Norwegian Wood

by digby

It isn’t just Americans who have been screwed in all this:

Norway’s finance minister was being summoned to the parliament this week, to answer questions tied to investments made by the country’s oil fund in the bankrupt US investment bank Lehman Brothers.

The fund, a sovereign wealth fund fueled by revenues from Norway’s offshore oil reserves, reportedly boosted its shareholdings in Lehman Brothers dramatically earlier this year. According to The Financial Times, the fund’s stake in Lehman Brothers rose from 1.7 million shares to 17.5 million shares during the second quarter of this year.

“That’s about the dumbest thing anyone could have done,” one of Norway’s most savvy investors, Tor Olav Trøim, told newspaper Dagens Næringsliv on Wednesday. Trøim works for Norway’s wealthiest man, shipowner John Fredriksen, who has a history of risk-taking. Trøim, however, likened the purchase of Lehman stock to “gambling” that was inappropriate for what actually is a pension fund.

Lehman’s bankruptcy means Norway’s oil fund, meant to finance pensions for future generations, faces heavy losses. “This is very sad for 4.8 million Norwegians,” commented another well-known investor in Norway, Øystein Stray Spetalen.

Do we know how many of the big American pension funds are exposed like this? I assume they were smart enough not to go all in like this manager did, but it seems like there’s always some bozo who thinks he’s got a sure thing.

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