Good news as the slovak voters seem set to throw corrupt Vladimir Meciar party out of parliament

A recent poll found that the Movement for a Democratic Slovakia (HZDS) would be left standing in the cold outside parliament’s doors with only 4-percent support. The party has anything but lived up to its name, it is a corrupt personal fiefdom of Vladimir Meciar and it is about to be booted out of parliament.

Just one day earlier the Agency for Research of Public Opinion (AVVM) published its own poll, reporting similar results for Smer, SDKÚ, KDH, SaS, Most-Híd and SNS. But according to the AVVM poll, SMK would join HZDS in the club of also-rans after the 2010 election.

That result, however, was not affirmed in a poll conducted by the Focus agency released on May 20 in which Smer polled just over 35 percent and all eight of the aforementioned parties made it over the 5-percent threshold.

Ján Baránek, an analyst with the Polis polling agency, said that the polls show as many as four parties swimming in very dangerous waters: SNS, HZDS, SMK and Most-Híd.

“As far as I can remember, it’s a situation we haven’t had before, prior to a parliamentary election, and that complicates any reflections and deductions about the [composition of] the future parliament, not even mentioning the future government,” Baránek said

Martin Slosiarik, an analyst with the Focus agency, pointed out that the results of polls published in late May do not yet reflect voters’ perceptions and decision-making flowing from the controversy over Hungary’s dual citizenship legislation and the increased tensions that have entered the Slovak election campaign and are becoming a leading topic.

“This could considerably move voter’s preferences, but we do not yet have polls that show which parties could gain from it and which could lose,” he said.


Eyes on HZDS


Analysts agree that Smer is sure to capture the most votes in the election but what is less certain is its ability to team up with other parties who cross the threshold to form a ruling coalition in the next parliamentary term. Baránek says that Smer might be quite concerned about such a scenario, noting that this is probably why it has started even tougher, more negative campaigning.

“But the biggest threat lies in HZDS not making it into parliament,” Baránek said, adding that Smer, even with its high percentage, might have serious problems forming a government without HZDS taking at least some seats in parliament.

Will HZDS be able to climb over the threshold? That, according to Slosiarik, is one of the major questions to be decided in the election, one which the polls cannot answer.

“HZDS’ electorate has been tunnelled by Smer; it succeeded in attracting some portion of their voters,” Slosiarik told The Slovak Spectator, adding that HZDS does not have the potential to attract new voters and can only depend on support from its most faithful supporters. Slosiarik hypothesises that a low voter turnout, which could reach a historic low of about 50 percent, would aid HZDS.

On the other hand Slosiarik notes that SNS could benefit from the controversy over Hungary’s dual citizenship law, a factor not yet reflected in the recent polls.

“Preferences for SNS are moving not far from the dangerous 5 percent mark and this is what can now mobilise their potential voters,” said Slosiarik, adding that even a double-digit result for SNS would not surprise him.


Right hopes for a Czech scenario


The most recent polls confirm a strengthening position for Slovakia’s centre-right parties. Their hopes were also raised after the Czech parliamentary election lifted that country’s centre-right parties, including two newcomers to the political scene, who together received enough votes to outpace the ruling social democratic party. Despite the Czech Social-Democratic Party (ČSSD) capturing over 22 percent of the votes, it seemed clear that the next government would be formed by three centre-right parties. This result represented a significant drop in support for ČSSD, since it had received 32 percent of the vote in the last election, in 2006, Czech Radio reported. ČSSD leader Jiří Paroubek announced that he will stand down as the party’s leader.

According to Slosiarik, there is the potential for the right wing of Slovakia’s political spectrum to repeat the Czech scenario on June 12 and he believes it is mainly due to the success of Slovakia’s centre-right parties and particularly SaS, a new party on the Slovak scene, to attract a large number of new voters.

“That possibility wasn’t there at the end of last year, but now it seems that the centre-right parties have managed to address new voters,” Slosiarik said, adding that a problematic question in this scenario is whether SaS will be able to actually mobilise its potential voters.

Baránek agrees that the phenomenon of what he called “the internet voter” might play a role in the election, meaning mainly young voters from bigger cities and from the middle class.

“We don’t have any experience with the internet voters, whether they actually really stand up and go to vote,” he said.

