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eastern Europe. Is it really a powder keg that some say?

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  • eastern Europe. Is it really a powder keg that some say?

    I asked my friend in Prague (he is an expat who has lived there for 20 years) how eastern europe looks. He does projects for Soros and travels all around eastern europe. He is responding to a blog post about the coming riots of the east due to mortgage crises and euro exploitation of the east.

    Here it is:


    Generally, yes, they're right. Apparently there are a lot of Swiss Franc-denominated mortgages in Poland, and possibly in Hungary. But the Czechs and Slovaks are actually really resenting being lumped in with these countries, as are the Slovenians; they don't have these issues and their economies are doing relatively better.

    But it's more complex than this guy's making it out. It's not like all 1.7 trillion is going to go into default all at the same time. That's the problem with people sitting in their big offices in Manhattan; they look at a region and put everyone in the same bucket.

    For example, the economic slowdown will in many cases mean that more of the production will be shifted eastward from more-expensive Western factories.

    And some sectors are showing signs of revival already. Kia and Hyundai, for example, have twin factories just across the Czech-Slovak border from each other. The implementation of government incentives to junk old cars in Western Europe means that people are buying cars again, so those workers went back to full shifts today.

    The Slovaks and Slovenes both are on the Euro, too, which should help them especially with exports.

    Ukraine is thoroughly fucked; a lot of the Western banks went in there expecting that the reforms that the Central Europeans had would take root there. But endemic corruption and a political deadlock have meant that little real change took place.

    The Czechs and Croats have a large part of their economy based on tourism, but that will be a non-starter this year. But comparatively, even with a relatively high rate of mortgage lending in the past few years, overall indebtedness is still a fraction of what it is in Western Europe; it's still really hard to get a proper credit card, which was a pain in the ass before, but is turning out to be a blessing in disguise because it meant that people didn't go on the massive debt-fueled buying sprees they did in the US.

    Will it be hard? Definitely. The shock waves are just starting to hit here.

    Already it's interesting and scary to see a rise in xenophobic attacks throughout the region; people want easy scapegoats, and people who don't look like they do make easy targets.

    Personally, though, I have a lot of hope for a couple of things: While there isn't an EU Federal Reserve to prop up bad banks, stimulus from the EU is on the way, albeit very slowly. Because it's so excruciatingly slow, the first wave of real EU funding, approved after enlargement in 2004, is just starting to hit the region, which means that there's a lot of infrastructure work being done. The second is that capital cities like Prague will probably be better off than the post-industrial regions, where there aren't as many opportunities. That could be bad, too, as lots more people move to the cities in search of jobs.

    But will the entire region suddenly go dark? Unlikely. Like most other regions, I expect there will be brighter and darker spots, and that in general people will muddle through.

    It may sound crass, but as opposed to most Americans, Eastern Europeans have had real and recent experience with poverty and probably have better coping mechanisms - everything from being able to fix broken stuff to being able to switch rapidly to barter-based economies if necessary.

    Banks to avoid: Unicredit, Erste Bank, Raiffeisenbank, Societe Generale are the ones that come most quickly to mind; they have big exposure, especially in Romania and Ukraine. As it turns out, I have my pitiful bank account with Raiffeisenbank and my mortgage (in Czech crowns) is with Unicredit. But they're insured up to EUR 250,000 by the government, so it should be fine.

    Will things hold out? Who knows? But it probably won't be as monolithic as that author said.

  • #2
    Re: eastern Europe. Is it really a powder keg that some say?

    Goadam,

    Your friend neglected to mention the energy aspect. Unsurprising from someone working for Soros.

    What happens to all these nations when Russia cuts off their subsidized energy imports in favor of its own internal and (paying) import needs?

    http://www.heritage.org/Research/Europe/bg2083.cfm

    Energy Dependence on Russia

    Europe is hungry for energy. In 2006, the 25 EU members consumed 1,722.8 million tons of oil equivalent (mtoe). Nearly two-thirds came from hydrocarbons: 706.3 million tons of oil (14.9 million barrels per day) and 420.6 mtoe (476.4 billion cubic meters) of natural gas. The remain­ing 34.6 percent came from coal, nuclear, and renewable sources.[5]

    EU energy security already depends heavily on Russia. The EU imports almost half of its natural gas and 30 percent of its oil from Russia.[6] Eastern Europe consumes even higher percentages of Rus­sian gas. Table 1 shows the major European recipi­ents of Russian natural gas exports, ranked from most dependent to least dependent.


    Next part of exercise: consider what the actual prices paid for above energy are in each respective state - and this proportion as a function of expungeability.

