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Post by mambo on Mar 10, 2010 0:36:50 GMT 1
They probably want to build a Lidl in a position where they will need the influence of the mayor again. It is all politics.
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Post by mambo on Mar 10, 2010 11:52:53 GMT 1
IMF is not always a good solution. They work with very strict rules and these rules probably won't work in a crisis. One of the rules e.g. is to limit government spending and basically the government would require prior permission if they want to spend money. THis may work in a normal situation, but in this crisis it may not work at all.
But fully agree with you on the other suggestion: 'get rid of all the politicians', but you will also need to get rid of all the 'pocket fillers' in government service. Croatia is a very complicated situation because the system is rotten to the core.
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Post by boris on Mar 13, 2010 15:19:06 GMT 1
CRO goverment is pumpimg 15 billion kunas in CRO economy, but IMO whatever they do it is not going to be very effectuve as the currency kuna is much overvalued.
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Post by mambo on Mar 13, 2010 21:25:03 GMT 1
Problem is not so much the perceived overvaluation of the Kuna (with which I don't agree by the way), but the fact that one day the government has to pay this money back. The only way by getting the money back is through taxes or spending less than what they get. Both are completely impossible in Croatia, so most likely the government will bankrupt itself by having to pay enormous amounts of interest each year. Worst what can happen then is that the banks, institutional investors etc will not subscribe to government loans anymore. This will hike the interest rates even further and will add to the already huge problem. In the end the Kuna will be completely worthless and banks will start demanding a fixed rate against the euro.
The Croatian government should invest heavily in increasing the production of this country. Bio plastic, solar power, bio energy, water management, tourism, fish production, agriculture (vast empty lands which can be used for almost anything) etc. Focusing on expanding production will increase the number of jobs available and hopefully increase export. Export is what will bring in the so needed money to the governments treasury.
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Post by Madgolfer on Mar 14, 2010 10:27:32 GMT 1
The Croatian government should invest heavily in increasing the production of this country.
Export is what will bring in the so needed money to the governments treasury.
Quite right Mambo, but the Croatian "management/Govt" have very little experience of an export led economy and I have to assume, no real idea how to go about creating one.
Innovative and forward thinking business people need the right kind of environment to flourish.
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Post by ray51 on Mar 14, 2010 12:10:40 GMT 1
Jis' Luurve that cartoon , MG!
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Post by dugodude on Mar 22, 2010 19:51:29 GMT 1
Solitum; "The problems is that you have a huge part of the people getting their paid by the public or from banks, insurance companies etc. all from industries which does bring 1 Kuna into Croatia, in most cases these people even get above average salaries, pensions etc. Q Are you saying that banks, insurance companies, etc bring no added value to the economy? yes, i am, this is service industries, they are their to service the business and the people, they do not produce goods, which can be exported. ................. Interesting theory there - so only people or companies that export add value? On that basis, we should do away with dustbin men, police and even doctors, except those who treat paying foreigners presumably (as they bring in foreign exchange, right?) dd
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Post by dugodude on Mar 22, 2010 20:03:21 GMT 1
You imply here that monetary engineering is the only way to devalue work. Politically it really manages to do it without strong social backlash, but in Croatia case, that would mean financial death. 10 years ago, it would have been possible, but right now, Croatia citizens are simply to deep in debts. The part of population hit the most would be the middle class. During last decade, they amassed an impressive debt, mostly buying their homes, and since their debts are in Euros and Francs, they would be driven below poverty level and basically forced to emigrate. Personally, I believe that in any society, middle class is the engine of progress and contributes the most - killing middle class would mean the destruction of economy and any chance of progress. . I do not wish to 'devalue' work, neither that done by a Croatia nor that done by a Sri Lankan coconut picker. I am talking real economies; if you (as Croatia does) pegs its currency against the euro, and the euro is strong due to a highly productive German and north European economies (although right now it is being dragged down by poor S European economies) - then if Croatia does not improve its productivity in line with the dominant states of Europe its goods WILL BECOME RELATIVELY EXPENSIVE. If these goods are something which people want regardless of price (eb some fancy watch or wine brands) it does not matter too much. But, Dubrovnik excepted perhaps, they ain't. Most people, once they see a product from one country become expensive, drop it and buy elsewhere. Having a floating currency is a safety valve against this problem. It allows you to reduce your price relatively to your competitors, keep jobs and create new ones. (Ask the Chinese, who have artificially kept their currency too low for mayub e 2 decades now.) But Croatia (and greece, Portugal etc) have pegged themselves agasint the Euro, or joined it. As a result, one day, sooner or later, the Tsunami will come, and when it does, fan, hits, s..... etc. DD
