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alabala

Because You're Ugly

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Whats next riots...

http://danskeresearch.danskebank.com/link/.../CEE_150509.pdf

GDP numbers for Q1 across Central and Eastern Europe surprised significantly on the

downside. The weaker-than-expected GDP numbers raise serious doubt about the outlook

for budget finances in the region.

Details

Most notable in our view is the speed of the decline in economic activity in Romania and

Bulgaria – until Q4 both countries showed very few signs of slowing down. However, the

crisis has now hit the two South Eastern European economies with a vengeance. Romanian

GDP dropped by 6.4% y/y in Q1 – sharply down from positive GDP growth of 2.9% y/y. This

implies that – even when assuming (probably unrealistically) that quarter-to-quarter GDP will

stop declining in the remaining quarters of the year - GDP will drop by more than 10% y/y on

average for the year. Similarly, Bulgarian GDP dropped by 3.5% y/y – down from +3.5% y/y

in Q4.

Another unpleasant surprise was the drop in Slovakian GDP of 5.4% y/y – much worse than

the consensus expectation of -2.4% y/y. It is very clear that the Slovak economy is not

escaping the crisis and there is no doubt that the weak numbers to a large extent reflect a drop

in exports especially within the auto industry. That said, the deterioration of the labour market

in Slovakia is beginning to hurt private consumption, which should weigh on economic

activity during 2009. Slovak GDP might drop as much as 6% in 2009.

Less surprisingly, Hungarian GDP dropped 6.4% y/y in Q1 - worse than the consensus

expectation of -5.75% y/y, but close to our forecast of -6.5% y/y. It now looks like Hungarian

GDP could drop more than 8% in 2009.

The Czech GDP numbers surprised on the downside as well dropping by 3.4% y/y, worse than

the consensus expectation of -1.8% y/y and down from 0.7% y/y from Q4 2008.

Assessment & Outlook

Overall, the crisis in the CEE economies is very bad and worse than in Western Europe.

Especially the countries that have had large external imbalances like Romania, Bulgaria and

Hungary are seeing a very sharp drop in economic activity and in our view, the most likely

outcome for Romania and Bulgaria is a “Baltic style” recession with double-digit drops in

GDP during 2009. Even though one can argue that Q1 GDP are “historical” data and therefore

not relevant for the outlook for the CEE economies we think today’s numbers are quite

concerning.

An important implication in our view is the impact on public finances. Take for example a

country like Romania for which the European Commission forecasts a drop in GDP of 4% this

year and a budget deficit of 5.1% of GDP. If Romanian GDP drops by 10-12% instead the

budget deficit could fast approach 10% of GDP – which would make additional fiscal

tightening necessary to fulfil the budget targets in Romania’s standby-agreement with the IMF.

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One thing they are not in Eastern Europe is Ugly.

With the women in Prague selling their bodies for less than £7.00 for a night of romance and sex explosions they dont have to worry too much about the failing economies, the black market on selling women will more than make up for the budget deficit.

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One thing they are not in Eastern Europe is Ugly.

With the women in Prague selling their bodies for less than £7.00 for a night of romance and sex explosions they dont have to worry too much about the failing economies, the black market on selling women will more than make up for the budget deficit.

I will have to consider breaks in your postings in a whole new light.

p-o-p

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One thing they are not in Eastern Europe is Ugly.

With the women in Prague selling their bodies for less than £7.00 for a night of romance and sex explosions they dont have to worry too much about the failing economies, the black market on selling women will more than make up for the budget deficit.

beirut.jpg

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Interesting that yet again there is no mention of Poland in this article about "Eastern Europe"

The economy in Poland is not an issue. For so long as we can ensure that any war the West haves starts and ends in Poland then thats fine, hence the reason Poland is a friend of Europes.

Where else do you park a nuclear arsenal ?

Gotta Luv the Polish, we park our nuclear arsenal in their backyards, and they work in our nation for a few shillings and a pat on the head for appreciation of the good work they do.

Manuel, Mr Fawlty needs a cup of English Breakfast Tea...................Yes Sir!!!!!

