Slovakia and the crisis as compared with other Central european countries and balkan countries

The graphs speak for themselves

The Slovak economy was affected by the global crisis but has shown one of the best rates of recovery. Only Poland has fared better, but its huge size makes it both less prone to downturns and more sluggish in upticks. Slovakia is projected to regain a 4% GDP pace this year and next, which is fairly goldilocks.

Slovakia is a big beneficiary of the euro and will therefore stay in it forever

Richard Sulik who is mentioned here does not have the power to force his opinion, and anyway he only talking about a plan b should things take an unexpected turn such Germany leaving the euro itself. If one reads his comments in Slovak he is stating the obvious, if the euro's chief instigators ( Germany and France) throw in the towel and decide to give up on being parts of the biggest trading block in the world then Slovakia should prepare for it.

Journalists with not much to write should note that this hypothetical is firmly on pig flying territory. There is an anglosaxon assumption that the Euro and the EU are unecessary so the breaking of the euro is a matter of time back to the natural order of things... Additionally talking to british politicians one gets the impression that deep down they think that it was all a matter of a Helmut Kohl & Miterran love-in in the 1980s and that the future is bright for tiny countries with mercantilist policies. This thinking is ofcourse deluded and a product of lazy economic nationalism, self interest disguised as idealism, breathtaking arrogance, and a short termism that diplomatically has led Britain to now have the smallest influence in europe in its entire history. As the small print says in all that rubbish investment products sold in UK banks "past performance does not guarantee future returns". The world where the UK could exploit vast swathes of the world because of the primitiveness of the natives are over. The world is now more sophisticated and massive trading blocks are emerging, and you better be part of one of them. Slovakia's establishment has understood that and is integrating into the most viable scheme possible to address the globalising challenge. To put it in other words, even if the euro were to fail, it would be replaced by a successor!

Things would have to get massively worse for the euro to be a liability rather than an advantage for Slovakia.
For this small country this border/labour/monetary (and in the future possibly even fiscal) union with Germany is of strategic importance, as it is for other small fiscally conservative nations dotted around germany, such as the Netherlands, Denmark, Finland, Czech republic, and not least Austria. All these nations share common values and high Human Development Index as well as raw GDP performance.

Additionally under the EU, schengen, and euro umbrella, Slovakia has redressed the economic isolation that came about from the iron curtain and the nationalisms of the 30s and 40s. Membership of this Neo-Austrohungarian economic zone, Czechs, Austrians etc is powering the economy and integrating it in big infrastructure investments that will further entrench these ancient economic links.

Economic integration under the euro is not an ideology or due to romantic visions of internationalism, but because globalisation is making this a necessity. If there are countries that at some point reintroduce currencies, they will have lost in the challenge of the emerging competitors (China, India) and will face a deflationary path to irrelevance and further nationalism. One has to only look at states with independent currencies and with no european perspective. It reads like a list of basket-cases in europe that are going nowhere (Moldova, Serbia, Montenegro, Albania, Ukraine) So the answer to the article is probably that Slovakia would probably the least likely state to leave the Euro.

The real question also is why so much focus on the euro and so little attention is paid to the printing presses of the dollar?? That is far more newsworthy..


Should Slovakia quit the euro?

December 13, 2010 4:02pm | 

Slovakia is the newest member of the euro, and as the common currency lurches from crisis to crisis, there seem to be increasing doubts in Bratislava as to the wisdom of accession. (actually the epicenter of the debate is why the club is bailing out wayward members that are richer than slovakia). 
The qualms come from Richard Sulik, the speaker of parliament and leader of the SaS party, a new grouping that is part of the centre-right governing coalition. In an article for the Hospdarske Noviny newspaper, Sulik denounces the policies that got Greece and Ireland into trouble, and looks fearfully at the potential threat facing Spain and Italy. In response, he says Slovakia should come up with a “Plan B” and contemplate reintroducing the koruna.
Sulik, a self-made millionaire who made his fortune in setting up a chain of copy shops, was a member of the team that helped create the Slovak economic miracle more than a decade ago by introducing flat taxes and slashing bureaucracy.
Finance minister Ivan Miklos, himself a key player in those reforms, has a different view: everything possible should be done to keep the euro strong.
Slovakia was initially thrilled to be spared the turmoil felt by its central European neighbours when the economic crisis hit the region. Flush Slovaks went cross-border shopping to Poland and Hungary in 2009 to spend their euros in countries where the national currency had plummeted in value. Foreign investors like Volkswagen were also pleased because they no longer faced currency risk in Slovakia, but still had access to much cheaper workers than in Germany.
However, Slovakia baulked at paying €800m ($1.1bn) to bail out Greece, and now faces the prospect of more demands as other peripheral eurozone countries fall into trouble.
“I think that it reflects a general frustration of the Slovak government,” says Lars Christensen, emerging markets analyst with Danske Bank. “The feeling is that when you join a club you should follow the rules, and not pay for the people who have broken the rules.”
Next door meanwhile, the Czech Republic, never an enormous euro enthusiast, has made it clear that it is in no rush to join the common currency.
“Nobody can force us into the euro,” Petr Necas, the prime minister, said recently, while Vaclav Klaus, the Eurosceptic president, has asked the government to work out if it can renege on the promise made to eventually adopt the euro when the Czech Republic joined the EU in 2004.

