Slovakia will have elections in June 2010 - Our predictions on the Slovak election

Most likely many people are wondering what happens next. (also enjoy the old pic of Robert he must have spent ages on that hair ) terrible :)

Here are some unscientific predictions (but then again remember there is no such thing as a scientific prediction)

1. Robert Fico the current PM will be re-elected (90%) but probably with more right-leaning coalition partners.
2. Taxes: "He emphasised that the government had not increased taxes (his measures are fiscally neutral) and added that any new government taking office after the June parliamentary elections must continue this trend. "
3. Vladimir Meciar is heading towards political oblivion without the 5% to make it to parliament (good riddance).

I think that eventually Fico will have to raise some more taxes somewhere because of the worldwide crisis, but it will not be by much.

In other news, results  of  a  telephone  survey carried  out  by  Polis  Slovakia  agency  show that  most  people  would  welcome  seeing a leftist-rightist  government  after  the  parliamentary  elections  in  June.  The  survey  was carried out on March 13-16 of  this year on a representative  sample  of  1,280 respondents Based  on  its  results,  38  percent  of  those polled want Slovakia to have a leftist-rightist government  after  the  elections,  18.7  percent of the respondents want a rightist government and 12.9 percent of people a leftist one. More than one in five participants do not care about the  orientation  of  the  government  after  the elections, while one  in ten respondents could not answer the question.

I generally believe that Fico got some big an important things right (euro, taxation etc) and alot of smaller things wrong and very wrong. The coalition parties he chose were the worst possible.

Kia announced it would invest 100 million Euros to build a new engine production facility in Slovakia

South Korean automaker Kia Motors said Thursday it would build a new engine production facility in Slovakia. The overall investment including production technologies will exceed EUR 100 million and will add the Zilina region more than 270 direct jobs, the company told SITA news agency.

“I am very glad we managed to obtain another investment worth more than EUR 100 million for Kia Motors Slovakia to build an engine production facility, thus increasing our overall  capacity to 450,000 engines per year. We confirm our intention of long-term development of our activities in Slovakia. Our goal remains an effort to positively influence employment in the region of Zilina as well as overall economic growth of Slovakia,” President and CEO of the Zilina car company In-Kyu Bae said.

Kia Motors to invest 100 million euros to build new engine plant in Slovakia.

Kia announced it would invest 100 million Euros to build a new engine production facility in Slovakia (Europe). The company expects to launch the operations at its brand-new engine production plant in 2011 and reach full annual production capacity of 150.000 units by the end of 2012.

Kia did not disclose any information regarding the engines it plans to produce at the plant, but it is believed that the company will build highly advanced four-cylinder powerplants for its next-generation vehicles.

The new production facility will also provide engines for a plant run by Kia’s sister firm Hyundai in the neighbouring Czech Republic, which is located only 40 miles from the Kia’s Slovak factory. The investment is said to add 270 new jobs to the 2.700 people already working at existing Kia plant.

According to President and CEO of Kia Motors Slovakia, this 100 million euros investment will increase Kia’s overall annual production capacity to 450.000 engines, which confirms the brand’s strategy to develop Kia’s activities in Slovakia in the long term.

Kia has been operating a 1 billion euro automobile manufacturing plant in Slovakia since December 2006. The plant has an annual production capacity of 300.000 vehicles and currently builds three different vehicles; two for Kia and one for Hyundai.

The automaker uses same production lines to build the all-new Sportage and Hyundai ix35 (known as Tucson in the USA) crossovers, both destined for European market. It also manufactures three variants of popular cee’d: the 5-door cee’d, cee’d wagon and 3-door cee’d).

USA and UK between 2000-2008

The economist needs to change... How the right has become discredited by this crisis and how this shows by the increasingly desperate articles in the economist magazine.

http://www.economist.com/opinion/displayStory.cfm?story_id=15663362&source=hptextfeature
The economist needs to change...

I think the www.economist.com has reached the limits of its ideology, because we live in the world that applied the economists' creed since 1979 and its now plain to see that from a european perspective, europe has lost by following the advice of the Chicagoschool/Economist/FTet al nexus.