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Interesting that yet again there is no mention of Poland in this article about "Eastern Europe"

http://danskeresearch.danskebank.com/link/...dCPI_140509.pdf

? Polish inflation surprised again on the upside, coming out at 4.0% y/y in April from 3.6%

y/y in March.

? After declining rapidly for several months, Polish inflation has increased in the last three

months mostly on the back of a weaker zloty.

? Today’s data effectively closes the window for further monetary easing in 2009.

Details

The Polish statistical office released data on Polish consumer price inflation in April today.

Inflation rose to 4.0% y/y in April compared to 3.6% y/y in March - the consensus expectation

was 3.8% y/y while our forecast was 3.6% y/y. Food and fuel prices were key contributing

factors behind higher inflation.

http://danskeresearch.danskebank.com/link/...0509_edited.pdf

?

GDP dropped by 18% y/y in Q1 09 – much more than the consensus forecast of a drop of

16.4 % y/y and our forecast of 16.8% y/y.

? The latest Lithuanian GDP numbers indicate very weak Q1 GDP numbers and increased

risk that Latvian GDP might suffer to a much higher extent than in the previous quarter.

However, the decline by 18% y/y was somewhat unexpected even taking into account

continuously deteriorating industrial production and retail trade performance.

Details

The Latvia statistical office released its flash estimate on GDP growth in Q1 09 today. GDP

dropped by 18% y/y compared with a decline of 10% y/y in Q4 08. The developments clearly

indicated that a “worst case” scenario for the medium term outlook with regard to Latvia have

become a reality.

The downturn in Latvia has steepened, but an even more negative outcome is expected during

the coming quarters. Especially taking into account further tightening on the fiscal front, which

should be implemented as soon as possible – otherwise Latvia would not qualify for the

international aid package.

http://danskeresearch.danskebank.com/link/...aGDP_280409.pdf

?

GDP fell by 12.6% y/y over Q1 09 – much more than our expectation and consensus

forecast of a drop of around 8% y/y.

? Retail trade deteriorated further, slowing by 30.8% y/y in March from the 32% y/y decline

in February. However, the outcome was significantly better than our expectation of a

39.3% y/y decline.

http://www.businessweek.com/ap/financialnews/D98DBR7G1.htm

"In 2009, unfortunately, we expect a sharper fall in the GDP than we had thought," Medvedev said. "The global economic crisis is far from nearing the end."

Government figures Friday showed that the economy shrank at an annual rate of 9.5 percent in the first quarter. A quarter-on-quarter 23.2 percent drop includes eleven daylong New Year holidays, making it somewhat less revealing.

http://www.reuters.com/article/rbssBanks/i...N36653520090223

Rothensteiner added that RZB would be ready to provide extra capital for its banks in emerging Europe if necessary.

RZB provides more than half of the funding for Raiffeisen International, emerging Europe's second-largest lender, which owns banks in countries including Russia, Ukraine and Romania -- which are being hit hard by the financial crisis.

Rothensteiner said Raiffeisen International would emerge as a winner once the financial crisis was over.

"This phase will be over at some point, even if not before 2010. And then we will be top in markets with huge potential," he said.

"We already experienced that once before in Russia. After the currency crisis in 1998 we were the only ones to stay there ... this was very good for us."

bankclaims.jpg

http://www.washingtontimes.com/news/2009/m...rsening-crisis/

BRATISLAVA, Slovakia -- This pleasant city on the Danube River is considered part of eastern Europe, although it is only as about as far from Vienna as Washington is from Baltimore (about 35 miles) and is, in fact, near the geographical center of the European continent.

Slovakia was the poorer part of the former Republic of Czechoslovakia until 1993 when the country split in two parts, one being Slovakia (the Slovak Republic) and the other the Czech Republic. Economic growth languished until a reform government took over in 1998, established a set of policies that gave it one of the highest growth rates in Europe (average of 7.2 percent from 2004 to 2008), and made it the world's 20th-freest economy, lagging behind only Estonia among the former communist countries.

While Slovakia has been doing many things correctly, its fellow European neighbors to the west have not; and their actions have put their own economies into recession as well as those of eastern Europe. The United States is generally blamed for setting off the global recession, which is only partially true.

