switches. Anything that relies on an advanced chip. Anything that needs cobalt or lithium or coffee or cocoa or any other material not found in sufficient numbers or quality in the US. Ships. Hell, planes while we're at it (Boeing suck ass). Anything that needs to be affordable (like clothing).
You mean there are news about ASML trying to build production facilities on US soil?
Coffee and planes that stay in the air.
But to be more serious, the US (and Europe maybe to a slightly lesser extent) wealth is propped up on cheap labour overseas like the Roman empire was on slaves. It is absolutely possible to change that, but it's not as painless as you seem to think.
Exhibit A, almost 9% of GDP is tourism. Not only is that not productive in any sense of the word, that will crater thanks to Trump and ICE Gestapo wannabes arresting random people for minor administrative errors. Nobody sane wants to visit the US now.
Exhibit B, you assume higher GDP means something good. In the US, a good coffee, with tip and tax, can cost you $10. In France, it's 1.50-2€. GDP numbers would make you believe the US is 5-10 betters, but in reality, there's no difference other than Americans being scammed out of their money with very high prices.
Exhibit C, anything that happens in any of the US health insurance companies. Record profits, high market caps, etc. but you'd struggle to find anything of any value happening there.
Out of the 4 neccessary ingredients (photolithography, wafers, LLMs, energy) the USA already has LLMs and energy. And is pushing hard to bring photolithography and wafer production inhouse too.
No other country currently has a good shot at it.
And of course you're making the assumption that AI will be a revolution on par with the industrial one, which is still to be proven.
Plus, both rely on US GPUs.
So far, it seems like there is no possible future in which the US can be overtaken in AI matters. The USA is already leading and investing the most into the future.
... american components, russian components ... all are made in Taiwan.
> The USA is already leading and investing the most into the future.
Wasting resources on the current investment hysteria. You already forgot about blockchain.
You already forgot about blockchain
If the US decides to do that, the US dollar will be removed as the global standard and the entire planet will flock to China who will, in very short measure, annihilate the Americans.
We humans are not afraid that apes might annihilate us, right? Even though we have became a pariah species that puts the others into zoos.
Using AI instead of lithium inside batteries shows disappointing energy generation.
Other examples easily generated via AI if you want to spend the time.
But things are not as simple as you portrait them. Lets assume that all of Norway suddenly became a country full of completely useless rent-seekers living off of their wealth fund. Just nationalizing their US assets does not just mean that you are unlikely to see any assets that you hold in Norway ever again (or any exports of value, as you correctly identified).
It also means that every other nation is gonna become very "careful" in dealing with you, by reducing trade/cooperation/investments, because holding any US asset has suddenly become a liability (because it could be seized).
But you don't have to take my word-- just look at which nations do this kind of "nationalizing foreign-held assets on a whim", and note where you would put them on a "failed-state-cleptocracy" leaderboard-- you will note that the correlation is quite high, and getting the US high on that leaderboard seems not very desirable to me.
I would expect current progress in AI to deliver the equivalent of a veritable army of consultants for very cheap, available to basically everyone within a decade or so. But that is not gonna make foreign labor worthless (or labor in general-- maybe a lot of whitecollar/creative work, we'll see). But trade is always gonna have value until the earth is perfectly homogenous, simply because it allows you to get value from both being better at things than other nations (=> export) AND from being worse (=> import).
If you are gonna go full autarky, you are going to be left behind by countries that don't, because all the spread-out efforts will struggle to compete with nations that put actual focus on things, and in-housing everything will drive up costs and prices tremendously.
On what time horizon does this happen?
Ray Kurzweil thinks about the timing more than me, has a pretty good track record in terms of his predictions, and estimates it to happen around 2045.
trade is always gonna have value
As soon as one country achieves way higher intelligence than the rest of the world, things might change in a fundamental way.
> We don't trade much with apes and birds, do we? And we don't let them invest in our stock markets. We also don't pay them dividends for the land we took from them.
This sounds immensely misanthropic to me; if we hit a scenario like that, where a majority of US "entities" (?) share this kind of outlook on other humans, I strongly doubt that you (or I) are gonna be part of the "we" in that world, and I'd consider this more of a "may god have mercy" worstcase for our species than anything to be helped along.
smaller and smaller gains in utility
sounds immensely misanthropic
Also, when you disown property owners and default on debt, this doesn't lead to just less investments, it means a total collapse of the dollar.
The US will not have absolute AI dominance in a case of full self-isolation because then their current ways to suppress rivals (sanctions, trade blocks) will fall apart. And when that happens, China wins.
The "United States of AI" cannot produce everything themselves.