In the name of free trade witht he US, we europeans have been sold:

1. crap sub-prime mortgages as saving financial products and lost money on those
2. american shares that seem extremely bubbly to me
3. we are lobbied to buy shoddy and diseased US food (e.g. chlorine bathed sick chickens etc..)
4. finally got the stupid credit card bug of not spending what we earn (worst case the UK)
5. we are being told what to do with our holidays and lives (i think anglosaxons don't really like their families and therefore keep themselves busy with work to avoid family life...) Personally I take many many weeks paid holiday a year and i dont work for the state. My life has meaning beyond work..
6. american-style politics of a presidential type (e.g. Blair) which shows what a mess it brought about in the UK creating 2 right-wing parties to choose from - hardly real democratic choice, its more like a "managed" political system - what the ancient greeks would recognise as an oligarchy....
7. US-based and influenced IMF emanating advice consistently bad and inappropriate but always suitable for US exporters' interests.
8. US-style healthcare although it is such a colossal disaster no civilised country wants to touch it and even the US is trying to move away from it via Obama., The economist was singing its virtues about a year and a half ago in a nauseating series of articles "special reports" which i would call advertorials.

I firmly believe that the pendulum needs to shift back quite a bit because the economist has become a religious publication in the sense that it doesn't change its mind when circumstances change. It is starting to sound like those breathless self-congratulatory and mindlessly campaigning press releases by US corporations.

I can personally testify to the fact that for most people as other comments described as well, the way of life in most european countries being infinitely more pleasant and purposeful than in the UK and the US (i have lived in all of them).

i can't help feeling that either economists' writers are rather sad individuals that should get out more, find a purpose in life and certainly consume far less...

(i am off for some cycling on the danube between Vienna and Bratislava and a coffee and croissants with my gf as i ve been given friday off by my employer because i did some good work
-gdp ticker counts this as minus... if i got a bonus and spent it on child labour employing products from China GDP ticker would say Plus- ergo stupid indicator and moronic free market zealots).

get a life seriously... Nobody thinks Thatcher was brilliant anymore, Adam Smith railed about morality in our financial interactions much more than he mentioned the invisible hand.

Anyone can grow if they inflate huge speculative bubbles... its fraud... like the anglo economies and poor Spain that now has concreted over all its beaches to create empty villas because it tried to be Britain through a housing based economy.

Tim Geithner, treasury chief of the US, defends hedge funds and rich investors and needs to be removed from his position..

Geithner warns of rift over regulation
By Martin Arnold and Sam Jones in London and Nikki Tait in Brussels

Published: March 10 2010 20:50 | Last updated: March 10 2010 20:50

Tim Geithner, US Treasury secretary, has delivered a blunt warning to the European Commission that its plans to regulate the hedge fund and private equity industries could cause a transatlantic rift by discriminating against US groups.

A letter sent by Mr Geithner this month to Michel Barnier, Europe’s internal market commissioner, makes it clear that the European Union is heading for a clash with Washington if it pushes ahead with what the US – and Britain – fear could be a protectionist law.

The debate over the shape of future financial regulation has reached a critical point in Brussels. Diplomats were on Wednesday night moving closer to a compromise on the sweeping overhaul that has angered the industry and worried institutional investors.

- tough, they shouldn't be trying to destabilise governments that are sorting out the mess they made in the first place , they should stop speculating and get a real job producing something -


The draft EU directive would impose tighter restrictions on hedge funds, private equity and other alternative investment funds. It has caused alarm in the City of London, where some in the industry say it is a thinly veiled attempt by France and Germany to undermine the UK’s dominance of financial services.

If European diplomats reach agreement at a meeting on Thursday, the directive will be put to EU finance ministers when they convene on Tuesday. The proposed rules will require approval by EU lawmakers.

Mr Geithner’s one-page letter, sent on March 1, stresses the need for the US and Europe to work together on regulation of the financial services industry.

- The US does not regulate, their idea of regulation is putting wolves guarding sheep. Self regulation died with the crisis! -


Mr Geithner warns that US hedge funds, private equity groups and banks could be discriminated against if proposals to restrict the access of EU investors to funds based outside the 27-country bloc are included in the final law.