It is true that the Federal Reserve's excessive low-interest rate policies, the mismanagement of the government-sponsored Fannie Mae and Freddie Mac mortgage institutions, and overleveraging by some of the big private investment banks did create much of the housing bubble in the United States. Yet, it is also true that actions by the Bank of England and the Blair/Brown government in the United Kingdom created most of the British housing bubble. Also, low-interest-rate policies by the European Central Bank (which creates the euro) supported much of the housing bubble in many European countries from Spain's Atlantic coast all the way to the Black Sea coast in Bulgaria.

Many EU countries in eastern Europe have had larger problems because of their dependence on foreign banks and the fact many home loans were written in euros or Swiss francs rather than their domestic currencies. (Five European banks account for two-thirds of eastern Europe's loan exposure.)

On May 15, a meeting sponsored by several think tanks in Slovakia and Vienna's Hayek Institute was held here in Bratislava to discuss the current situation and what should be done. Nobel laureate in economics Myron S. Scholes spoke, as did several other prominent European and American economists. There was nearly unanimous agreement that the financial crisis was not only primarily caused by governments, but that the solution was less rather than more government spending - and less but more focused financial regulation.

Europe's economy has lagged considerably behind that of the United States during the last quarter-century. A great deal of Europe's poor performance can be explained by a larger government sector (higher taxes and government spending) than had characterized the U.S. economy - at least up to now. Europe has also suffered from a much worse demographic situation than that in the United States.

Because of very low birthrates, European countries have an unfavorable dependency ratio (number of people receiving retirement pensions versus number of workers) compared to the United States. And this will only get much worse. Italy, and many of the countries in eastern Europe, are already losing population, and Germany is not far behind. Given these structural problems, it will be very difficult for much of Europe to achieve a quick and robust recovery.

European banks face a different situation from banks in the United States. In the United States, companies rely on banks for a much smaller portion of their capital needs than do companies in Europe. American companies are more prone to tap stock and bond markets for financing than their European counterparts.

As the recession deepens, more and more European banks will face nonperforming business loans, and, unlike the United States, there is no eurowide institution (like the Fed) with the authority or capability of serving as the lender of last resort for the private banks. Many of the individual countries in the EU are too small (unlike France or Germany) to be able to bail out their big banks. Since they cannot, they will not.

These banks may have no choice but to let some of their subsidiaries fail in some of the eastern European countries in order to preserve the parent bank.

However, big banks in small countries, knowing they have no recourse to a large government to bail them out, appear to have been more prudent in designing ways to protect their core activities and the parent bank.

Germany has the largest economy in Europe, and it now appears the recession in Germany will be deeper than that in the United States or the United Kingdom. Hence, the German taxpayer is not likely to bail out European neighbors and their banks. The European Union Treaty (Maastricht) clearly states that the "Community" is not responsible for financial obligations made by any "Member State."

The International Monetary Fund Global Financial Stability Report of April 2009 estimated global financial write-downs might now be as great as $4.1 trillion, with a sizable share originating in Europe. Banks are expected to bear about two-thirds of these write-downs, with the rest spread among other financial institutions.

Some European bankers claim these IMF estimates are greatly overstated. For the sake of both Europe and the world, let's hope these bankers are correct

.

Anyone dare to look at the graphs, this is how real crash looks like, hold on to your hats.

Austrians banks are simply going to be a little dissapointed...skid marks.

I ******in hate Pikeys -> Austrian banks.:-), I mean.

just wander who and how are going to do stressssss test on Austrian Banks, live by the sword and die by the sword, or something of similar meaning ->I ******in hate Pikeys.

Edited by alabala

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Interesting that yet again there is no mention of Poland in this article about "Eastern Europe"

Well, the geographic centre of Europe is Warsaw, so Poland is Central Europe. Or something.

Edited by Peter Hun

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Well, the geographic centre of Europe is Warsaw, so Poland is Central Europe. Or something.

Is it? I'd have thought Warsaw was well East of centre but then i never studied geography at school so what do I know :)

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