Friday, January 28, 2011

The week in review...

While Polish leaders joined global big wigs for the world's top schmooze and booze fest in Davos, the political fight died down only to be replaced by an economic one: the Polish government and its pension "reform" versus Leszek "Mr. Shock Therapy" Balcerowicz. The government wants to effectively roll back the previous pension reform that added a private second-pillar to help put off deeper fiscal reform. Mr. Balcerowicz says this is stealing from future pensions and backs shock therapy light. Don't worry, though. No real debate occurred. Instead, the government branded Balcerowicz an idiot and a barbarian.

The Financial Times' Jan Cienski took a closer look at the issue and made a fine point: "Balcerowicz and other economists have become the de-facto opposition" at a time when the main opposition party, the conservative Law and Justice, is fixated on the Smolensk crash that killed Lech Kaczynski. Law and Justice's obsession does play well to a hardcore, but much less well among the majority of Polish voters, thereby creating a nice niche for an opposition party to fill.

The FT's main Polish blogger also hits out at the government over its incredible shrinking road-building plans.

The Wall Street Journal's New Europe blog saw Marcin Sobczyk likewise highlight the battle over the pension "reform," including a nice little refresher in paragraph two for the economically challenged. The only thing I might have added is that Monetary Policy Council member Andrzej Rzonca, who he cites criticising the government's plan, is a former disciple of Balcerowicz. Saying Rzonca supports Balcerowicz is kind of like noting Paul supported Jesus.

Also on New Europe, Sobczyk covers -- is this is a blog or news? -- the view of a deputy National Bank of Poland governor, Witold Kozinski, who told the daily Gazeta Wyborcza that the zloty could weaken if foreign investors worry too much about high public debt and a wide budget deficit. Wow, genius stuff.

But I guess the zloty could indeed be depressed on fiscal worries, but is the situation really so bad Poland faces default? This was apparently stated by Barclays in a recent report. Yes, the very same Barclays that during the crisis was bailed out by Persian Gulf investors. Talk about the kettle calling the pot black.

It is, though, undeniable debt is growing (check out the handy Polish debt clock for more) and growing faster than the population, which grew by an absolutely stunning 0.1% to 38,200,000 at the end of 2010. The numbers also show a Poland getting older. Some 16.9% of the population were over 65, up 200,000 from the previous year. Considering how fast Poland will get older, if I were the business type, all I know is I would be investing huge in the haemorrhoidal cream industry (speaking of haemorrhoids, here's one of the weirdest ads ever in Polish).

Finally, for the feel good story of the week, here's a great story/video piece about Baltic, the dog who was heroically rescued a year ago from an ice floe. He just recently celebrated his first anniversary. Dobry pies, Baltic, dobry pies.

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