tag:blogger.com,1999:blog-8764541874043694159.post8479469503935960019..comments2024-03-28T12:23:39.665+00:00Comments on Coppola Comment: Slovenia and the banksFrances Coppolahttp://www.blogger.com/profile/09399390283774592713noreply@blogger.comBlogger24125tag:blogger.com,1999:blog-8764541874043694159.post-31453549372249752692016-08-21T23:34:53.226+01:002016-08-21T23:34:53.226+01:00Sorry, I should of course say NET inflows of funds...Sorry, I should of course say NET inflows of funds. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-6529337938390761712016-08-21T23:33:44.098+01:002016-08-21T23:33:44.098+01:00Karthik,
The capital account is the mirror image ...Karthik,<br /><br />The capital account is the mirror image of the current account. When there are inflows of funds, the capital account goes into surplus and the current account into deficit. Very large sudden inflows of funds (hot money flows) can therefore cause the current account deficit to balloon. <br /><br />Hope this answer your question.Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-37610950073512404172016-08-20T05:00:51.750+01:002016-08-20T05:00:51.750+01:00Hi Frances, I am not clear as to how capital inflo...Hi Frances, I am not clear as to how capital inflows leads to a massive Current Account Deficit - could you kindly help explain the link<br /><br />Refer ("The result, of course, was a mammoth inflow of foreign funds, a huge credit bubble, an enormous spike in real estate prices, and a massive current account deficit ")<br /><br />Thanks.Karthik R.https://www.blogger.com/profile/18005533417235308407noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-38116635253807936762016-07-29T13:04:35.244+01:002016-07-29T13:04:35.244+01:00In economic news, initial claims for unemployment ...In economic news, initial claims for unemployment benefits in the US showed a modest rebound last week.<br />Epic Researchhttp://www.naukri.com/epic-research-jobs-careers-1021624noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-87989758126175566262016-07-27T13:48:32.134+01:002016-07-27T13:48:32.134+01:00Never heard of Slovenia? I'm not sure when I f...Never heard of Slovenia? I'm not sure when I first heard of the place, but it can't have been any later than the 1980s. Certainly I'd heard of it some time before the break-up of federal Yugoslavia. We Eastern Europe-watchers used to think the Slovene reformers were clever & funny but a bit disengaged from the rest of the federation; if things turned nasty, it looked as if they were more likely to jump ship than stay and try to get it back on course. As indeed they did.<br /><br />On the other hand, I freely admit that I've skimmed this post - it would take about an hour to read it properly, what with all the terms I'd need to look up. I'm selectively ignorant, but I'm working on making it more selective.<br /><br />Philhttps://www.blogger.com/profile/07009879034507926661noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-65463212557528471302016-07-27T13:24:06.276+01:002016-07-27T13:24:06.276+01:00The ECB is busy reminding the Slovenian police tha...The ECB is busy reminding the Slovenian police that their officials and documentation are immune from investigation being only accountable to the European Court of Justice!Chrislongshttps://www.blogger.com/profile/08252889875324409569noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-77868349021806438092016-07-26T00:50:41.348+01:002016-07-26T00:50:41.348+01:00Comment already removed. Comment already removed. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-20205237140245852742016-07-25T23:20:58.783+01:002016-07-25T23:20:58.783+01:00Ranked 10 on the Global Peace Index, right after J...Ranked 10 on the Global Peace Index, right after Japan.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-20999933125579098702016-07-25T22:06:03.972+01:002016-07-25T22:06:03.972+01:00Regarding spreading it over the years, and even re...Regarding spreading it over the years, and even relegating the repayments to our "bad bank" (DUTB), there is a law draft on that in the initial legislative procedure, so it seems doable.<br /><br />Regarding the unforgiving EC, <br />(1) it may well forgive given its highly problematic involvement (one of the EC's lower official's replies to being told the equity is positive, hence a wipeout without compensation (pardon me, an "enhanced burden sharing") is legally impossible, he replied almost literally "So fudge it into negative!")<br />(2) also, let's wait a few days and see how much Italy will be forgiven with Monte dei Paschi di Siena.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-87973052526479637492016-07-25T21:32:53.565+01:002016-07-25T21:32:53.565+01:00Anonymous,
