Slovenia Encounters Debt Trouble and May Need Bailout

[UtwigMU]

Yet five years later, this alpine nation with two million people risks the dubious distinction of becoming the first former socialist country in the European Union to need a bailout.

Janez Jansa, the Slovenian prime minister, warned last month that debt troubles could eventually force him to seek European aid. And his government has already promised to put up guarantees of as much as 4 billion euros, ($5.2 billion) — more than 11 percent of gross domestic product — to help the country’s banking sector unwind bad real estate and commercial loans.

Mired in recession, weighed down by crippled banks and battered by the bond markets, Slovenia’s fall from grace has cast doubt on an economic transition that was once the envy of Central and Eastern Europe.

http://www.nytimes.com/2012/09/15/business/global/slovenia-runs-into-debt-trouble.html?_r=1&pagewanted=all

I think it's quite grim since most people here are not aware of what needs to be done at this point and they are not yet grasping the reality.

[dZeus]

what about Hungary? They're in deep trouble and Mr. Orban seems to want to take on the IMF/EU head on.

[UtwigMU]

The catch is, during 1990's some in Slovenia always pointed out how Hungary fared poorly because they sold everything (companies) to foreigners and we're doing much better because we kept everything.

Most big companies in Slovenia are partially state partially state funds, partially cross-owned. Effectively they are state owned and some were bought off with loans by their managers resulting in bankruptcies once stocks tanked taking down banks with them.

Also we are in the Euro, while Hungary is not, so we will have to be bailed out. Also Hungary can print money and debase their currency. Their currency used to hold pretty much 1-1 parity with our and during entry in Euro it was at about 240 Slovenian Tolars or Hungarian Forints for 1 Euro. Now their currency is at about 280 Forints for 1 Euro (consider that Euro during this time lost much value compared to USD).

The average Slovenians think Slovenia is the greatest place if not centre of the World and that we can never be compared to Hungarians, Czechs, Slovaks or Poles who used to come here in their funny cars and wearing funny clothes. For example here adjective Czech means something of poor quality. (Eg.: Flip-flops are Czech, the ECS motherboards are Czech, we used to joke Trabant is PeVeCe Porsche - say it with Hungarian accent). During the fall of Berlin wall, 1990s and 2000s we were the richest ex communist country.

I think that the sooner this perception ends, the better.

[UtwigMU]

In Slovenia we presently have centre-right pro-European government (our PM is aligned with EPP and consults with Merkel often).

While leftists are less so European. Our president and leader of opposition appeared on some WW2 partisan celebration where the leader of veterans nearly declared war on USA and the West. They see everyone who is not extreme leftist as "fascist" or "theocrat".

The problem is political situation is completely blocked and while the government has majority, any legislation passed that does not please unions (relict of communism the way they are organized here) and the left can go on referendum and can be voted down.

Also the leftists and prevalent media are saying that if we borrow a bit more and start road building and construction boom again, everything will be OK.

Sadly it takes foreign media to write the truth (recently Franfkfurter Allgegmeine Zeitung wrote that we are the Spain of central Europe).

[UtwigMU]

The most absurd is that since the beginning of year the main themes of discussion were:
- whether about 7 gay couples in Slovenia can adopt children;
- who should be or not be invited to which state celebration;
- which banners should be flown there;
- who the military barracks should be named after.

And now:
- how many stanzas should our national anthem have.

I don't know whether to laugh or cry.