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Emerging Europe |
HenryTo
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 Posted: Sat Jan 17, 2009 12:58 pm Post subject: Emerging Europe |
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Current Director of the European Department of the IMF (and former Polish Prime Minister), Marek Belka, discussing the financial crisis that is hitting Europe - and more specifically, Emerging Europe:
http://www.imf.org/external/pubs/ft/survey/so/2009/INT011409A.htm
| Quote: | In the span of a few months, the IMF has approved emergency loans for Hungary, Ukraine, Iceland, Belarus, and Latvia worth more than $39 billion, and a request from Serbia will be considered soon. In this interview, Marek Belka, who took over the reins of the IMF's European Department on November 1, 2008, talks about Europe's prospects for recovery and the principles that guide the Fund as it seeks to help Europe's emerging economies counter the fallout of the crisis.
Former premier
Belka is well acquainted with the challenges of managing emerging market economies. Before joining the Fund, he served as prime minister of Poland from 2004 to 2005 and as deputy prime minister in 1997. He was minister of finance from 2001 to 2002. A professor of economics, Belka also has extensive international experience, serving as Under-Secretary General at the United Nations and as Executive Secretary of the UN Economic Commission for Europe.
IMF Survey online: What will be the impact of the financial crisis on Europe in 2009?
Belka: Because Europe is very open in terms of trade, and because its financial sector is so closely integrated with the rest of the world, the region cannot avoid being significantly impacted by the financial crisis.
But how the crisis will play out in Europe will differ from how it plays out in the United States because the economies are structured differently. While Europe has very few toxic assets of its own, European banks owned a lot of bad U.S. assets, and were more highly leveraged than American ones. So we can expect more deleveraging in Europe than in the United States. |
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rffrydr
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rffrydr
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rffrydr
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HenryTo
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| Posted: Tue Jun 21, 2011 1:46 pm Post subject: |
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Stratfor: The Financial Positioning of Ukraine and Belarus
| Quote: | Eurasia Analyst Eugene Chausovsky examines the economic and political differences between the financial positions of Ukraine and Belarus.
Editor’s Note: Transcripts are generated using speech-recognition technology. Therefore, STRATFOR cannot guarantee their complete accuracy.
The EU enacted fresh sanctions against Belarus on Monday, imposing asset freezes on three companies tied to Belarusian President Aleksandr Lukashenko. As economic troubles in Belarus continue to grow, there have been rumors and speculation that similar troubles could begin to appear in neighboring Ukraine. While there are some similarities between Ukraine and Belarus, there are also important financial and political differences to keep in mind when gauging Ukraine’s economic prospects.
In terms of the economic situation, the problems that Belarus is currently experiencing stems from many reasons. These include an increase in populist spending by Lukashenko ahead of the country’s presidential elections and then economic sanctions imposed by the EU as a result of these elections. While Lukashenko’s forceful crackdown on opposition protests has caused his country to face isolation from the West, the Yanukovych administration in Ukraine has been much less forceful against the opposition.
For example, when there were protests in the beginning of the year in Ukraine over changes to the tax code, Yanukovych agreed to listen to the demands of the protesters rather than crackdown on them. More importantly, the Yanukovych administration has not been targeted by EU sanctions and instead the government is currently in talks with the EU to form a free trade agreement with the economic bloc.
Also, while Belarus has sought to get a loan from the IMF to address its financial problems, the IMF has been hesitant to grant such a loan due to its isolation from the West and other political factors. Meanwhile, the Yanukovych administration has had a cooperative relationship with the IMF and it is likely that the Ukrainian government will receive disbursements from the IMF before the end of the year.
But all of this is not to say that Ukraine is in the clear financially speaking. One aspect that can cause some serious financial problems for Ukraine is if it completes the negotiations with the EU over joining the free trade agreements. That is because Russia has threatened to enact countermeasures against Ukraine were it to join into this free trade agreement. This is because Russia is seeking to get Ukrainian cooperation into its own economic bloc, which is a customs union between Russia, Belarus and Kazakhstan, and it has threatened to impose duties on several exports to Ukraine such as oil, which is one of the factors that led to the Belarusian crisis in the first place.
