|
In response to last
Friday's post Slovenian Bond Yield Breaks
7%, First Time Since Euro Entry in 2007 I received an
interesting email from a Slovenian economist who says "Our banking
system is on the brink of collapse."
Luka Gubo writes ...
Hello Mish!
I am an economist from Slovenia (I have written you before about social
unrest in Slovenia). I just want to point out few facts about Slovenia.
1.
Slovenian debt to GDP ratio has doubled since 2009
(one of highest growing on the planet)
2.
Our banking system is on the brink of collapse.
Biggest bank (Nova Ljubljanska Banka - NLB) is
owned by the government and almost all the money it has lent is sub-prime
(much worse than in US up to 2007/08) or it was lent politically to chosen
people who now can't pay the debt back. NLB has 15% bad loans (payments being
late more than 90-day) and the number is getting higher.
3.
Our housing market is frozen. Prices are not falling
because no one is buying or selling. Most of the construction companies are
bankrupt and they owe lots of money to banks. (percentage
of loans that payments are late in construction sector is mind boggling 25%!
- and is even growing!)
4.
Government has recapitalized NLB with 250 million
€. It will probably do it again with 400 million. I have calculated
that if the bank was for sale it would be sold for no more than 400 million
€! So taxpayers have already 250M and will pay another 400M for what?
For saving some banker's ass because of his bad decisions? (And they call the bank "Slovenian silver"!)
5.
There is no interest in Slovenia to leave EU.
Moreover, it may be better for incompetent bureaucrats from EU to run the
monetary system because things would be much worse if run by incompetent
Slovenian bureaucrats.
6.
Slovenian banks will need to borrow at least 5
billion € in 2012 and get about 1 billion € of fresh capital. Do
you know someone who will give them the money? I truly hope it will not be
the taxpayer.
7.
When the banks start selling real estate, the market
will collapse 20-30% in a year or two. That will further deteriorate bank
balance sheets and the problems will be much worse.
8.
Our labor market is totally inflexible and
unemployment rate is getting higher (currently at 11.5%)
So if someone says to you that Slovenia is healthy just tell him the facts.
Slovenia is not healthy. It has a brain-tumor that is getting worse.
By the way, Bostjan Vasle
is a great economist but he works for incapable government. When he says
there is a possibility for recession, we know there is a 100% chance
recession is coming. He doesn't say so directly out of fear the government
will implement some Keynesian silliness or other crazy ideas.
Best regards from Slovenia!
Luka Gubo, frustrated with Slovenian government analyst and worried
about banking system economist
Luka Gubo
Senior Analyst and Economist
Finančni trgi d.o.o.
The surprising thing to me was not his candor, but
the willingness of Luka to share his full name. A quick search led me to Finančni blog, where he shares his
views.
Thanks Luka. Good luck to
you.
|
