#5 Europe - Eastern Europe might cause some major issues in 2009 - Hungary already has had some major issues but many smaller eastern European countries followed the US model - borrow borrow borrow, spend spend spend. But unlike the US which somehow people still find the "safest country in the world" (the only country in the world who originates a global crisis and people flock to their currency) the Eastern European countries do not have this advantage. We could see multiple shock waves in smaller Eastern European countries in the year ahead especially if credit remains this impaired.
And so it is developing... speaking of all things Baltic (non shipping in this case) Bloomberg: Baltic Protests Erupt as EU's Worst Economies Shake
- The Baltic countries of Latvia, Lithuania and Estonia are facing unrest and street protests over government austerity measures that may make political leaders casualties of the worst economic collapse in the European Union.
- Protesters hurled stones and broke windows at the Parliament building during an anti-government demonstration in the capital of Vilnius today, leading to 11 arrests. It followed a larger riot on Jan. 13 in Riga, Latvia’s biggest city, in which 106 people were detained. Lithuanian Prime Minister Andrius Kubilius held an emergency Cabinet meeting as police pushed protesters back with rubber bullets and tear gas.
- Disruptions in the former communist nations just west of Russia contrast with 2006, when the economies of the three grew faster than any others in the 27-member EU. Now, leaders are facing calls to step down over painful spending and wage cuts, enacted more than a year after the International Monetary Fund warned that an economic meltdown was looming.
- “The frustration of people can have political ramifications for all the Baltic countries,” said Lars Christensen, chief analyst at Danske Bank AS, in a phone interview from Copenhagen. “Politicians are very restricted in what they can do now and that is very hard to explain to people.”
- About 7,000 people took part in today’s Vilnius demonstration, which was organized by the Lithuanian Trade Union Confederation to protest government tax reforms and public wage cuts. People marched along Vilnius’s main shopping and business boulevard chanting “Shame on You” and carrying signs “Stop Impoverishment and Unemployment” to the government building
- The frustration of citizens was felt the most in Latvia, which has had the biggest economic reversal. In 2006, gross domestic product expanded 12.2 percent, the highest rate in the EU. In the third quarter, GDP contracted 4.6 percent, the EU’s steepest dive. Zatlers, 53, said the next day that trust in the government and lawmakers had “catastrophically fallen.
- “I understand the hardships of people in the face of the economic downturn,” Semeta said. “These measures were necessary but may be socially painful individually. The essence of the system that’s been introduced as a medicine in this situation must remain.” (I believe "kick the can" policies would solve your problems; it solves ours. "Taking your medicine" is not something we advise you to ever do)
- The troubles may infect the economies of other former eastern-bloc nations and the Nordic states....“There is a risk that a financial crisis in Latvia could spread and create unease on the financial markets in Sweden and our neighboring countries,” Swedish central bank Governor Stefan Ingves said in a statement on Dec. 16.
- “The chances for the survival of the government are not great,” said Juhan Kiviraehk, a sociologist with the International Center for Defense Studies in Tallinn, the Estonian capital.
....and states continue to spend, no painful wage cuts or spending cuts here [Jan 14: USA Today - States Continue to Spend Despite Budget Shortfalls] - federal bailout money on the way to the states ($180 Billion at last count). The ability to print money from thin air (or borrow on grandchildren) is such a powerful tool; we're so lucky to have it.
3 comments:
Mark - nice looking site. Great job for those involved.
TM, I echo TJ's comment. The site looks very clean!
I'm glad you mentioned the issues arising in East Europe. We here in the US consider the populace of Europe in general as 'level headed' and not prone to rocking the boat, but in fact, they have a long history of public protest, which will probably get more intense as the economy gets worse. Oddly enough, mist Americans do remember the Berlin wall coming down, and maybe remember the 'Red October' group, but having lived in Europe, I recall watching the students from my hotel window as the students in Paris went on a rampage, setting fire to cars and throwing Molotovs at the Gendarmes.
Even with our awareness of issues like the Belgian Congo, Pakistan and Malaysian problems, we still ignore what for us could be the biggest local problem: Mexico.
Consider that they fund about 60% (at least that's what I've heard)of their social programs with oil revenue and that their largest oilfield is due to expire in late 2010. The present government under Calderon has tried, but cannot contain the fallout from their drug problem; corruption, murder, beheadings and execution of police members, journalists and politicians. Then there is the issue of daily kidnapping for ransom, forcing many wealthier families to move out of Mexico.
Wait till the oil money dries up and the welfare programs end. I suspect Mexico will turn out to be as bad as the barrios in Nicaragua. If anyone thinks we have an illegal immigration or Mexican Mafia problem now, wait a couple of years...
jegan
I'm just going to paste this whole thing in... This blogger is heavy on crude.... This latest article underscores my recent comments..jegan
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Gregor.us
You Peaked, Babe
Posted: 22 Jan 2009 06:55 AM CST
Mexican oil production is now declining at a rate of 9.2% per year. That’s a decline rate very close to the IEA Paris’ “scary rate” of 9.7%, which is how much global oil production would fall without any investment.
The problem in Mexico is with their largest field, Cantarell. Equally, it doesn’t help that the national oil company is constitutionally mandated to be part of the government, and that the entire country lives off of these revenues (after they’ve passed through the hands of the politicians). With oil production in decline for both geological and political reasons, it’s not surprising a growing number of observers have become worried about Mexican political stability.
Pity the role of the Mexican Energy Secretary, whose job it is to maintain the facade that Mexican oil production can rise once again, thus protecting the status quo and the Mexican way of life. This month, Georgina Kessel said that Mexico will develop new oil fields to boost output to 3 million barrels a day by 2015. But that is highly unlikely.
The history of oil production in all regions, states and countries is clear: once your largest field has peaked, you have peaked. And no amount of small discoveries can make up the difference. You can cobble together hundreds of these, but it’s just too hard to overcome the loss of the largest field. Best estimates suggest Cantarell peaked in 2004. Well, that’s just about the same year overal Mexican production peaked, above 3.8 Mb/day.
There’s nothing Ms Kessel can do to change that. Now that annual production has fallen to 2.80 Mb/day, I just want to say: You peaked, babe.
http://www.ezimages.net/upload/ESISUBS/PEMEX.JPG
-Gregor
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