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Slovenia May Have ‘'significantly'’ Misread The Cost Of Fixing Its Troubled Banks,

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Slovenia is the only former communist European Union state that declined to sell most of its banking sector into private hands, a strategy that led to political influence, mismanagement and disastrous lending that has now put the lenders at risk.

Because none of the privately owned banks made those mistakes...

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http://www.nytimes.com/2013/04/10/business/global/oecd-warns-slovenia-on-banking-crisis.html?partner=rss&emc=rss

'LJUBLJANA, Slovenia — Slovenia, trying to avoid becoming the euro zone’s next bailout victim, may have ‘'significantly'’ misread the cost of fixing its troubled banks, the Organization for Economic Cooperation and Development said Tuesday.

The O.E.C.D., which includes 34 developed countries, said in a report that Slovenia should save state-owned banks that are viable and sell them into private hands, and allow those that are not viable to fail.

According to an assessment made last year, the local banks, mostly state-owned, are burdened with 7 billion euros, or about $9 billion, in bad loans — a fifth of Slovenia’s gross domestic product.

The country risks falling behind in its race to catch up with Western living standards, the Paris-based organization said.

The report predicted a second straight year of economic contraction, by 2.1 percent. It also said that Slovenia’s public debt had more than doubled since 2008 to 47 percent of gross domestic product and that it could rise to 100 percent by 2025 if no changes are made.

Facing uncertain costs to bail out its lenders, continued pressure on its exports from the euro zone crisis, and a rise in lending costs after Cyprus’s bailout, Slovenia has one of the worst economic outlooks in the O.E.C.D., the organization’s report said.

It recommended that the government increase the powers of the competition office, gradually raise the retirement age, wean wealthier citizens off family benefits, cut unemployment and other benefits, and improve efficiency in education and health care.

Slovenia is the only former communist European Union state that declined to sell most of its banking sector into private hands, a strategy that led to political influence, mismanagement and disastrous lending that has now put the lenders at risk.

‘'Slovenia is facing a severe banking crisis, driven by excessive risk-taking, weak corporate governance of state-owned banks and insufficiently effective supervision tools,'’ according to the report.

The organization also urged the government to start new stress tests of the banking sector based on a more robust methodology, and to publish the results before recapitalizing distressed but viable banks, preferably through share issues. '

what a relief.I'm sure the stress tests will sort the problem out.

Public debt at 47% GDP and bad loans of an extra 20% in the banks?

A piffling issue beside the UK.

We're at 90%, deficit still high so o ver 100% in a couple of years, plus hidden bad loans that are disguised by the propped up property market.

The printing press isn't going to stop us going Greek at some point.

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Doesn't seem to have troubled EURUSD today. Been pretty strong and recovering from recent lows.

I don't think the money markets or the politicians live on the same planet as anyone else.

The sun is really setting on the Eurozone . . . it's just become a Federation of Failed States. (FFS)

Cyprus trashed, Slovenia going south, Portugal is in trouble again, Greece bad to worse with deflation setting in, youth unemployment in Spain still going off the meter . . .

Obviously all good economic indicators.

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I don't think the money markets or the politicians live on the same planet as anyone else.

The sun is really setting on the Eurozone . . . it's just become a Federation of Failed States. (FFS)

Cyprus trashed, Slovenia going south, Portugal is in trouble again, Greece bad to worse with deflation setting in, youth unemployment in Spain still going off the meter . . .

Obviously all good economic indicators.

:lol: Soon be time for the elites to admit it is over, great viewing that will be :P

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Cant be easy being an Eastern Euro state. Same ageing demographics as the west, but losing their productive demographic to the west.

The demographics are worse . . . I believe Slovenia has the oldest average age in the EU . . . around 47. About losing productive demographic, I think Bulgaria is now the worse case - actually with a population which has shrunk to post war levels.

Not to worry, the Troika will raise the retirement age to 90.

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Because none of the privately owned banks made those mistakes...

I'm thinking more that this is clearly a reason to be punished.. How Dare You Not Privatise Something..

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http://www.nytimes.com/2013/04/10/business/global/oecd-warns-slovenia-on-banking-crisis.html?partner=rss&emc=rss]According to an assessment made last year, the local banks, mostly state-owned, are burdened with 7 billion euros, or about $9 billion, in bad loans — a fifth of Slovenia’s gross domestic product.

The country risks falling behind in its race to catch up with Western living standards, the [O.E.C.D.] said.

Huh? It looks as if Slovenia is learning fast and is eminently suitable for join the rest of us in the West?

Edited by dryrot

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Behind this are problems in the construction industry in Slovenia which has then hit her banking industry. The analysis show below indicates that there are more problems coming.

Construction industry problems

We also see a familar theme in that many of the troubled loans were to the construction industry which was a driver of economic growth in Slovenia just like it was in Spain and Ireland. From the Slovenian Times in October 2011.

But over the course of just one year the sector itself has fallen like a house of cards. Of the three leading construction companies in the country, one has gone bankrupt (Vegrad), one into receivership (SCT) and the third (Primorje) has recently been given a six month loan moratorium by the banks.

There was apparently quite a motorway building programme which for some reason reminds me of the autobahn building in Germany in the 1930s. However we look at it the headline from the article quoted sums it up.

A House of Cards – Construction Sector in Slovenia

Let me bring this up to date with the numbers from January from Eurostat.

Monthly comparison:The largest decreases were registered in Slovenia (-7.4%) Sweden (-5.1%), the Czech Republic

(-4.4%) and France (-4.0%)

Annual comparison: Production in construction fell in all Member States for which data are available for January 2013. The largest decreases were registered in Slovenia (-22.1%), Portugal (-20.2%),Poland (-17.3%), Slovakia (-14.9%) and the Netherlands(-13.7%)

As you can see the situation remains dire.

http://www.mindfulmoney.co.uk/wp/shaun-richards/slovenia-and-its-economy-need-help-but-where-can-they-get-it-from/

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Mish has it right:

http://globaleconomicanalysis.blogspot.co.uk/2013/04/slovenia-rules-out-bailout-translation.html

An official denial is in: Slovenia Rules Out Bailout. Here is my interpretation: "A bailout is already in the works, only the date of the announcement is uncertain".

Of course they will bail out their corrupt and greedy bankers. It's part of the deal for membership of the European club.

We'll only see any meaningful change in the attitudes of politicians towards transferring bank losses to the public whenever the public actually get fed up enough to take to the streets. Given how zombified the UK public is, that likely means food shortages will be required.

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Slovenia is too small, there will be no bail out.

It will be another Bail-In.

But . . . but . . . Cyprus was a 'special case' . . . 'not a template' . . . . official denials and all that.

I think you might be right, but one wonders what happens if they pull that stunt twice.

It would mean at least a second Euro country with capital controls. Not to mention it would finish the banks forever there like in Cyprus . . . who wants to put money in a bank where you can't take it out . . .

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But . . . but . . . Cyprus was a 'special case' . . . 'not a template' . . . . official denials and all that.

I think you might be right, but one wonders what happens if they pull that stunt twice.

It only applies in the special case of a country that is in the Eurozone but not called Germany.

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Slovenia does not have the national assets such as gas to flog for bailouts.

One nuke plant and and a few traditional power stations.

Two million people.

I worry about my friends there. What are the Germans up to?

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  • 238 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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