But Ukraine is well aware of these dynamics and therefore the country is navigating carefully between the EU on one hand and Russia on the other. These dynamics will be the next critical thing to watch for as we examine the potential for financial problems in Ukraine. |
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rffrydr
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| Posted: Wed Dec 01, 2010 9:41 am Post subject: |
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This periphery seems to be doing alright:
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rffrydr
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| Posted: Wed Oct 06, 2010 8:24 am Post subject: |
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EU signs free-trade pact with S. Korea.
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rffrydr
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HenryTo
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| Posted: Mon Oct 04, 2010 8:43 am Post subject: |
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Eastern European homeowners still hurting from the strength of the Swiss Franc:
| Quote: | Strong Swiss franc crushes E. Europe homebuyers
Once-cheap mortgages in foreign currency squeeze economy in Hungary, region
Pablo Gorondi, Associated Press Writer, On Monday October 4, 2010, 10:27 am
BUDAPEST, Hungary (AP) -- Ildiko Papp can calmly discuss the collapse of her family company and break-ins at her home and business. Mention the Swiss franc, however, and she struggles to keep from crying.
The 55-year-old florist and her husband borrowed 61,000 Swiss francs -- the equivalent of 10 million forints ($47,000, euro35,700) in 2006 -- to cover two-thirds of the cost of a small apartment in an outer Budapest district.
After four years, a sharp rise in the franc against the forint doubled her payments, from 50,000 ($240, euro180) to 100,000 forints ($480, euro360) a month.
Worse, the amount she owed in forints had not gone down, but up -- nearly 50 percent, to 14.5 million forints.
She lost hope of paying or canceling the debt. And she's got a lot of company across Eastern Europe.
"I'm stuck in a vicious circle, paying more and more every month and I still owe the bank more than at the beginning," Papp said in her living room, sitting in front of a folder full of documents and correspondence with the bank. "I'm always depressed and anxious, following the news morning, noon and night to know where the Swiss franc stands."
Foreign currency loans -- popular during the mid-2000s in eastern Europe -- are now a serious burden on several countries. The loans, in francs, euros or dollars, are holding back attempts to make economies in Hungary, Romania and Ukraine grow -- growth that is needed so those governments can dig out from under financial crises that required bailouts by the International Monetary Fund and the European Union.
The problem appears worst in Hungary, where the burden of repaying Swiss franc loans with sharply devalued forints is choking off consumer spending and hurting tax revenue.
Hungarian households' foreign currency loans totaled 7.3 trillion forints ($35 billion, euro26.2 billion) at the end of June, according to the National Bank of Hungary. Nearly 80 percent of that was in Swiss francs, with some loans in euros.
Of the 1.8 million people who took out such loans, 400,000 are behind on their payments, including 100,000 who are behind by three months or more.
The loans are one factor behind the empty shop windows on Vaci utca, Budapest's main shopping street. Retail sales in Hungary fell every month for more than three years until posting a slight increase in July.
Additionally, debtors are leaving legal jobs for off-the-books work in the gray economy -- thus avoiding paying taxes that the government desperately needs. It's a way to prevent debt collectors from automatically taking part of their salaries as soon as they've been deposited.
Papp's payment struggles began soon after getting loan. Her family's company, which made and sold children's clothing, went bankrupt, undercut by cheap Asian imports.
Papp's son was unemployed for a long time and has his own problems paying back a car loan, while her husband has been selling fruits and vegetables at a rented store, with mixed results.
Papp also tried for months to reduce her debt by making a lump-sum payment with proceeds from the sale of another apartment -- which was also mortgaged by the same bank -- but the bank rejected her efforts without giving her, she said, an adequate explanation.
For years, Hungarian banks offered loans -- mortgages and personal and car loans -- in Swiss francs at much lower interest rates than in Hungarian forints. Forint loans carry higher interest rates because the currency is not as stable as the franc, meaning lenders risk being paid back in money that is worth less than when it was loaned.
The currency risk, instead, was shifted to borrowers -- who did not anticipate the violent fluctuations of exchange rates due to the world financial turmoil that began in 2007 over bank losses on U.S.-mortgage backed securities.