The new British prime minister is politically small-minded and lacking in substance. So much for the special relationship.

Britain under Tony Blair sacrificed men to fight in iraq in a big way, the UK has been supporting everything emanating from the US, with a fervour that can only be attributed to the UK getting something fairly substantial out of the "relationship".

Alas it seems that the nature of the UK's relationship with the USA seems to fundamentally be akin to that of a naive groupie and an ageing rock star... Love or commitment do not seem to be working both ways but it seems that now not even kind words are in the offing. What was the success of Tony Blair then??? the economy was a massive destructive bubble, and now accoriding to wikileaks:

David Cameron, Brown's successor as the guardian of British-American relations? The new British prime minister, American diplomats reported after a conversation with a high-ranking British banker, was politically small-minded and lacking in substance.

The only thing that can help this situation is European humility. British foreign minister, William Hague, has said: "The world has changed and if we do not change with it, Britain's role is set to decline." The new coalition in London now avoids using the term "special relationship."

well that didn't last long... and nothing of substance was gained. So why oh why is Tony Blair going around and pretending to be a great ex-statesman? He is a failed salesman that has fallen for his own pitch...

Bratislava has a new mayor

Bratislava has elected Milan Ftacnik as its new mayor.

He is by most accounts a modern person with an engineering background.
he just so happens to look like this however :)

the fear...

A song for our times...

I want to be rich and I want lots of money
I don't care about clever I don't care about funny
I want loads of clothes and fuckloads of diamonds
I heard people die while they are trying to find them

And I'll take my clothes off and it will be shameless
'Cuz everyone knows that's how you get famous
I'll look at the sun and I'll look in the mirror
I'm on the right track, yeah I'm on to a winner

I don't know what's right and what's real anymore
And I don't know how I'm meant to feel anymore
And when do you think it will all become clear?
'Cuz I'm being taken over by the Fear

Life's about film stars and less about mothers
It's all about fast cars and cussing each other
But it doesn't matter cause I'm packing plastic
And that's what makes my life so fucking fantastic

[ Lily Allen Lyrics are found on ]
And I am a weapon of massive consumption
And its not my fault it's how I'm programmed to function
I'll look at the sun and I'll look in the mirror
I'm on the right track, yeah we're on to a winner

I don't know what's right and what's real anymore
And I don't know how I'm meant to feel anymore
And when do you think it will all become clear?
'Cuz I'm being taken over by the Fear

Forget about guns and forget ammunition
'Cuz I'm killing them all on my own little mission
Now I'm not a saint but I'm not a sinner
Now everything is cool as long as I'm getting thinner

I don't know what's right and what's real anymore
And I don't know how I'm meant to feel anymore
And when do you think it will all become clear?
'Cuz I'm being taken over by the Fear

© Emi Blackwood Music Inc.;Tucano Music;Universal Music Publishing

On modern food

this is a fascinating video i am sure will stay with you next time you go to the supermarket

Essential reading on what is going on in Bratislava and Vienna (Wien)

The Month of Photography Bratislava is organized as part of the European Month of Photography in Paris, Vienna, Berlin, Roma, Moscow, Luxembourg and Bratislava.


    More information about the programme

    BHS – festival of returning performers and new discoveries

    46th Annual Bratislava Music Festival (BHS), 19. 11. – 6. 12. 2010.
    Even the most perfect recording won’t replace moments when music is being born, created in the harmony between the artist and the audience. That’s why – year after year – classical music fans await the Bratislava Music Festival. The forty sixth annual festival will once again take place between November and December. The programme will include big name artists and orchestras from 25 countries: it will be a festival of returning performers and new discoveries.

    Ľubica Orgonášová is a Slovak soprano who owns the world stages. The concert at the BHS will celebrate her return after 30 years and the audience will discover that her interpretation of Mozart is without competition. She will perform with Camerata Salzburg.
    A different flavour in Bratislava will be the return appearance of conductor Valery Gergiev with the Mariinsky Theatre Orchestra. This magician has been marked as the most exciting talent on the stage in recent years and the richness in colour of his orchestra has no match. Some can recall that as a young man at the beginning of his starry career, he stood on the Reduta stage in 1980.
    BHS is also a parade of world renowned orchestras: The Czech Philharmonic, The Hague Philharmonic, Budapest Festival Orchestra or the Krakow Philharmonic – with conductors Ken Ichiro Kobayashi, Neeme Järvi, Iván Fischer or Pawel Przytocki. Of course, it is an opportunity to welcome orchestras with an exotic flavour: The Armenian Philharmonic recently had great success at the BHS; let’s believe that this will be repeated. The World Expo in Shanghai inspired festival organisers to introduce the culture of this city here – for the first time, the Chinese Shanghai Philharmonic will visit the BHS with conductor Mahai Tang, whose artistic career started with Herbert von Karajan himself and with pianist Mélodie Zhao, who won Hummel’s Piano Competition in Bratislava.
    Once again, excellent soloists will perform at the BHS: pianists Piotr Paleczny, Pavel Gililov, Henri Sigfridsson, Jenö Jandó, Emmanuel Ax, Mikuláš Škuta and Peter Pažický; violinists Václav Hudeček from the Czech Republic and Slovak Dalibor Karvay; cellists Frenchman Gautier Capuçon as well as the famed Italian, Giovanni Sollima. An evening of stars is promised by the Bratislava and world famous duo: Vadim Repin – violin, Boris Berezovskij – piano.
    It must be mentioned that the BHS is acknowledging the Belgian EU presidency and has therefore invited Flemish ensemble, Anima Eterna, with the ever fresh Monteverdi’s madrigals. Since Slovakia has presidency of the Vysehrad Four, a concert is being prepared in which pieces from composers from all four countries will be heard, interpreted by artists from the V4 countries.
    Apart from foreign artists, the Slovak Philharmonic, Slovak Radio Symphony Orchestra, ŠKO Žilina and the Bohdan Warchal Chamber Orchestra, celebrating 50 years of existence, as well as other artists, will perform at the BHS.
    Audiences will certainly enjoy listening to pieces from big names whose anniversaries we are commemorating: 200 years since the birth of the darling of the Warsaw and Paris salons and the genius of romanticism, Fryderyk Chopin, as well as Robert Schumann, who worshiped the joining of music and poetry. Audiences will also be able to appreciate a master whose works are full of dazzling effects together with great pain - the excellent Gustav Mahler, who was born 150 years ago.
    Once again this year, part of the Bratislava Festival will be the international stage of young interpreters, New Talent – SPP Foundation Award – this is a platform for discovering talent and presenting new artists, future great personalities in the music world.