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    • #3
      Re: eastern Europe. Is it really a powder keg that some say?

      This guy is no economist. I just thought it was interesting to hear from someone who lives there.

      Comment


      • #4
        Re: eastern Europe. Is it really a powder keg that some say?

        Originally posted by goadam1 View Post
        This guy is no economist. I just thought it was interesting to hear from someone who lives there.
        I know nothing about your friend, but regarding Soros in Eastern Europe, I could say, his approach is a combination of socialist pipe dreams with a serious chunk of money (a-la Savvah Morozov). He (Soros) has serious misconceptions about Eastern Europe, because he has zero understanding of Russia.

        Nowadays the problem in Eastern Europe, just like in many places around the world, is more political, than economic. There is no way free society will survive there without the help from the West. It will be political fight between Russia on one side and EU/US on the other. I am not sure, the West has enough guts to stand up to Russia, the West has its own difficulties sustaining its free society.

        In the end I would not expect explosion of a powder keg (hopefully). But I would expect Russia having more political control over Eastern Europe with Germany reluctantly approving it. Eastern Europe will, probably, move away from NATO, and its political status will be more, like Finland.

        Ukraine is a special case. Russia will do everything possible and impossible to get it back.

        All these changes may create some loud noise, but, hopefully, no major conflicts.
        медведь

        Comment


        • #5
          Re: eastern Europe. Is it really a powder keg that some say?

          Only thing I'd say is that it is to my view unlikely that Soros indulges too many "pipe dreams". This guy has made a lifetime study of figuring out the bottom line, and I'm sure he has few illusions about Russia, past or present. Otherwise this is yet more great realpolitik from Medved. Your feet seem always firmly placed on the ground guy (except when you are talking about the "myth of global warming" ).

          Originally posted by medved View Post
          I know nothing about your friend, but regarding Soros in Eastern Europe, I could say, his approach is a combination of socialist pipe dreams with a serious chunk of money (a-la Savvah Morozov). He (Soros) has serious misconceptions about Eastern Europe, because he has zero understanding of Russia.

          Nowadays the problem in Eastern Europe, just like in many places around the world, is more political, than economic. There is no way free society will survive there without the help from the West. It will be political fight between Russia on one side and EU/US on the other. I am not sure, the West has enough guts to stand up to Russia, the West has its own difficulties sustaining its free society.

          In the end I would not expect explosion of a powder keg (hopefully). But I would expect Russia having more political control over Eastern Europe with Germany reluctantly approving it. Eastern Europe will, probably, move away from NATO, and its political status will be more, like Finland.

          Ukraine is a special case. Russia will do everything possible and impossible to get it back.

          All these changes may create some loud noise, but, hopefully, no major conflicts.

          Comment


          • #6
            Re: eastern Europe. Is it really a powder keg that some say?

            Originally posted by Lukester View Post
            Only thing I'd say is that it is to my view unlikely that Soros indulges too many "pipe dreams". This guy has made a lifetime study of figuring out the bottom line, and I'm sure he has few illusions about Russia, past or present. Otherwise this is yet more great realpolitik from Medved.
            Actually, he does indulge in pipe dreams. He is a good speculator, that's about it. And Savvah Morozov was a decent Russian capitalist, nothing more. Being filthy rich does not always makes a person a good politician. Many rich intellectuals support socialist pipe dreams as a religion, but, obviously, don't practice it in their real lives. This is the religion for the "little people" to practice.

            If Soros knew anything about Russia, he would understand, that Russians are sick of the Jews, either commies or international speculators (and, indeed there are a lot of them in both of these groups). They especially hate, when the Jews try to teach them, how to manage life in Russia. Mr. Soros is neither the first nor the last Jew making this mistake. Antisemitism was one of the major forces during the Russian revolution and civil war, and later during the Stalin repressions. It does not matter, Soros tries to help the Russians or give them a ton of money. There is no way he can touch anything in Russia without damaging whatever cause he is trying to support.

            Your feet seem always firmly placed on the ground guy (except when you are talking about the "myth of global warming"
            I guess, we already found out, this subject belongs in the "I've Lost My Mind Just Now" thread, so, let's leave it there.
            Last edited by medved; 03-02-09, 08:57 PM.
            медведь

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            • #7
              Re: eastern Europe. Is it really a powder keg that some say?

              Originally posted by medved View Post
              Actually, he does indulge in pipe dreams. He is a good speculator, that's about it. And Savvah Morozov was a decent Russian capitalist, nothing more. Being filthy rich does not always makes a person a good politician. Many rich intellectuals support socialist pipe dreams as a religion, but, obviously, don't practice it in their real lives. This is the religion for the "little people" to practice.