The success of the Czech centre-right parties, according to Slosiarik, was based on Czech voters actually voting for the parties they had expressed support for in the polls.

“In Slovakia, mainly in the case of Most-Híd, there is the possibility that voters will be weighing the chances of the party [to make it into parliament] before actually voting for it, considering whether their vote would be wasted,” Slosiarik said.

The analysts generally agree that the possibility of Slovakia’s centre-right parties repeating the success of their Czech counterparts mainly depends on whether all five of these parties – SDKÚ, KDH, SMK, Most-Híd and SaS – make it into parliament and what the final position of HZDS turns out to be.


The Hungarian question


Conflicts that erupted in SMK in 2009, and the subsequent founding of Most-Híd party by a group of renegades from SMK, have also spiced up the political scene in Slovakia. Two weeks before the elections, both ‘Hungarian parties’ are struggling to attract enough support to cross the 5 percent threshold and analysts are reluctant to definitively evaluate their chances. Both Baránek and Slosiarik said they believe that at least one of these parties will be in parliament after the election.

“Higher turnout helps Most-Híd, while lower turnout helps SMK,” Baránek said, explaining the possibilities.

SMK, as the traditional ‘Hungarian party’ with what is thought to be a stronger core electorate, could benefit from the dual citizenship controversy, as Slosiarik says it represents tradition for ethnic Hungarians.

“In the case of Most-Híd, it’s all up to the Slovak part of that party’s electorate, whether they transfer their declarations of support in the polls into an actual election turnout,” Slosiarik said.

Slovakia is to give almost 1 billion dollar loan to Greece only after strict conditions are met

Of course the following reflects the election cycle in Bratislava...

Slovakia will wait until Greece adopts savings measures to cut the budget deficit before disbursing its share of the emergency loan aimed at saving the Balkan country from default, Prime Minister Robert Fico said.
“We want to see Greece doing its homework first, we want to see laws being approved by parliament,” Fico said at a press conference in the Slovak capital Bratislava. “Personally, I don’t trust Greeks.”
Finance ministers from the 16-member euro region approved an 80 billion-euro ($105 billion) aid package for Greece, with another 30 billion euros pledged by the International Monetary Fund. The share of Slovakia, which adopted the euro in 2009, would amount to about 800 million euros spread over three years, according to the country’s Finance Ministry.
Greece yesterday pledged to push through 30 billion euros of budget cuts, equivalent to 13 percent of gross domestic product, in return for loans at a rate of about 5 percent.
Slovak lawmakers will need to amend existing legislation to allow for the loan, Fico said. A special session to do so will probably be held by a new assembly after the June 12 general election, he added.
SDKU, the largest opposition party, is against the Slovak participation in the loan and will seek a special parliamentary session before the election to discuss the issue, Iveta Radicova, the party’s election leader, said today according to the Sme newspaper.

Slovak PM says will not hike taxes after election

as reported by Rueters:

* Prime Minister Robert Fico sees no higher taxes
* Personal, corporate income tax steady at 19 percent
* In response to world crisis May hike top-end health, social security contributions by a small amount.

Slovakia will not hike taxes if the leftist SMER party forms the next government after a June general election, Prime Minister Robert Fico said on Friday, adding such a step would hurt the business environment.

The euro zone member state introduced a flat 19 percent tax rate in 2004 to overhaul its complex tax system, and the tax reform has helped bring higher budget revenues in recent years.

"We do not plan to increase taxes, none of us wants to hike taxes for corporates," Fico told a meeting of the Employers' Association (RUZ). He added the personal income tax will remain untouched as well.

Thanks to wide-ranging market reforms, Slovakia became a magnet for foreign direct investment worth billions of euros, mainly into the car and electronics sectors, which helped to boost the economy to among the European Union's fastest-growing before the economic crisis crushed foreign demand.

Fico, a tireless campaigner with a strong chance to form the next cabinet with one of its current coalition partners or with one of the opposition factions, dismissed employers' call to cut health and social security taxes.

"We will not lower health and social security contributions, there's no economic room for this," Fico said.

Fico said he was considering higher health and social security contributions for higher-income earners, as a measure which would help to boost budget revenues and back the planned fiscal consolidation.

Slovakia, using the euro zone currency since January 2009, has pledged to axe its fiscal deficit to the EU's official limit of 3 percent of gross domestic (GDP) by 2012, down from 6.8 percent in 2009.

