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The global recession has not quite struck down the entire Western world. The economy of Norway is booming. Housing prices are on the rise, interest rates are low, and Norway's frugal management of oil and gas money helped to build one of the world's biggest investment funds. Here's NPR's Eric Westervelt.

Captain KNUT JANSEN (Captain of Boat, Patricia): (Foreign language spoken)

ERIC WESTERVELT: Captain Knut Jansen smiles and the Viking ship tattoos on his forearms flex as he steers the boat Patricia through a narrow channel past quaint vacation homes in the calm waters outside Kristiansund in Southern Norway. And why shouldn't Jansen smile? The tour boat business is good this year, the sun is shining, and Johnny Cash is on the radio.

(Soundbite of song "Ring of Fire")

Mr. JOHNNY CASH (Singer): (Singing) I fell for you like a child. Oh, but the fire went wild.

WESTERVELT: Jansen chuckles when asked how his nation has fared so well financially when most of the rest of world has seen only economic pain and stress.

Capt. JANSEN: (Foreign language spoken)

WESTERVELT: Isn't it lucky Norway has plenty of money? he says - a big, big oil fortune.

(Soundbite of laughter)

WESTERVELT: Unlike many energy-rich nations, Norway didn't go on a spending spree after gas and oil was found in the mid-1970s. The country saved. Norway pumps much of its huge oil and gas revenue into a state investment fund. With few exceptions, the government is only allowed to spend four percent of the fund a year. Finance Ministry Director General Amund Utne.

Mr. AMUND UTNE (Director General, Norway's Finance Ministry): By the end of this year, I guess we are approaching 400 billion U.S. dollars. That is huge. Of course it is that.

WESTERVELT: A $400 billion fund for a country of just over four and a half million people. There's endless debate in Norway over how to use the money. Some would like to see tax cuts or individual payments. But for now, there's general consensus here to continue to invest globally and grow the fund for the government to draw on in the future.

But it wasn't just oil and gas revenue that saved Norway during the downturn. The nation severely tightened banking oversight after a banking crisis in the early 1990s. Since then, Norwegian banks have loaned more prudently. There was no housing bubble here. And during the frenzy of the last decade, the banks largely stayed away from exotic investments and financial products - what Finance Ministry Director Utne calls the ruin of some U.S. and European banks.

Mr. UTNE: They got all the bright guys to make all kinds of fantastic products. Very creative. And it turned out it was maybe not the best solution in the end. I think Norwegian banks are not as creative.

WESTERVELT: It's good to be boring some times.

Mr. UTNE: Yes, I think in this situation, it may be good to be somewhat boring. Yeah.

WESTERVELT: Kristin Holth, the vice president at DnB NOR, Norway's largest bank, warns that banks here have not been totally insulated from the global crisis and could feel more economic pain later this year and early next. But Holth is not that worried. It's Norway. Relax. Eat some fish.

Mr. KRISTIN HOLTH (Vice President, DnB NOR): We feel we're in an extremely strong situation because 80 percent of our activity is based in Norway. And the Norwegian economy is solid - in oil and gas, in seafood, in shipping. And those markets are cyclical, yes, but we know they are cyclical. So we know how to handle the cyclicality of it.

WESTERVELT: Along the busy shopping district near Parliament in downtown Oslo, high-end shops, cafes and restaurants are full and busy. People are taking leisurely lunches. Kids are playing, and economist Knut Anton Mork is disillusioned.

Mr. KNUT ANTON MORK (Senior Economist, Handelsbanken's Oslo Office): There is no preparation being made for a non-oil economy.

WESTERVELT: Anton Mork worries oil revenue is making Norwegians complacent, self-centered and soft. Some are spending too much time in their cabins in the woods and their family boats on the sea, he worries, while others are too eager to abuse Norway's generous social safety net. Eleven percent of the working age population in Norway is out on disability.

Mr. MORK: It's not that that the government is handing out money to everybody to live a lavish life. But it's become, with all the various programs, very easy to escape from working. I call this an oil-for-leisure program.

WESTERVELT: Are you being a crank, because, you know, the country's booming. You survived the worst economic crisis in a generation, really, with three percent growth last year while everyone else was hurting.

Mr. MORK: Sure, we've been lucky, but I don't think I'm being a crank. I think I'm saying we're living a lie. The lie is that we're taking care of everybody's needs, and we're not.

WESTERVELT: He says little is being done to deal with long-term problems like Norway's aging population and decaying rail and road network. He says it's time for Norwegians to get out of the sauna and get back to work. But his tough love message will be a tough sell to a nation whose rich oil and gas fields are expected to be productive for another 50 years or more. For now, most Norwegians seem relaxed and even a little proud of themselves that they survived the economic crisis in far better shape than any other country in Europe.

Eric Westervelt, NPR News, Oslo.

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