              If Soros knew anything about Russia, he would understand, that Russians are sick of the Jews, either commies or international speculators (and, indeed there are a lot of them in both of these groups). They especially hate, when the Jews try to tech them, how to manage life in Russia. Mr. Soros is neither the first nor the last Jew making this mistake. Antisemitism was one of the major forces during the Russian revolution and civil war, and later during the Stalin repressions. It does not matter, Soros tries to help the Russians or give them a ton of money. There is no way he can touch anything in Russia without damaging whatever cause he is trying to support.


              I guess, we already found out, this subject belongs in the "I've Lost My Mind Just Now" thread, so, let's leave it there.
              i've decided to become a jew so that whatever i say, if it is smart, people will say... of course! he's a jew! and if i say something stupid they can call me a commie.

              Comment


              • #8
                Re: eastern Europe. Is it really a powder keg that some say?

                Okay, yeah I was hoping for some anti-semitism. Honestly, take the anti-semitism to Daily Reckoning.

                As far as this guys work for Soros, he helped put in radio stations in Bulgaria.

                Oh and as Jew you should take what I say as being very smart.

                Sad.

                Comment


                • #9
                  Re: eastern Europe. Is it really a powder keg that some say?

                  Originally posted by goadam1 View Post
                  Okay, yeah I was hoping for some anti-semitism. Honestly, take the anti-semitism to Daily Reckoning.
                  That would be nice to take all of it there and dump it. Unfortunately, it is a part of life in Russia, and people like Mr. Soros should understand it.

                  As far as this guys work for Soros, he helped put in radio stations in Bulgaria.

                  Oh and as Jew you should take what I say as being very smart.

                  Sad.
                  No problemo there. Antisemitism in Bulgaria is practically non-existent.

                  http://www.southeasteurope.org/documents/Bulgaria.htm
                  медведь

                  Comment


                  • #10
                    Re: eastern Europe. Is it really a powder keg that some say?

                    This is a very funny thread! Medved is the king of deadpan (aka. "black") humor (just take a look at his mug-shot). Nobody does cynical black humor like Medved.



                    Originally posted by medved View Post
                    Many rich intellectuals support socialist pipe dreams as a religion, but, obviously, don't practice it in their real lives. This is the religion for the "little people" to practice.
                    Last edited by Contemptuous; 03-02-09, 10:19 PM.

                    Comment


                    • #11
                      Re: eastern Europe. Is it really a powder keg that some say?

                      Latvia has very little problems with antisemitism, most Jews were done away with during WWII and have not returned for some reason.

                      My wife says Soros has ulterior financial / power motives with his "promote democracy" do-gooding operations. She however has no proof of this as far as I have been able to determine
                      Justice is the cornerstone of the world

                      Comment


                      • #12
                        Re: eastern Europe. Is it really a powder keg that some say?

                        For example, the economic slowdown will in many cases mean that more of the production will be shifted eastward from more-expensive Western factories.
                        Yehh, this should really help Eastern Europe :-(

                        Whoever is in the market to buy a car now is either financially independent or is living in a Kafkian World.

                        I will give you some on the ground feeling here in Poland.

                        Pessimism to the hilt. Many Poles fell in love with the credit card, car, mortgage in Swiss Franks, and currency hedging. They saw their zloty rise to the heavenly rates against the Swiss Frank and thought all was fine. Here is the trend they were looking at

                        2005 0.38 Swiss Francs/zloty
                        mid - 2008 0.50 Swiss Francs/zloty
                        Today 0.31 Swiss Francs/zloty

                        http://fx.sauder.ubc.ca/cgi/fxplot?b...g&a=lin&m=0&x=

                        In 2008 everyone thought this was normal as the Polish economy "was dynamic". I told them there was speculation.

                        Well a recent article stated that Goldman-Sachs was "playing" the zloty. Hence, I was right.

                        Eastern Europe is being played and people like Soros are in there playing as hard as possible. I remember hearing the Soros name while in Russia also and thinking "That speculator, what may he be up to here."

                        I suspect to nothing good, at least not for the average Joe in Russia. He reminds me of that other luminary Mark Rich who also has been teaching "free market benefits" in Russia.

                        Should we bring in here that other icon of "free market" Khodorkovski. He was also working hard to bring all the best that "free market" has to offer, and get it to the west as fast as possible.

                        Crooks, all of them.

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                        • #13
                          Re: eastern Europe. Is it really a powder keg that some say?

                          Thanks for a normal and interesting response.

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