The government aims to cut the gap to 5.5 percent of GDP this year.

Here are some pictures from the recent opening of a new square in Bratislava and sizeable new park and recreation area by the danube.

Slovak national anthem goes showbiz

This is funny in a time of heightened nationalism all over the world... :)

Slovak national anthem used as fanfar at Seoul Drama Awards 2009 - The organisers of a televised awards show in South Korea have apologised to Slovakia for mistakingly using the Slovak national anthem as background music on the show, which took place in Seoul in September of last year.


Slovak Ambassador in Seoul Dusan Bella has received a letter from the organisers in which they apologised for the 'inappropriate' use of the Slovak national anthem, adding that this happened by mistake, according to Foreign Affairs Ministry spokesman Peter Stano.

"We apologise for this from the bottom of our hearts, and we assure you that there was no intent whatsoever," reads the letter. "Thank you for telling us about this terrible mistake. We promise that no such thing will ever happen again."

According to Stano, the ministry has accepted the explanation, recognising from the very beginning that the Koreans had no bad intentions in unwittingly using the anthem. He added that the organisers of the awards ceremony obviously picked it for a serious event due to its pleasing melody.
(TASR, SLOVAKIA TODAY / ILLUSTRATION PHOTO)

debts of EU countries...

Slovakia GDP likely to be 4.1% in 2010 & 4.5% or more in 2011

Economies in the CEE region are expected to grow 2.8 % in 2010 and 3.4 % next year, reads the latest World EconomicOutlook drawn up by the International Monetary Fund. (IMF)

Similarly to western economies, the prognoses for individual countries in the CEE region vary in dependence on the impact of the economic crisis but the GDP in Slovakia is supposed to rise the most, namely 4.1 % this year (which is the most within central Europe and the euro zone) and 4.5 % in 2011.

This is obviously a fantastic prospect when despite the difficult times Slovakia and Bratislava in particular are recovering strongly. This wconfirms our long-term view that the durability of Slovakia's policies are helping the small nation converge with the living standards of Germany and other open and competitive economies in the eurozone.

Greece heading for a default

So the focus was almost entirely on Greece and there are less people feeling that there will be a contagion as the greek situation is special due to the recklessness of the previous 9-10 governments. The apparently precarious position of its banks added to negative sentiment built up from the country’s funding problems and the disjointed response from eurozone leaders. At these yields deficit reduction is unworkable and it appears that external support will be necessary, though the government continues to insist otherwise. Trichet’s intervention and the confirmation that the ECB will be extending its relaxed collateral rules – essential for Greek banks – stemmed the widening tide and brought spreads back in during the afternoon. Greece’s spreads are now trading around 435bp and the Markit SovX WE is trading at 95bp, with most of the active constituents improving in tandem.

There is no possibility that Greece will default on its debts and no reason to doubt Germany's commitment to an EU pledge to help Greece, the European Union's monetary chief said on Thursday.
Economic and Monetary Affairs Commissioner Olli Rehn told a conference in Brussels that Greek default was not an issue, saying: "There will be no default."

Rehn said he believed Germany was fully committed to doing its part to help Greece, if Greece requests financial assistance, despite the threat of a challenge to the aid package via Germany's courts.

The 16 countries that share the euro single currency agreed the details last week of how they would help Greece if required, including providing bilateral loans in proportion to their economic weight in the euro zone.
Germany would be expected to provide around 8.4 billion euros, according to the package, which will total around 45 billion euros -- 30 billion from the eurozone and 15 billion from the International Monetary Fund.

"I have no reason to doubt the German commitment if needed and if aid were to be requested," Rehn said, despite the possibility of a legal challenge in Germany to German involvement in the bailout mechanism.
Rehn also reiterated his intention to give more teeth to repeatedly breached rules on budget discipline and increase economic surveillance across the bloc to avoid any repeat of the fiscal crisis suffered by Greece.