Nonono. It wouldn't be "sprea...Anonymous,<br /><br />Nonono. It wouldn't be "spread over several years". Overturning the bail-in would be an immediate hit to the fiscal finances, taking the fiscal deficit back over 3% again. These days the EC is completely unforgiving about deficits even slightly over 3% (just look at Finland). Slovenia would be back in the Excessive Deficit procedure again. <br /><br />As this would mean further fiscal tightening, we would expect unemployment to rise. I'm not going to play "my statistic is better than yours": in my book over 8% is too high and the focus of the government should be on bringing it down, not making good subordinated creditors of failed banks. <br /><br />I may indeed have a closer look at the conduct of the Slovenia bank rescue. But I would do that on Forbes, not this blog. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-60928913874374009672016-07-25T21:24:54.141+01:002016-07-25T21:24:54.141+01:00I knew Slovenia was hopeful about exiting the Exce...I knew Slovenia was hopeful about exiting the Excessive Deficit procedure. Must have missed that in the press release with all the excitement about Cyprus.Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-34256969288614616382016-07-25T21:20:54.912+01:002016-07-25T21:20:54.912+01:00I seek no quarrel, but for Slovenia:
(1) the lates...I seek no quarrel, but for Slovenia:<br />(1) the latest EC estimates/forecasts for the fiscal deficit are 2.4% for 2016 and 2.1% for 2017; spreading 1% of GDP over several years does not seem that utterly unaffordable;<br />(2) the EC forecasts for GDP growth in 2014 and 2015 turned out to be strong underestimates (again, reportedly/purportedly due to the bleak predictions submitted by BoS), so forecast of "slowing" GDP growth of 1.7% for 2016 may well turn out the same, and moreover, the forecast is 2.3% for 2017;<br />(3) ranked by the unemployment rate, using the same-for-all methodology of Eurostat ( http://ec.europa.eu/eurostat/tgm/table.do?tab=table&language=en&pcode=teilm020&tableSelection=1 ), Slovenia's 8.1% was in May 2016 better than the Eurozone's average as well as median, and better than Belgium's 8.4% and bit worse than Lithuania's 8.0% (yet mind the rapid and persistent emigration from the latter).<br /><br />And regarding the different post I seem to have wanted you to write :), I think there'll be plenty of opportunity for that. Slovenia is small, but the mess its central bank has made of its bail-in, with the abovementioned clandestinely extortive role of a member of the C-5 subunit of the C unit of the DG COMP of the EC, and "serendipitous" promotions of the most servile Slovenian officials involved to various sinecures in Brussels, Frankfurt, and London, may eventually be of interest in looking for explanations how, or why, the bail-in was so utterly misapplied in the initial overeager desire to "create templates", first in Cyprus in March 2013, and then in Slovenia in December 2013 ...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-20019892713764129182016-07-25T20:28:17.565+01:002016-07-25T20:28:17.565+01:00Oh, and one more thing... (says inspector Colombo ...Oh, and one more thing... (says inspector Colombo :) - As others have pointed out, calling Slovenia "peaceful by Balkans standards" is a really curious statement. But I see you've already changed it. Thanks for that.crthttps://www.blogger.com/profile/12640027184111907254noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-53488301640385977002016-07-25T20:24:45.976+01:002016-07-25T20:24:45.976+01:00Slovenia is no longer formally in the Excessive de...Slovenia is no longer formally in the Excessive deficit procedure - http://www.consilium.europa.eu/en/press/press-releases/2016/06/17-cyprus-ireland-slovenia-deficits/ . Current trends confirm this (6-month deficit points to an annual deficit slightly above 2%).<br /><br />This is not to say that all's well. However, the conditions are better than the numbers originally used in your post would suggest. After the glacial recognition of accumulated problems and the somewhat revolutionary methods employed in dealing with them, Slovenia is today much closer to being just another "boring" EU country than being a macroeconomic outlier.<br /><br />As to the future, yes, there absolutely are risks. Then again, it is possibly not a good idea to appeal to the authority of the IMF or any other of the venerable institutions on this topic - you've summed up the reason for this in the last paragraph of your text.<br /><br />Disclosure - I live in Slovenia (and am known to spend my time explaning to people how non-unique the local developments really are - it's just another cheap credit, bad hangover, Kubler-Ross stages of grief story).Crt Jakhelhttp://www.dergan.netnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-48808974250240932282016-07-25T18:28:53.069+01:002016-07-25T18:28:53.069+01:00There is no way a country that is running a fiscal...There is no way a country that is running a fiscal deficit of nearly 3% of GDP,has high unemployment and slowing GDP, is a Euro member and is still in the Excessive Deficit procedure can afford an additional 1% of GDP to overturn the bail-in. <br /><br />You seem to have wanted me to write a different post. I am not discussing the wrongs or rights of the bank bail-in. I am describing how we got to this point. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-26853669551286755582016-07-25T17:33:35.432+01:002016-07-25T17:33:35.432+01:00< And Slovenia can't possibly afford the co...< And Slovenia can't possibly afford the cost of overturning the bail-in, anyway.