    More detailed information at:

The president of the EU says euroscepticism leads to mercantilistic trade and foreign policy and eventually to war

The president of the EU says euroscepticism leads to mercantilistic trade and foreign policy and eventually to war.

Mr Van Rompuy linked hostility to the EU, and the idea that countries could leave the Union, to a revival of aggressive nationalism.

"We have together to fight the danger of a new Euroscepticism. This is no longer the monopoly of a few countries," he said. "In every member state, there are people who believe their country can survive alone in the globalised world. It is more than an illusion: it is a lie."

The controversial comments made on Tuesday come less than a fortnight after David Cameron, the Prime Minister, declared that he was a Eurosceptic after his gruelling Brussels summit battle to block a sharp increase in the EU budget at a time of national austerity.

On China and its rise

China wants a unipolar asia with itself as the leader. To this end it has facilitated a nuclear armed unstable country in the neighbourhood of ALL its major potential adversaries. N Korea to pin Japan,Pakistan to pin India(It also claims a Japanese island and an entire Indian state as its territory) and now a nuclear Iran to pin the US in the middle east.While it carries on a relentless mercantalist expansion of its economy for another decade.

To say nothing of its blatant supression of dissent and free speech including locking up of this years nobel laureate.

The real question is why many people in power in both US and EU seek to aid and facilitate this development when it is clearly not in the interests of our countries especially in the long term.

China shows no signs of a country that wants to emerge peacefully.

On infectious greed as a development model...

One of the leading lights in the current government of Slovakia opined that Slovakia should attempt to become more like singapore or hong kong, a small extremely liberal enclave in the wider market of the EU and eurozone.

The allure of places like this should be tempered by the following facts.

  1. they are usually accidents of history and are usually not countries proper (this is true of both Hong Kong and Singapore)
  2. They have massive economies right next to themselves, and the rich of these countries usually uses these territories as a place to hide their money from taxes.
  3.   ermm.. this...

Wall Street Journal interviews Slovak Prime Minister Iveta Radicova on the reasons why Slovakia refuses to bail out Greece with further loans

Wall Street Journal interviews Iveta Radicova on the reasons why Slovakia refuses to bail out Greece with further loans 

Iveta Radicova is clearly an intelligent leader, and she explained that Slovakia is participating in an Eurozone insurance policy for the protection of the euro due to unforseen and unavoidable future circumstances.

However she politely suggested that the greek situation is not justifiable as a bailout, because it was hardly an unavoidable situation and that the indirect beneficieries of such bail-outs (often rich investors and banks) need to accept the risk of their investments and the tax payer cannot be there to pick up the pieces if the investor does not do their due dilligence. This is a point made by several economists over the years when bailouts started with Asia & Mexico under Clinton.

In other words the PM of Slovakia noted her and her country's aversion to a development model largely based on ever increasing borrowing. She expressed her solidarity with the greek people but not with the practices of their governments in the last 20-30 years in relation to debt.

This is not just words, Slovakia has a tiny national debt as a % of GDP which is even smaller than Finland and about half that of Germany at around 35%, moreover this is likely to decline further. One cound say that Slovakia is a very debt averse country culturally, and seems to be baffled by the prevalence of the credit card and other forms of indebtedness in the anglosaxon world.

The Slovak Prime Minister called for stronger regulation of euro-zone financial markets and for allowing overly-indebted countries to undergo and orderly default rather than throwing them new credit lifelines.

Earlier this year Slovakia, the newest and poorest of the 16-rich-nation currency group, caused a stir around Europe when it refused to be part of a EUR110 billion bailout for Greece, agreed on in May by euro-zone member countries and the International Monetary Fund. However it should remembered that Slovakia's share is fairly small as it is a small country of only 5 million people.

Why is Germany booming in a time of weak and state supported growth in the rest of the western world?