So-called “third country” elements of the directive would force non-EU funds to comply with the new rules if they wish to market themselves at all within the EU.

- We europeans had quite enough of american financial products, they are tainted by fraud because the SEC is toothless and generally only cares about business not citizens. Not in the EU sorry! -

2020 - Ten years of real convergence to go!

In a very thoughtful paper "Strategy for Development of the Slovak Society" produced at the behest of the slovak cabinet, it is a document that outlines how Slovakia will achieve the continuation of the remarkable convergence it is already enjoying with the average northern european countries of the old EU (15).

Slovakia’s economic performance can come considerably close to the average of economies of the EU by the year 2020, says the paper called Strategy for Development of the Slovak Society that the Cabinet acknowledged on Wednesday.

The recession, a consequence of the global economic crisis in 2008, thwarted
development aspirations of the local economy. Notwithstanding this, the country can expect improvement following a period of two or three years necessary for a return to pre-crisis levels.

If conditions are fulfilled that are necessary for utilizing the improved global recovery, the Slovak economy may converge with its GDP per capita to the tune of 75-80 % compared to the EU15 countries

and to almost 90 % of the EU27 by 2020. The employment rate in Slovakia could near the levels of the EU15 and wages could reach 57 % of salaries in this group in the same time period.

All this implies strong growth for Bratislava in the next 10 years..

New law that seeks to further clean up politics in Slovakia

The law will allow any Slovak to challenge the origin of anyone else's assets over 460,000 euros ($629,200). A prosecutor will be able to order the person to disclose where the funds came from. Courts will have the right to confiscate assets of unclear origin.

Basically if challenged any Slovak citizen will have to be able to explain how he/she got their assets. This will also make bribery more difficult.

This should make life very difficult for the mafia and certainly turn Slovakia into a country organised crime actively avoids.


The 150-seat parliament saw an unusual consensus when 112 deputies voted to change the constitution, necessary to allow adoption of this law, which was endorsed later by 116 votes.

We think its a step in teh right direction but more needs to be done. Slovakia is already "cleaner" than ITALY or Greece in terms of corruption but the role-model is Austria.

The PIIGS will not sink the euro - Economist Intelligence unit & BBC link to Joe Stiglitz discussing

http://www.bbc.co.uk/blogs/thereporters/gavinhewitt/2010/02/s_6.html

http://tiny.cc/bratislava

Please check this out http://tiny.cc/bratislava

also a tour of Bratislava across time http://www.flickr.com/photos/bratislava_byt/4390113043/in/set-72157623526064294/

Oh dearism

If you have not seen this, do 

also

greek sovereign trials and tribulations and their impact

Although we do not believe in a further deterioration of the situation in Greece in the long term because the political climate in the country has changed in a way that has not been seen in 30 years. The important news is that reckless finances will become a thing of the past.

Just to clarify we do think that some of the hystrionic press about Greece defaulting was an attempt by traders to cause a self-fufilling crisis based on rumours so they can profit from their short positions.

The graph here shows just how bad the situation is compared to other european countries. This graph captures by how much greek politicians have led the country down a blind alley and how irresponsible the last 30 years have been.

Nevertheless it is clear now that there is a defacto economic government imposed on the club-med members of the EU. It also means that the norms of german financial conservativism will become best practice and in the long term that bodes well for Greece and the rest.

Central Europe vs. Balkans

But what about eastern europe and central europe? (for those that think they know the difference between central vs. eastern europe look at the map for your education...)

For one thing the crisis showed that countries with bad fiscal management suffer whether they are in the eurozone or not. Slovakia, Czech republic and Poland come out of all of this with more credibility as financial actors.

The countries with bad management of their finances and high corruption Greece, Romania, Bulgaria, and the rest of the balkans now seem to be a category of their own. We need a new name for it, but i think for now the Balkans+Romania will do just fine

Legendary commentator and economics professor Nouriel Roubini and his team share their views on the prospects for this region. Our conclusion from this is that given that we see the EURO as safe despite the greek melodrama, for central europe the likely outcome is that Slovakia will carry on being the only euro member in the region, and is likely -after a short pause- sweep all the FOREIGN DIRECT INVESTMENT for itself. This is the way we interpret the last comment on this piece.

