East European economies crack

Few years ago, in acient pre-EU times 1 euro would buy 4.8 zloty. It was time of stagnation, 20% unemployment, doom and gloom. Sentiment was that our cheap labour costs would make us little China and we would make all kinds of items for EU and be saved. Then zloty went up, every time media would announce end of our economy, as with expensive zloty nobody would buy our products. 4 zlotys per euro then 3.5 were magic barriers that would make our country almost colapse and kill all exports. Few months ago we reached 3.2 zlotys to one euro and then it went back up - and it seems that we would borrow now money to pump our currency, while on other hand we lend money to Iceland goverment. Very strange.

I have to disclose that I have VI in weak zloty to euro ;->

Goodness; this is a partial default, verbatim, no?

To tell the truth I just can’t see it happening. The Gov could cancel the contracts and not compensate foreign banks, but Polish businesses would find it very hard to deal with a foreign bank again, if they do compensate the banks that will be very expensive, much more than stated in the article, and the banks will scramble to reinstate zloty positions which could drive the currency lower.

I think it’s more likely that they’ll just help out the companies on an individual basis. Zloty hasn’t changed much on the back of this so the market doesn’t seem to think it’s going to happen.

And I was only reading Page 50 The Economist ‘The World in 2009’ Special Edition this morning
TWENTY YEARS OF CAPITALISM : was it worth it ?

Between 1989 and 1999 GDP Rates fell by a 1/3 for most Balkan, Baltic and Eastern European states.
Between 1999 and 2009 Countries returned to growth, with some regions ONLY RETURNING TO 1989 LEVELS IN 2006 !
(I wonder what % of that growth was fed by re-patriated money from say (Irl and UK)

Intersting note - Excess Deaths : Mortaliy rates in these regions during post 89 Capitalism far EXCEEDED the trends pre-transition.
The transition brought with it many civil wars , huge numbers of deaths in the male population with Eastern Europe seeing a fall of 7M in population, and birth rates are now lower than death rates.
“Societies are in extreme stress , previously observed only in wartime”

If you were to listen to the bleeding heart liberals and the likes of Mary Robinson it was a utopian transition that brought sunshine and roses to the streets of Vilinus.

Just as well Irish banks have no exposure to Poland :angry:

But, but, but, we keep hearing (mostly on AAM) that a certain Polish subsidiary must be worth at least 1 bn. And we won’t sell at less than that.

It is worth a billion. I just need to decide the currency

You see, in Poland we had this hudge problem. Our companies were exporting like crazy, debt levels were pretty low and costs low - it was a scary time. Before joining EU we had stagnation or maybe recession, so companies who survived were unlucky to be very efficient. Unfortunately central bank has been keeping interest rate high and banks were unwilling to borrow any money. Basically it was doom and gloom, it seemed like we have been cheated by Western Europe. Wealth was slowly growing due to increasing manufacturing and service sectors. Every zloty had to be earned, it seemed that for many long years we would have to work and work and work like complete losers. In this doom and gloom banks have decided to save Poland by introducing this currency options, so now by buying them companies could earn serious money with serious investment, instead of getting pennies in “old economy”. Corporate world had finally found hope and happiness, a risk less path to true wealth. Now with global recession descends upon us, we feel a part of better world with those companies going bankrupt.

I don’t know whether to laugh or cry reading this post because it sums up so eloquently why we have the mess we have today - everywhere -. This sentence above all is why we are all 8-

Nobody wanted to work hard because there was a way to get rich quick XX . Somewhere, some generation will understand this and not have to learn it the hard way.

How is Poland doing? Last I saw (a few months ago), its economy was holding up ok. Is it still like that? Most of the smaller countries in that region, Estonia, Latvia, Hungary, Bulgaria, Romania and others seem to have gone down the plughole since November. Their industrial production is down about 25pc. And, remember, in those countries, their services sector isn’t so well developed, so manufacturing is a much higher percentage of their economies. But, they send relatively few immigrants here. If Poland goes the same way, I’d expect a renewed upsurge of immigrants to Ireland. Even if there are no jobs, I’m sure unemployment benefit here is a lot higher than in Poland.

Since September 08 Poland has lower unemployment than Ireland, but don’t get to excited. We may still beat you. We also in very last minute (Spring/Summer 2008) have decided to jump in and bought a lot of currency options that went very bad. I’m pretty sure that we would be still coming to Ireland, as all this people on dole would need cheap services.

BTW you need to have 104 weeks of PRSI to claim most of benefits.

Are you from Poland? Out of curiosity, how would unemployment benefit in Poland compare with in Ireland?

My first post might have given a misleading impression. I believe in free movement of labour. I’ve no objection at all to people from Poland moving to Ireland, whether to work or, if they can’t get a job, get unemployment benefit. I’d only ever object in the case of people who made no effort to get a job, whether Polish, Irish or whoever. I lived in England myself for 10 years from 82 to 92, and was unemployed there for 2 of them. But, back then unemployment benefit in England was much higher than in Ireland, so I referred to collect unemployment benefit there. I can hardly object if the same happens in reverse now.

I’m Polish. Difference in amount is quite big, Poland is circa 1400E per annum but is paid only for 6 months (in some cases up to 18 months). Here is over 10k per year and is paid for a year…

And after a year the claimant can automatically move to the means-tested Jobseeker’s Allowance which pays the same and has no time limit. Then there’s Rent Allowance and Children’s Allowance and medical cards. Theoretically, someone from Easter Europe can remain as long term unemployed here indefinitely. Basically once you’ve worked and paid stamps for a whole year you’re in the system. Those outside the EU must satisfy a much stricter Habitual Residence Test ( 2 years, one of which can be on Jobseeker’s Benefit if you’re EU, six years if you’re non-EU).

There is evidence that immigrants are being let go in higher proportions than native Irish right now. They currently make up about a fifth of the live register.

cso.ie/releasespublications/ … lregeo.pdf

ftalphaville.ft.com/blog/2009/02 … ervention/

A nice little earner for the FX markets coming up. Now who was it that said that the zloty would be next after the previous batch of currencies repegged by the market…

This is true, there really is no economic incentive for migrants from EU accession states to go back to their homeland if the economy is equally as bad there

Poland Seeks $20.5 Billion Credit Line From IMF (from tickerforum)

imf.org/external/pubs/ft/sur … 41409A.htm

Poland may be able to wing it with “precautionary” credit lines in place . Latvia is a lot more Icelandic …and will not get these credit lines .