"The Swiss franc was offered as the cheapest alternative and people were dissuaded from loans in forints," Papp said. "Why shouldn't I trust what the bank clerk tells me?"
Without commenting specifically on Papp's case, OTP Bank's communications department sent AP a form which people taking out mortgages were made to sign, warning them of the exchange rate risks. The one-page form says the Swiss franc's exchange rate can fluctuate "in any direction and by any extent."
Consumers typically borrowed when a Swiss franc was worth around 150 forints. On Sept. 8, it briefly rose to over 225 forints, a 50 percent gain. On Monday a franc bought 203.7 forints.
Most of the loans have come from the Hungarian subsidiaries of banks from Austria, Germany and Italy, raising concerns about the impact on banks in those countries.
Other countries in the region have also been affected by foreign currency mortgages.
In Ukraine, the hryvnya fell some 40 percent in wake of the 2008 global downturn and the government banned loans in foreign currencies to individuals last November.
Ukraine's central bank has been encouraging banks to restructure foreign currency loans into hryvnya whenever possible. But borrowers are reluctant since interest rates in hryvnya throughout the crisis have been 10 to 15 percent points higher than in U.S. dollars, said Yevhen Hrebeniuk, senior analyst of Troika Dialog Ukraine, an investment company in Kiev.
Hungary also suspended loans in foreign currencies from July and the government is working on several measures intended to alleviateing monthly payments but increasing their total debt because of the extra interest -- and banks would have to use an exchange rate more favorable to borrowers.
The proposals are expected to become law this month.
A few days after telling her story, Papp, the struggling florist, was finally able to sell her modest but spotless 52-square-meter (560-square-foot) apartment. She paid back the bank in full -- but after four years of hardship and payments she was left with no home and only about $2,500.
She would rather move back to her mother's countryside home than take on new debts.
"I don't ever want to have anything to do with another bank loan again," said Papp. "Especially not in Swiss francs." |
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rffrydr
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| Posted: Thu Mar 11, 2010 8:12 am Post subject: |
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Flow count:
| Quote: | Eastern Europe
Published: March 10 2010 23:06 | Last updated: March 11 2010 08:51
Only now is it clear how many bubbles were pumped up by the abundant liquidity of the pre-Lehman world. Investment in eastern Europe, suggests a PwC study, was one. Foreign direct investment into 14 central and eastern European countries including Russia ballooned from $30bn in 2003 to $155bn in 2008, boosted by European Union enlargement. FDI then plunged last year to $77bn.
Notably, however, PwC concludes the bubble might well have burst, or been punctured, even without the credit crunch and recession. A key factor in attracting investment was lower manufacturing labour costs, relative to Germany. Yet overheating and the hefty wage increases leading up to 2008 were already tarnishing the region’s competitive attractions. Recession added to what would probably have been downward pressures on FDI in any case, by depressing demand and raising credit risk premiums. |
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rffrydr
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rffrydr
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| Posted: Thu Nov 19, 2009 6:41 am Post subject: |
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OECD tips Poland to come through--come through with flying colors really:
http://online.wsj.com/article/BT-CO-20091119-705940.html
Remittances from UK the big question.
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rffrydr
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| Posted: Tue Oct 27, 2009 3:46 pm Post subject: |
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Europe running profitable for US Steel in today's earnings.
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rffrydr
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| Posted: Wed Sep 30, 2009 11:10 am Post subject: |
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Howard Simons
GDP In The Modern World
9/30/2009 10:54 AM EDT
| Quote: | A column heading on Bloomberg for Colombian GDP notes matter-of-factly, "Excluding Drug Crops."
Now comes Hungary. They have recalculated GDP for the past 14 years to include both illegal drugs and prostitution, noting that prostitution with a foreign "importer" actually constitutes an "export of services."
And, yes, they did refer to "unit costs."
Just as piracy flourishes in the absence of a dominant navy, the underground economy in all of its manifestations flourishes as the entrepreneurial spirit is aroused. As economists and government statisticians do a poor job of accounting for the underground economy, the official statistics understate the economy's vibrancy.
The best ways to drive any industry underground are:
1. Make it illegal, and
2. Tax it over tolerable levels |
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rffrydr
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HenryTo
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