What Greece’s Fiscal Crisis Could Mean for Eastern Europe

Mary Stokes and Jelena Vukotic

Feb 22, 2010 11:42AM

Eastern Europe & Southeastern EU will likely feel reverberations from Greece’s fiscal woes. While the possibility of contagion via trade and FDI channels is limited, transmission via the financial channel is a real risk in Bulgaria, Romania and Serbia, given the strong presence of Greek banks in these markets. Any direct spillover effects will likely be limited to these South East European economies, but the potential for indirect effects must also be taken into account.

On the positive side, Greece’s fiscal crisis highlights the comparatively better fiscal positions of EU newcomers in Central Europe. Nevertheless, troubles in the eurozone periphery could further delay euro adoption, which could weigh on emerging European assets going forward.

Grεεk dεbt disastεr

Posted by Tracy Alloway on Jan 18 10:40.

Here’s a singularly-arresting chart from Deutsche Bank’s excellent fixed income team:

That is foreign banks’ holdings of European government debt, and there is an unexpected standout: Greece.
The chart highlights two concerns; firstly, the potential for banks to be burned by the situation in the Hellenic Republic, and secondly, the extent to which the country has relied on outsiders to finance its deficit in recent years.
Here are the DB analysts, headed by Gilles Moec, with a bit more detail:

Such inflows leave an economy vulnerable to a sharp withdrawal of funds at some point in the future should foreigners lose confidence or face liquidity constraints that prevent them from maintaining this exposure. A breakdown of net international investment positions for some of the more vulnerable EMU economies highlights this predicament.
Financing of C/A deficits generally takes two forms – debt creating and non-debt creating inflows. Non-debt related inflows refer to FDI and equity, debt-related inflows can be in the form of either portfolio flows into domestic public or private fixed income markets or loans (e.g. trade credit, syndicated loans). In Greece’s case the majority of its negative net international investment position relates to portfolio flows into the public sector which foreigners can choose to sell whenever they wish. At end-Q3 foreigners held EUR216bn of Greek government debt (72.3% of the total market, 90.2% of GDP), having doubled their position since end-04. Given recent downgrades and another round of revisions to budget data from previous years, a sharp slowdown or even reversal of inflows from foreigners into the local debt market has become an increasing risk.

Matters are made worse by the fact that the ECB has taken a hardline stance on the collateral criteria for its liquidity ops. That means if Greece is downgraded by Moody’s (the only agency still rating it at the A-level) its debt will no longer be eligible for the ECB facilities once the central bank raises its collateral-threshold back to its original level of A-.

Greece is probably hoping that foreigners will continue to finance the government for the rest of 2010, some investors have been piling in to Greek bonds in anticipation of a bailout, but there are signs that may get more difficult.

The country’s Public Debt Management Agency has already said it will not sell any bonds to the market this month, instead opting to focus on T-bills. Bid-to-cover ratios for last week’s auction of 52-week bills was fine at 3.05, but yields rose 119bps to 2.2 per cent. Which means, in short, that investors are demanding more and more of a premium for holding Greek debt.
If foreigners do retreat from Greek debt, the government will no doubt be hoping that its domestic banks could step in to replace them. That however, may also prove problematic, according to DB:

Full financing from the domestic banking sector is probably also not viable. December saw the government sell EUR2bn in bonds in the form of a private placement to 5 banks, 4 of which were Greek. Should the government rely entirely on its domestic banking sector for financing this year, it would result in a 163% increase in their holdings of Greek government debt relative to end- October (EUR32.5bn)1. In the absence of an increase in banking sector liabilities, Greek banks would move from holding 8% of their assets in Greek government debt at end October to 20.2% of their total assets by end-2010. This would only materialise if Greek government debt could not be posted at the ECB as collateral but would undoubtedly translate into a sharp fall in the stock of private sector credit and a more negative growth outcome than is projected by the government, endangering the government’s fiscal targets.