Something quite extraordinary is going on, the values of the ageing baby-boomer generation have hit the brick wall of debt (also known as leverage). 
The characteristic of most western societies from the 1980es onwards has been that  a rise in living standards for some has become increasingly reliant on borrowing from tomorrow's (fewer and poorer) taxpayers. This has been true particularly of countries like Greece, Britain, Ireland, Spain, Italy and of course the USA. Their formerly "dynamic economies" now seem to have been largely based on accumulating debts and boosting spending unsustainably. The recent world financial crisis simply brought forward the day of reckoning to affect some of the perpetrators.

Meanwhile Germany took a pragmatic view during the years of euphoria, it exported the consumer goods everyone else wanted now while keeping its own consumption moderate and its already high wages in check during this period. It didn't join the party, it just served the drinks for those that were demanding the high-tech machinery and automobiles and other manufactures that germans excel at.

Clustered around germany are a number of economies that in varying degrees followed the policies of Germany. Chiefly countries like Slovakia (more than the Czechs), Poland, Sweden, Denmark etc. They are also closely linked to germany through trade. Slovakia has and is benefiting from German and Austrian investment, and in turn it has become a good customer, in the crisis the Slovak economy almost mirrored the sharp german slowdown and swift recovery

Reading now old articles carrying scathing criticism of europe in magazines such as the economist, or the Financial Times during most of the decade from 2000 up to 2008 makes illuminating reading. With hindsight teutonic/continental economies seem to shine through now as sustainable, socially responsible, and intergenerationally fair systems, and are not suffering the long-term consequences the debts have brought about and anglo economies will feel for decades. Back then the anglosaxon press at best would characterise europe slow or ageing or not as fast growing as the USA. I see no grovelling apologies for these misguided opinions of the past. It seems that Germany's policies but also its admirable investment in the east is in the best tradition of building up the future not only for its own citizens but also for its neighbours. 

To back up my ideas about the lack of debt see the article below by one of the top US economists.

(Why is Germany doing well?) It's the lack of leverage
This contribution was authored by Carmen Reinhart and Vincent Reinhart.
Germany’s relatively robust comeback obviously requires a multi-part explanation. The very important dimension of its resilience in the current environment, where recoveries from the crisis, notably in the advanced economies, on the whole, have been disappointing.

Carmen M. Reinhart is Professor of Economics and Director of the Center for International Economics at the University of Maryland. She received her Ph.D. from Columbia University. Professor Reinhart held positions as Chief Economist and Vice President at the investment bank Bear Stearns in the 1980s, where she became interested in financial crises, international contagion and commodity price cycles.

We explored the experience of economies surrounding severe financial crises in a paper, After the Fall, presented at the Federal Reserve Bank of Kansas City’s Jackson Hole Symposium. As we pointed out, Germany was a notable outlier in the now-notorious credit and debt boom of the decade prior to the onset of the subprime crisis. Credit relative to nominal GDP fell about 11 percentage points during 1997-2007; during the same period, credit/GDP rose 80 percentage points for most of the advanced economies. Germany’s gross external debt/GDP fell about 5 percentage points during 2003-2007, while that ratio climbed by about 50% for other advanced economies. Germany’s property market cannot even be loosely characterised as part of the global bubble. In fact, real house prices fell 11% from 1997 to 2007. Unlike Japan, which was the other notable outlier during the credit boom, it did not have the burden of a high public debt. As a consequence, despite rapid increases in government debt since the crisis, Germany does not have a private or public debt overhang of the historic proportions confronting most other advanced economies. It follows that a long and painful deleveraging is not on the horizon. 

In this regard, Germany is the advanced economy counterpart to emerging markets in Asia and Latin America. Those economies also deleveraged during the tranquil booming years (as discussed in Reinhart and Rogoff, 2010). These emerging markets are not only recovering robustly—some are showing signs of overheating.

IBM may expand its investments in Slovakia outside Bratislava

IBM may expand its investments in Slovakia outside Bratislava

The IBM company is welcome to invest in central or eastern Slovakia, the Minister Construction and Economy, Juraj Miškov, said on August 26 after meeting representatives of IBM Slovensko who told him that Slovakia was one of the five possible countries for a IBM investment in central Europe, the SITA newswire reported.
IBM representatives did not elaborate on their intentions at the meeting, SITA wrote. If the investment comes to Slovakia 200 jobs would be created next year and a total of 3,000 could develop over the next three years, the daily newspaper Hospodárske noviny wrote. IBM representatives are considering the towns of Žilina and Košice as well as other localities according to the newspaper.

IBM is one of the world's largest IT companies, currently employing almost 400,000 people world-wide. IBM has been active in Slovakia since 1990.

5% GDP - 2nd quarter of 2010 - Slovakia’s economy has best GDP growth among all countries in the European Union

In the second quarter of 2010 Slovakia’s economy is posted the best GDP growth among all countries in the European Union.

The growth is spiking but it is not yet the stellar numbers achieved in the past given the international situation. Still Slovak growth looks set to remain strong for the rest of the year. Germany energising economy is a very big trade partner for Slovak business, and it certainly helped to generate the nearly 5-percent pro rata jump in Slovakia’s GDP.

In the second quarter, the country’s GDP grew by 4.6 percent year-on-year, following just slightly stronger growth of 4.8 percent in the first quarter, according to a flash estimate released by Slovakia’s Statistics Office on August 13. Total GDP in the second quarter reached €16.340 billion.