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Post by justapixel on Mar 22, 2010 22:40:34 GMT 1
I am talking real economies; if you (as Croatia does) pegs its currency against the euro, and the euro is strong due to a highly productive German and north European economies (although right now it is being dragged down by poor S European economies) - then if Croatia does not improve its productivity in line with the dominant states of Europe its goods WILL BECOME RELATIVELY EXPENSIVE. Well, unless you live in USSR, you can't really "peg" a currency against another, the only thing you can do is have a policy and pour some resources (e.g. monetary reserves) into enforcing it. In case your idea is way off the reality, then you'll fail and the value of the currency will go it's own way. Also, there is no direct connection between a country's productivity and the value/trajectory of it's currency. If these goods are something which people want regardless of price (eb some fancy watch or wine brands) it does not matter too much. But, Dubrovnik excepted perhaps, they ain't. Most people, once they see a product from one country become expensive, drop it and buy elsewhere. You mention Dubrovnik, probably implying it's too high prices. The point is that Dubrovnik is not expensive because of Kuna value, but because it's residents deem it so. The market will decide if that notion is economically sound. These days I'm having hard time finding a place on the coast available in June. And yes, I believe the prices are too high, but still there's obviously demand. Having a floating currency is a safety valve against this problem. It allows you to reduce your price relatively to your competitors, keep jobs and create new ones. (Ask the Chinese, who have artificially kept their currency too low for mayub e 2 decades now.) But Croatia (and greece, Portugal etc) have pegged themselves agasint the Euro, or joined it. Yeah, currency value can be used as a cushion and it maintains a certain negative feedback automatism to help a country's exports in rough times. Still, helping country's exports by reducing the value of kuna is the last thing we need in Croatia. Reducing the taxes and bureaucracy and providing financial aid would prove to be much, much more effective. And that's without ruining the rest of the economy. As a result, one day, sooner or later, the Tsunami will come, and when it does, fan, hits, s..... etc. Errr... like this here and now isn't Tsunami enough? .
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Post by solitum on Mar 24, 2010 22:32:56 GMT 1
yes, i am, this is service industries, they are their to service the business and the people, they do not produce goods, which can be exported. ................. Interesting theory there - so only people or companies that export add value? dd Yes you got 100% correct, expect you missed the part from prior in the conversation where it was mentioned produce and export!
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Post by upthevilla on Apr 2, 2010 13:47:37 GMT 1
I heard yesterday that the Croatian gov have borrowed 500 million euro from the Croatian banks. Not sure of the full story but it seems very bizarre to me if true
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Post by Ribaric on Apr 2, 2010 18:36:27 GMT 1
What's your source UTV? I won't mention Chel.......
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Post by gmh on Apr 2, 2010 21:54:17 GMT 1
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Post by upthevilla on Apr 3, 2010 8:42:57 GMT 1
( What's your source UTV? ) it was my wife, she was rambling on to her friends the other night ,complaining about the gov. I cought the jist of it but it was all in Croatian. I asked her later when her friends had gone but it was late. All i got was. "you know,..... bank are giving the gov money, i tell you tomorrow. Goodnight x x"
gmh. Thanks for the link
I won't mention Chel....... And rightly so
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Post by mambo on Apr 3, 2010 20:25:34 GMT 1
It is not uncommon. In the Caribbean I have seen the same. The goverment offers state loans with high interest rates and the banks 'can' sign in. Most of the loans are short term loans, but several are mid term loans. The next thing you will see is that the interest rates will rise every month and the government will ask the banks to roll the loans over. On Curacao the end result was that the government owned more in interest each year than the total GDP and the only way out was that the Dutch government paid off all the debts. Big question for Croatia is..................who will pay off all their debts ?
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