<br /><br />Overturning the bail-in would cost "Slovenia" about 1% of Slovenian GDP (a glance might suggest more like 1.4%, but mind that a considerable portion of sub debt was held by the state and state-owned entities). Is that something a country "can't possibly afford"?<br /><br />But perhaps more importantly, did it escape the author's attention that regarding the BoS, the publications whereof are the almost exclusive source for her writing, the Slovenian National Bureau of Investigation and the Slovenian Public Prosecutor’s Office have two weeks ago stated that the evidence they gathered in the ongoing investigation provides substantiation for BoS’s purposeful tampering with the banks' balance sheets as to paint a picture bleak enough to warrant a full wipeout of all the subordinated bonds in all the Slovenian banks that had them, without any compensation, all in the single night of 18 Dec 2013?<br /><br />It is rather incompatible with the laws of probability that of the 19 banks, 6 had sub bonds, and BoS detected negative equity in all the latter 6 and in none of the other 13. Furthermore, the Slovenian press has published an e-mail exchange between lower EC officials and Slovenian financial decision-makers containing a rather bizarre langue de bois ("enhanced burden sharing", as a codeword for a wipeout without compensation and without the right to its legal challenge), strengthening further the impression that implementing "enhanced burden sharing" on all Slovenian banks' sub debt then in existence was rather a politically-, and not financially/economically-based decision.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-86058208293102000592016-07-25T14:59:15.860+01:002016-07-25T14:59:15.860+01:00Anonymous,
Fair point about GDP, I will correct....Anonymous, <br /><br />Fair point about GDP, I will correct. The year-on-year growth rate is currently 2.5% and has been hovering between 2-3% since 2014. However, it is forecast to fall below 2% this year. See the IMF Article IV 2016 link in the text. <br /><br />I do not regard a very large current account surplus as a positive feature. <br /><br />Regarding the banks: <br /><br />- while NPLs remain a problem, bank capital will remain at risk. <br /><br />- I'm aware of the issues around the approach to the bank recapitalisation, but it is not primarily the focus of this article. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-34651261527955996432016-07-25T14:40:46.565+01:002016-07-25T14:40:46.565+01:00Dominik Gruskovnjak, your comment has been deleted...Dominik Gruskovnjak, your comment has been deleted because it violates the comments policy of this blog. You can find the policy on the About This Blog page. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-89680908650889506272016-07-25T14:39:05.687+01:002016-07-25T14:39:05.687+01:00I did not say it was not. I did not say it was not. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-23922008112898402762016-07-25T14:31:37.186+01:002016-07-25T14:31:37.186+01:00You're painting a too bleak picture of Sloveni...You're painting a too bleak picture of Slovenia. GDP growth is steady around 3% since 2014, and not 1%. Current account surplus is 8,5%/GDP, higher than Germany's for example.<br /><br />Also the banks are now one of the most capitalized (overcapitalized even) in the EU.<br />And this is the main issue the bondholders and shareholders have; that the banking rescue was excessive, the bank's assets were valued through undisclosed secret procedures, that completely sidestepped standard accounting practices. The hole in the banks was calculated exactly so that all subordinated debt holders were completely wiped out. This was done so that the fiscal burden on the budget would be minimal, since when the recapitalisation was done the yield on govt bonds was at unsustainable levels. So, the shareholders and bondholders point is that they were harmed with this "virtual" bankruptcy of most of the banking system, and they would have gotten more out of their shares and bonds if the banks went through a regular bankruptcy procedure.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-55390095137481592502016-07-25T14:02:46.737+01:002016-07-25T14:02:46.737+01:00...peaceful (by Balkan standards).
Do you realize......peaceful (by Balkan standards).<br /><br />Do you realize Slovenia is one of the safest countries in the world?Unknownhttps://www.blogger.com/profile/11721969545392962459noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-1405045764496797372016-07-25T13:35:07.665+01:002016-07-25T13:35:07.665+01:00"...peaceful (by Balkan standards)..."
..."...peaceful (by Balkan standards)..."<br /><br />Stopped reading after that.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-52755268349436389282016-07-23T13:22:06.683+01:002016-07-23T13:22:06.683+01:00So why is everyone so determined to keep the Euro?...So why is everyone so determined to keep the Euro? It seems to cripple every country except Germany.El Harrohttps://www.blogger.com/profile/03114846593099480928noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-79646621731370011672016-07-23T11:07:27.095+01:002016-07-23T11:07:27.095+01:00This comment has been removed by the author.Anonymoushttps://www.blogger.com/profile/01200990559060168509noreply@blogger.com