“The ongoing strength of the growth in the second quarter real GDP in Slovakia was, overall, more of a positive surprise,” Vladimír Vaňo, chief analyst with Volksbank.

In the first half of 2010, Slovak exports increased on average by 20.7 percent year-on-year, accounting for a similarly stellar recovery in Slovakia’s annual industrial production by an average of 22 percent in the first six months, Vaňo noted.

“Compared with expectations of other market watchers of around 4 percent year-on-year and our estimate of 4.3 percent, the year-on-year growth of GDP was faster than expected,” Martin Lenko, senior analyst with VÚB Banka, said.

Though the detailed structure of the growth in Slovakia’s GDP is not fully known yet, Lenko said that household consumption in Slovakia probably recorded only a moderate increase in the second quarter, similar to its performance in the first quarter, due to the country’s still high unemployment rate (mostly in the east of the country) which is falling only very slowly.

“Slovak quarterly expansion of 1.2 percent quarter-on-quarter runs ahead of results of similarly open economies of the Czech Republic or Hungary,” Vaňo said. “However, the overall eurozone economy, a destination for roughly half of Slovak exports, recorded a quarterly real growth of 1.0 percent in the second quarter. In other words, recovery of the export markets alone does not suffice in explaining the resilience of the Slovak economy.”

According to Vaňo, gauging from these comparisons as well as from the strength of the recovery in industrial production in the first half-year together point to Slovakia continuing to reap the benefits of euro introduction via a more resilient economic recovery. He believes this is explained by a competitive edge brought to Slovak exporters by the euro through lower interest rates but more importantly because of exchange rate stability and significant savings in the administrative costs of foreign trade.

“The faster than expected growth of GDP in Slovakia, and also in Germany, in the first half of the year is forcing us to revise the estimate of annual growth of GDP in 2010,” Lenko said. “We estimate that growth in real GDP will reach an average of 4.2 percent year-on-year in 2010 as opposed to our original estimate of 3 percent.”

The rosier growth numbers for Slovakia’s GDP have not yet been reflected in significant job growth in the country’s labour market.

The new train station of Bratislava - Hlavna Stanica as it will be in about 2-3 years

In a previous report, (you might want to open it to have some background) we discussed the long overdue reconstruction of the Bratislava main train station that links Bratislava to Vienna.

The newly released pictures we are showing here show how the station will look. The area will be transformed from this drab communist vision of the 1980es:

Back to its original facade from 1905

The current reconstruction of the station hall will remove the 1980es exterior to reveal the historical facade of the station. This historical building will reconstructed to the original design by the architect F. Pfaff from the year 1905.

The building was originally
Opened 1848
Rebuilt 1988
Formerly known as Pressburger Hauptbahnhof

Some original pictures for your enjoyment

Romanian gypsies in France raised again the usual talk of integration

Romanian gypsies in France raised again the usual talk of integration. But it has been tried!

here is an interesting passage on roma integration

"The communists tried to integrate the Roma, and the communists were masters at social engineering.

For example, when the germans left Transylvania in 70’s and 80’s, they left behind deserted villages. The regime decided to move poor homeless roma in the empty german houses and villages, a decision in tone with the regime’s claim to offer everyone equal chances. The move didn’t work very well, the new roma tenants being unable to assure the maintenance to their new homes, and the proper look of this villages turned to derelict.
Before this, the regime tried something else. After 1945, the communists evicted and deported the rich, the former elite on the ground of being vicious capitalists . Those rich people were living mainly in the centre of the towns, obviously. In the empty houses, the regime brought again the poor, mainly roma, in an attempt to make the communist rule more palatable to the masses and ingratiate themselves with the poor. So, for decades, many roma occupied the former’s elite central houses.

Also, the regime didn’t aknowledge such notions as „gens de voyage”. If you were seen wandering the streets, a Militia officer would come and start questioning, „comrade, why are you on the street at this time of day? You don’t work? Then come along comrade to the section, we will find an appropiate working place for you”. ",1518,712496,00.html,1518,712496,00.html

Slovak economy is revving up - the Return of the Tatra Tiger

According to the Financial times:


There are some persistent misconceptions about Slovakia and Czech republic that need to be addressed:

The region these countries inhabit is central europe, not eastern europe, this is correctly recognised by the german press. The term Mitteleuropa existed before world war 2, and describes the bulk of the former austrohungarian empire, and today the countries: Germany, Poland, Czech republic, Slovakia, tiny Slovenia, and parts of Croatia, Austria, and Switzerland. The term eastern europe is applied wrongly to any country that was conquered by Stalin's Soviet union (including most of Austria) after the war. This level of ignorance about geography by some editors in the anglosaxon press is worrying, they tend to confuse the historical term "eastern block" with the geographical term eastern europe. It makes one sound fairly uneducated to confuse the two, especially given that Moscow is geographically in europe...

Slovakia's former centre-left government kept the vast bulk of the economic reforms that have made Slovakia such a success. The problem was not economic policy, but a very corrupt parties being included in the former coalition (the nationalists) and Vladimir Meciar's HZDS which is now facing oblivion. I believe that the nationalistic leanings of Robert Fico, the former PM, and his burning ambition to be PM lef him to a bad choice of partners.