Reasons why the EU and its the greater european region has good prospects and the Asian mirage is heading for a fall

If you read the financial press there is currently an obsessive focus on the problems of europe, the invincibility of China, with the US assumed to be part of the winners club of nation. This is a myopic vision. For one high commodity prices will be a permanent bugbear of China that will put an ever increasing strain on its growth. Basically Chinese growth has peaked and will continue to fall gradually. China will end up in slow growth before achieving anything like first world status. Its extreme demographics are also harbingers of possible unrest with massive implications for investors there. Asian growth is based on

Andrea Moneta, chief executive of Aviva a huge insurance conglomerate, argues that most people continue to underestimate the potential of Europe and tend to forget that it is by far the world’s largest market for financial products. Europe and its financial backyard such as Russia included, has a population of more than 800m people and is growing. About 40 per cent of the world’s personal wealth is held in Europe. Europeans have personal financial assets of $62,000bn and this is expected to increase by a further $12,000bn during the next five years. And 13 per cent of Europeans’ wealth is invested in life assurance and pensions.

Aviva expects life assurance and pension assets currently totalling $8,100bn in Europe to grow by $1,700bn in the next five years, outstripping other regions such as North America and Asia.
Europe is thus not only a huge market with promising growth opportunities but has the added advantage of a stable regulatory environment, says Mr Moneta, who before joining Aviva 18 months ago was a senior executive at UniCredit. In terms of political, regulatory and even currency risks, Europe still enjoys a lower risk profile than many other regions round the world. All in all, says Mr Moneta: “We see Europe as a good growth story without taking big bets in Asia.”

The rise of China and why its all a big mistake and bubble

It is not often that the chief economist of Goldman Sachs writes about china in the Financial Times newspaper.
http://www.ft.com/cms/s/0/dc113472-3cfd-11df-bbcf-00144feabdc0.html 

What they broadly say is:

1. greek crisis is largely fear of the future that started when unthinkable events like Lehman Brothers collapsed which now has led investors to question everything. Generally the greek furore will die down but the euro will somehow never recover from this.
2. China is going to continue its meteric rise
3. USA should continue to allow China to grow despite continuing to be an undemocratic dictatorship with an aggressive military
4. USA must stop threatening a trade war if china doesn't play ball
5. We should all let china export its deflation-inducing growth to the world and learn to love China,
6. there is no bubble in china, its all good

Overall the whole position is highly suspicious, it is offered as a prediction of what is going to happen when it looks more like what Goldman Sachs would like to happen and where it has bet its money. The fact that they are writing articles like this in the FT, betrays alarm that things are not going the way they have bet.

Here are some points that need to be considered:

• Dictatorships don't end up well in the long run, their internal contradictions build up over time and then cause instability, but this is not going to be a story of peaceful and admirable democratisation like in central europe. Asia is still fairly barbaric in terms of values and there are many military implications because of China's rising military power. These will come to a head in the near/medium future. China is not switzerland, it may well become aggressive one way or another especially if it realises that it is a good way to keep internal stability in the absence of jobs and growth.
  
• People like goldman have shown a lemming-like quality in their investing so much on the china story just as they invested so much on the previous US real estate bubble before. For various reasons china's future is going to be far less predictable than its past in the last 30 years, Goldman et al seem to have bet the house that things will continue exactly as they have in the past. It has to be remembered that the last time Goldman was badly caught out and would be bankrupt now if it wasn't for the american taxpayer saving Lehman. Their judgement is impaired, this is not the goldman of the past.

• There is a massive bubble in China, it seems to be using its savings to produce even more capacity to export to the west at a time when the west does not want to import anymore. China's mercantilism is glaringly obvious now, and its savings in the good times are artificially propping up its economy now (that is if you trust chinese statistics...). The degree of this lopsided hydrocephalic development is underappreciated. The biggest problem china has is that not a lot needs to go wrong for  a vicious cycle to be set in motion, creating the mother of all panics as the people that have plowed investment into china may pull all that out quite suddenly.  This realisation may be the reason for Goldman to be wheeling out its chief economist in the media. More to calm  investors rather than offer insight. There is a distinct Enron-like press management feel to the whole thing.
  
• China benefits from the free trade religion in policy in a massive way, trouble is that a big trade war would probably tip china over very rapidly especially as all players seem to have concluded that they all want to pursue beggar you neighbour policies leading to this massive trade war. The biggest loser out of this by far would again be China.

• There is no political support for current policies towards China, it was never strong but now it is heading very low, and sooner or later policy will shift to match it. 

• Linear development on unsustainable trends over very long periods of time is not how the world has experienced history. Its exactly when a nation looks unassailable that folly prevails (look at Japan...).
  

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.