Monday, January 31, 2011

Kaczynski's zloty dream

Who knew Jaroslaw Kaczynski was such a visionary. Poland's infamous cranky conservative and globally respected economic theorist (not really) said Monday the humble Polish zloty should become a reserve currency for Poland's neighbours, second only to the mighty-for-now dollar and once-mighty euro.

"Some say the zloty should last in Poland for 10 years, but I go further and say it should stay for at least 20 years," the Law and Justice leader told journalists in Warsaw Monday about his euro adoption view. "The zloty should become the third reserve currency in the region, after the dollar and the euro."

Reserve currencies play a key role in the global financial system, as they are a store of supposedly stable wealth and are used to pay for international debt obligations. Globally, the American greenback is in the ascendancy. The euro was once seen as a potential replacement, though the Greeks, Irish and Portuguese largely put paid to that. With the dollar also on the defence as America's global star wanes and Chinese officials question its role, perhaps Kaczynski believes the zloty could play that role.

But the man widely known by the diminutive Jarek undermined his big zloty ambitions with nearly all other statements he made on the economy. Kaczynski said taxing various banking operations could create yearly revenues for the budget of tens of billions of zloty a year. Ahem, ahhh, Jarek, ok, so you will massively tax banks. What do you propose they will lend to create your super strong economy that will allow the zloty to be a reserve currency?

Kaczynski took further aim at banks, saying "Polish" capital needed to increase in the Polish banking sector at the expense of "foreign" capital. The energy sector too should not be privatised to "foreigners."

Oh, those dastardly foreigners. They are ruining Poland by . . . investing billions and billions of euros, dollars, yuan (you name it), buying more and more Poland-made products, transferring know-how of all sorts, and buying the government bonds on which the over-spending that Kaczynski enjoyed when prime minister in 2005-07 and the current government now enjoys was and is largely based.

Finally, aren't those pesky "foreigners" supposed to be the ones using the zloty as a reserve currency?

We'll leave that question to the man himself, a man who took 10 or so seconds in his Monday presentation to realise he was saying "euros" instead of "zloty." Take that to the bank.

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