Slovakia is a very open economy, and a very small country (5 million) but you know, small is beautiful :) , both of which mean that its economy is affected alot by the gyrations of the global economy, big highs and big lows. This is less true of Poland for example because it is a huge country. As a result the former tiny-bit-left-off-centre government threw in the kitchen sink to stabilise the economy when the big gyrations of last year where affecting stability disproportionally. That was a good idea given that growth was bound to come back to more normal levels as it has. This was not mismanagement. Generally the economic consensus of Slovakia is far to the "right" of those in Austria for example...

the rest of the article about the likely positive future of Slovakia into a path of convergence and prosperity is fairly accurate. Although the recently aired idea of stepping onto the accelerator maniacally to become a Singapore of europe is overdone. Singapore is a city state and really is the place rich asians stash their wealth legal or laundered... If the giant chinese economy next door didn't exist, neither would Singapore... Its a parasitic state and not many of them are sustainable or desired in this world.. The world does not need more places where one can launder drug-money...

"Slovakia is reclaiming the new tiger among central and eastern European markets after a boom in industrial output and car manufacturing boosted its economy.

Industrial output rose by 30 per cent on year-on-year basis, with the chemical industry rising by 50 per cent and the carmaking sector gaining 63.7 per cent. Electronics production did even better, rising by 85.3 per cent in May, mainly thanks to Sony and Samsung factories based in the country.

The Slovak economy, dependent mainly on exports, was once already called the “Tatra Tiger” after its GDP rose over 10 per cent in 2007 and outperformed its regional rivals.

Yet the economic crisis hit the country hard and joining the euro in 2009 also had costs. Unemployment rose as Slovak workers suddenly became more expensive than those from Poland and Hungary.
The government of the day intervened to ease the The budget deficit was as high as 6.8 per cent of GDP.

But now Slovakia has a chance to regain that promising status and attract more investors. The economy grew by 4.8 per cent year-on-year in the first quarter - the fastest growth among all EU members. GDP was $115.3bn in 2009 and is expected to rise by 3.2 per cent this year.

Slovakia is now ahead with important economic reforms, which are expected to contribute to the recovery and further economic growth.

The country’s new centre-right government, led by Iveta Radicova, was appointed on Friday. Its first task will be a decision on the €750bn European safety net designed to help debt-strapped countries."

Labour code in Slovakia - the protection of workers

The ease of hiring and firing employees is a very tortured subject. All around the world employees are seeing their rights and working conditions removed without their consent consistently for about 20 years now. This seems to be the result of globalisation as we are seeing that most workers in most european countries lose out to employers. Note i am not referring to the USA here as what is going on there is horrifying as uninsured workers are rendered even homeless. The US is heading in a Dickensian direction for people that are not exceptionally educated connected intelligent or are inheritors of wealth through birth or marriage.

Employers for their part are behaving in less and less honourable ways. They employ illegal immigrants when they can at low wages and hide them from the authorities, in fact in southern EU countries undocumented workers seem to have exploded in numbers, when these people have no right to work in the EU countries.

Iveta Radicova and the Slovak government need to recognise that some decent living standards should be afforded to workers. It is this point exactly that was lost in the USA and in China and that is why life in Europe is so much more decent uniformly around most of the continent. This is also the reason behind vastly lower crime rates in the EU compared to the US.

There are no easy decisions to be taken with the labour code, but one thing is for sure, employers that either avoid creating a decent working environment and act as if poorer people aresomehow dirty.

Allowing a society to become very unequal creates a huge number of problems that are not obvious at the start. Lobby groups will always push to extend their powers over workers, but converting the entire working population into temporary workers is not the way to strengthen the slovak economy.

Additionally the reason behind the lowering of FDI has nothing to do with competitiveness anymore as the general FDI flows are much reduced by the fear of deflation and overcapacity.

Germany needs to be our example here. It has managed to produce workers that are well rewarded and yet competitive. In other words, the country needs to be competitive through the competitiveness and home grown companies in Slovakia, not competing with China who will keep workers most repressed.

Lowly paid workers with no certainty in their lives are discouraged from starting families and investing in themselves, becoming trapped by their circumstances. A Walmart-isation if you want.

The model should be Denmark, not the USA, the USA is a huge country with big debts and a totally different culture. Entepreneurialism is a good thing but that is the only thing the USA still gets right.

Iveta take a trip to nordic countries, Sweden, denmark, finland, and even Austria. Low populations, good competitive companies, and yet highly prosperous. The future of the Slovak economy is in following their example, ever since China and India entered world trade it has meant that Slovaks will never be as cheap or as crushed.

see also

The Shocking Conditions Inside China's Brutal Foxconn Factory

Foxconn exposed
AAPL Jul 30 2010, 05:20 PM EDT
257.25Change% Change


The Foxconn suicide mess all started from job stress. Within half a year, there were 9 suicide attempts, with 7 confirmed deaths in Foxconn’s factory in Shenzhen, China.
In order to find out what’s really going on in that factory, the Southern Weekly, described by The New York Times as China’s most influential liberal newspaper, sent an amateur reporter to slip into Foxconn’s factory to pose as a worker and the mission is to find out the truth about the suicide cluster.
The deaths of the workers in Foxconn have caused a lot of noise in the IT world. Macs, iPods, iPhones and iPads are all assembled in Foxconn’s factory of China. And now, without any explanations, workers who are assembling these gadgets have gone crazy and some of them killed themselves. After the sixth suicide attempt happened in April, Southern Weekly’s amateur reporter, Liu Zhi Yi, arranged to slip into Foxconn’s factory ... while another senior reporter, Yang Ji Bin, conducted interviews with the senior management. Together, they have found out the real living conditions of Foxconn workers.
Foxconn exposed
Every single one of the workers is living through life like a clock. They work, they get off, they go to sleep. And the next day, they repeat the same thing again. The reporter thinks that the only way to stop this cycle is for them to end their lives.
If you are wondering if they are happy for producing Apple products, the answer is No. They are only happy on the 10th of every month, that’s the day when they get their salaries. On the 10th, the ATM machines are fully crowded with workers and their salaries start from $900 Chinese Yuan (about $130).
There’s one special agreement workers could choose to sign for before starting to work. The workers could sign a voluntary overtime working agreement so the factory is not responsible for their long hours of working. Anyway, they still have public holidays just like anyone.
Next, revolutionary and magical gadgets including iPhones and iPads are assembled by these workers and almost all devices in the market come from them. Most of the workers have no comments about the popular Apple products since they have never dreamed of owning the gadgets since their salaries are only enough to buy a knockoff version. While the gadget nerds are discussing how to spend their money on Apple’s iProducts, these workers are discussing about how to spend their money on those cheap knockoff iPhones.
This Southern Weekly reporter also had some chats with the workers during meal times. Some of them told him that they admired those workers who got sick leave approvals so they could get some rest. They also discussed their jobs to know more about the dangers. When they talked about the suicide cluster in the factory, they are speechless and some of them even made some jokes of those suicide attempts.

Foxconn exposed
Moreover, the workers always dream of being rich someday. To fulfill this dream, they would use part of their salaries to buy lottery tickets. They also put their hopes on horse-racing gambling too.
Friendship is a big problem in the factory. There are some workers who do not know the names of their roommates even though they have worked together for a long time.
What’s more, the workers are superstitious in some ways. Previously, there have been some accidents like a worker having his finger cut-off during the production of devices. Now, a few workers in the factory think that the machines are cursed, so it’s dangerous for them to use the machines for their jobs. Also, one of the workers said that he constantly wanted to drop something on the floor so he could bend down to pick it up while working. Due to the long hours standing (up to 8 hours), if he had the chance to lie or squat down on the floor, it would be the most enjoyable moment during the work day. So, he could get the chance to rest.
Foxconn exposed
My Conclusion:
With over 400,000 of workers in the Foxconn factory of China, it will be a mess if workers are mistreated badly. It’s definitely a pity for them to carry out mass production of iProducts while not being able to afford one. Some of them even killed themselves from the working pressure and I wish Foxconn could produce a better working environment like providing shopping malls, cinemas or karaoke to entertain them.
Destress rooms are probably not enough to fix their stress and I’m afraid it’s a silly idea since it may lead the stressed worker to kill someone else. Also, Foxconn needs to give more human rights to their workers and show more concern for them. Foxconn, please don’t treat your workers like dogs.
If Foxconn does not solve the problem, there will be more suicides. The workers definitely need beer, romance, and slightly higher pay. To put it simply, just make them happy. Let’s hope we don’t see a 10th jump… [Southern Weekly]

Read more:

The incoming conservative government

The conservatives are coming...

Bela Bugar ----- Jan Figel-----Iveta Radicova--Richard Sulik

Generally a fairly centrist lot, the christian party (KDH) is the most left wing of the coalition, Then its the hungarian/slovak party of Most HID. Jan Figel of the christian party, Iveta Radicova of the SDKU which is the largest party of the coalition and which will be ruling, and finally Richard Sulik the inventor of the 19% tax in Slovakia when he was working for SDKU in the 90s and 00s.

I feel that this government needs to be aware of how many of the certainties of the 90es in economics are being challenged and have changed. They need to show that they have understood that the broad based employee-class prosperity must not be hurt because that underpins the country's economy.

Tight and conservative regulation of the banks is also vital.

leftish SMER might face split in opposition...

A briefing on what is going on in Slovakia:

  1. Slovakia has a very open economy, its economy went though a big change of fortunes during the crisis due to the cyclicality of cars and other consumer goods Slovakia produces.
  2. The policies of the left have not hurt the slovak economy (if anything they provided a keynesian soft landing from the shock of the turmoil since 2008 and the gas crisis). SMER may have been barking up the wrong tree with some pet projects, but the economy is again revving up even before the election.
  3. The economy here in Bratislava has fared much better than any place i can think of, nation debt is only 36% of GDP which is the lowest in the eurozone, even Finland's...(44%). The economy is actually roaring ahead by conventional standards 3.4 is now being revised to 3.7% gdp growth for 2010, and within six months or so Slovakia will be flirting with 5% gdp growth again. It is going to be much faster than any comparable EU member and certainly fastest in the eurozone.
  4. Some in the right claim that Fico destroyed the economy, that is just rubbish, he has been quite reasonable and cautious. He didn't fight corruption that is true, but the main economic policies are intact since 2000...they have delivered growth now the right needs to put the economy on an investment in infrastructure trajectory, use EU funds more effectively, and leave the labour code alone, it is moderate as it is. The big question is how the average Slovak can achieve higher salaries by making the potential of Slovak citizens shine through with even better education, language skills and a general modernisation. Crucially they need to cut bureaucracy.
  5. A woman PM (check out communist era pic...) will send all the right signals abroad, Radicova will act as a Slovak Obama for Slovakia's image.

Central bank of Slovakia forecast: Slovak economy will grow by 3.7 percent in 2010

and likely to accelerate further to 4.3% in 2011
positively steaming away in these days of no growth or negative growth for others...

Centre right wins

It seems that our predictive ability is uncanny

My concern remains at the insistence of the right to make hiring and firing  extremely easy. This is something that most decent societies take a moderate position on. It rewards unscrupulous employers at a time of high unemployment, and SDKU should not underestimate how much this might help to send them to opposition once again... If they allow again employers to keep employees as temps forever...

The mixed bag of results from the election mean the following

  1. We are likely to get the first Slovak female PM, ms Radicova (pictured) given that the guy hugging her is the leader of the hungarian minority party, chances are that relations with Hungary are going to be vastly improved
  2. Robert Fico (PM) is still popular by a united left of centre. His party resembles PASOK in greece of the 1990es to 2001. Corrupt to a certain extent, enough to keep itself relevant, and keep the right on its toes.
  3. The right has won the election in the sense that the 4 parties that form the right (Christian non-democrats, Hungarians, Christian democrats, SAS neoliberals) are fairly moderate and would provide a welcome counterbalancing interregnum for Fico during which he can reconsider some of his extremist excesses (not so much in policy but in style).
  4. Most of the press is anti-Fico perhaps overly so. The left should be respected and the country needs a serious newspaper of the responsible left.
  5. Preliminary results of Slovakia’s general election, released Sunday by the Slovak Statistics Office, are likely to lead to the replacement of Prime Minister Robert Fico’s left-of-center cabinet with a business-friendly right-of-center coalition that will try to improve the country’s recently strained relations with Hungary. (However the Hungarian side seems to be on a nationalist crescento of its own making)
  6. The new ruling coalition will likely include politicians who represent Slovakia’s large Hungarian minority, potentially helping Slovakia mend fences with its southern neighbor.
  7. Although Mr. Fico’s Smer-Social Democrats party came first in Saturday’s elections, taking 34.8% of the vote, it won’t likely find suitable coalition partners in the 150-seat parliament.
  8. Preliminary results showed the Slovak Democratic and Christian Union, or SDKU, with 15.4% of the vote, followed by the liberal Freedom and Solidarity Party, or SaS, with 12.1%, the Christian Democratic Movement KDH with 8.5%, and the Hungarian minority party Most-HID with 8.1%. Final election results are expected late Sunday.
  9. The new parliament will thus be dominated by right-of-center parties led by the Christian Democratic SDKU, and the Hungarian minority party Most-HID. This coalition of four that will also include the Christian Democratic KDH and the liberal Freedom and Solidarity Party, and will hold a total of 79 parliament seats, compared with 62 seats to be held by Smer. The remaining nine mandates will be in the hands of the extremist Slovak Nationalist Party, or SNS (who's vote halved and nearly didn't make it to parliament!).
  10. The Freedom and Solidarity Party (SAS) was formed last year by Richard Sulik, an economist who designed the flat-rate tax system introduced by the previous SDKU-led governments that ruled in 1998-2006. Mr. Sulik’s party, supported by mostly young voters thanks to its Internet-centered campaign, will be a novice in the Slovak parliament. Its agenda that includes the decriminalization of cannabis use for medical purposes and registered partnerships for same-sex couples is likely to face strong headwinds in this conservative country.

  11. Nevertheless the solid result of Mr. Sulik’s party, the third-largest grouping after Smer and SDKU with 22 seats in the incoming parliament, showed voters’ discontent with the more established two junior partners in Mr. Fico’s outgoing leftist coalition cabinet.

  12. Slovakia will have the first woman PM! A very good signal to be sent abroad. The Christian Democrats SDKU led by, run by Iveta Radicova, a sociology professor and a former presidential candidate, has long opposed Slovakia’s current labor regulations introduced by the Smer-led cabinet, which stipulate minimum wage requirements and limit employers’ freedom to dismiss employees.
  13. Talking to reporters in a live television broadcast in the small hours of Sunday, Ms. Radicova, likely to become the first-ever female prime minister of Slovakia, sounded upbeat about her country’s prospects.
“Slovakia chose the path of responsibility that will help tackle its current problems,” Ms. Radicova said, referring mainly to lackluster economic growth and high unemployment.
“We’ll again turn Slovakia into Europe’s tiger,” she said, referring to the country’s reputation during the double-digit economic growth period in 2007 and 2008.

This blog believes that Robert Fico should lose power in Slovakia

This blog believes that Robert Fico should lose power in Slovakia for the following reasons

  1. his government contained inappropriate parties due to their extreme corruption, both Meciar and Slota are not fit for public life. Although Smer is far less corrupt itself, it is still responsible for the conduct of its partners as it hand picked them.
  2. Slovakia is not drawing EU funds fast enough, that is a national crime.

We like SDKU warts and all, as well as KDH, SAS has a lot to prove mainly its deregulatory rhetoric and how it squares with the international financial crisis