Job Discussion Forums

[anospi]

I'm not in Poland at the moment, but I just had a 30 minute skype chat with my girlfriend in Wroclaw. In those 30 minutes, the pound went from 4.93zl to 5.01zl. An hour earlier it was 4.82zl. Has the financial crisis finally caught up with Poland? Anywhere I can find some news online about what is happening to the economy there, or is anyone out there in the know? The zloty is taking a bloody massive dive!

[lundjstuart]

its not the PLN, the PLN is strong and your currency is taking a dive! The reverse effects of the British and American economies!

[sharter]

The Zl's strength in no way reflects it's balance of trade or purchasing power parity.

Poland is a bubble right now.

Nowhere can sustain the kind of % price rises Poland has had in the last 2-3 years. The property market has been nuts.

The UK's in recession, so Poles will be heading home as they're laid off. Once developers in Poland stop building and the down turn kicks in there too, things will calm down.

Credit has fuelled Polish consumption too.

[Richfilth]

If the zloty is losing against the pound, how can the pound be diving? That doesn't make any sense at all.

As for Poland being in a credit bubble; tosh. 30% of Poles still don't have bank accounts, let alone cash debts, secured mortgages or credit cards. The property market itself never achieved the liquidity needed to be exposed to this credit crunch, and therefore, although there may be a slowdown, you certainly wont see a recession because people simply didn't have the money there to start with.

In fact, the only part of the above two posts that makes any sense is:

[lundjstuart]

In Poland its still a mainly cash based economy still. By only the mid-aged (30-45 years) and younger have credit cards and mortgages, its also very hard to get a loan as it is!

Refresh on you economic rules, I compiled some to help you out:


Principle #4: People respond to incentives

Principle #7: Governments can sometimes improve market outcomes

Principle #8: A country�s standard of living depends on its ability to produce goods and services

Principle #9: Prices rise when the government prints too much money

Principle #10: Society faces a short-run tradeoff between inflation and unemployment

Note to rich: Call me back, I need to talk to you!

[scotv]

While, I'm not a credentialed currency market expert, here are some factors contributing to the weakening zloty (pound, euro, florin, etc.) is that the american dollar is always considered the safest bet, so when economic turbulence sets in investors go with the greenback. Also, Poland relies on foreign investments to tackle its deficits. When times are tough foreign investors withdrawal from emerging markets, because of the risk invloved. Poland also doesn't have much in terms of capital reserves. So, when you have a more attractive currency to invest your money in as well as an economy that isn't as stable as some others the currency loses value.

[sharter]

My basic points were;

1-The Zl's strength doesn't reflect its ppp.

2-Poland has become a bubble in recent years.

3.The credit crunch will effect patterns of consumption in Poland.

None of that is tosh.

I agree that currency speculators have has a run on the Sterling/Zloty market.

The credit crunch will mean that banks will require larger mortgage deposits. That will effect the demand for housing. The credit crunch has sent world stock prices into freefall. That will effect jobs. Higher unemployment will effect demand and I mean that for all goods and sevices, not just the housing market.

A housing market that has seen increases of 50 and 60% in consecutive years isn't normal. In my opinmion it is a bubble that will burst. It simply can't continue at those rates. 2000 quid a square metre is more expensive than in many parts of the UK. As recession kicks in, mortgage repayments will become harder to meet for those who lose their jobs or those who have foreign currency mortgages in reserve currencies.

I was talking about the global credit situation and the effects it will have on domestic markets. That said, negative equity will happen in Poland.

Foreigners will also start selling up. Afterall, they've made their return.

I looked at a 3 bed new build terraced house in Grunwaldska the last time I was in Poznan. At 350,000 pounds it was simply overvalued.

As for the inflation/unemployment trade off. Well, the Philips Curve can move outwards or inwards. That's why you can have high unemployment and high inflation simultaneously. I don't really see what that argument had to do with anything I said.

[Richfilth]

Is it a bubble, or is it your opinion that it's a bubble, because you've stated both. I don't deny that a 50% price gain is unstable, but you're still missing the point that the property market in general is an absolutely tiny percentage of Poland's real economy; it's value, rise and fall is neither an indicator of Poland's true value, or of where Poland's economy is heading in the future.

The foreign investors have got their fingers burnt, and banks are increasing the costs of loans, but that still isn't going to affect Poland that much because Poland simply hasn't been running on credit in the way that Western states were. Foreign owners of companies here, including the banks, will be reluctant to sell their assets because they know that Poland will also be one of the best growth areas whilst the western world is suffering. As for the unemployment, yes, I agree with you, that could be a factor, but on the other side if we use Philips Curve economics, you'd expect the Monetary Policy Council to be taking measures already, which they haven't, and won't for a while yet.

I'd say this is a moot argument because no-one is providing any statistics to back any of this up and also, you're starting to sound a bit like a broken record. I disagree with two of your three main points, but it seems the reasons why are far too complex to go into on a TEFL forum, so the gentleman's conclusion would be "lets wait and see."

[sharter]

I'm not trying to have the last word..it's just quite a divisive debate.

So, you agree that the Zl's strength doesn't reflect it's ppp. You also agree that house price inflation of 50% is unusual. So, you agree with 2 not 1 of my 3 points. I chose house price inflation as it is the extreme. Price growth has been high in many other areas as well. I don't live there now but visit every few months and even when you take away the exchange rate factors, prices in Poland have started to outstrip those in the UK. Electrical goods, clothes and luxury items cost more in Poland than the UK. I think that is a bubble and yes, everything I say is based on opinion. My opinion is based on my experiences over the past 13 years. Yes, I am also sounding like a stuck record.

If I took a punt, I'd say that demand side factors will stop and even reverse the boom. People will lose jobs in all of this. People will default on mortgages, loans and credit card payments. Is there really room for more growth right now? The Uk's growth was influenced by the housing boom and I think that construction has underpinned a lot of local growth in places like Poznan.

One thing I've never figured though is this; how do big shopping malls like Stary Browar in Poznan stay in business when you never see anyone buying anyhting there (excluding Empik of course)?Poles just seem to wander around with old carrier bags with 'Morgan' written on them.

So, I'll guess we'll wait and see as you said. BTW what do you think is going to happen re the exchange rate, inflation,house prices, wages and interest rates?

[lundjstuart]

Sharter:

A) Poland is in such an elevated growth state right now because of the EU and UEFA pumping money into the economy. EU with grants to repair infrastructure and public transportation. With the UEFA, they are pumping money out left and right for new stadiums, hotels and other commodities that will be needed for the EURO 2012.

B) When do you ever see the Polish community use credit cards? If you really want to say it, they do use 'debit cards' but those are linked to their bank accounts, so there is no credit risk in that sense. You mainly see Polish people using cash.

C) Do you really see or predict that Polish people will get laid off? They work for a fraction of the money for the same job a Brit or Pat would work for. Its basic outsourcing but not to India. Have you ever seen an IT specialist work for more than 10,000 PLN in Poland? That job pays good money in the UK and USA. There will be no lay offs!

D) You don't even live here in Poland and so you only see things like a horse on the track when it comes these situations. Stop listening to British media reports, they're a waste of your time!

[sharter]

I've got your point and although I don't live there now, I'm there for 18 weeks of every year, which I think is enough to comment on the changes without looking at the British media.

Big infrastructure projects aside, I think the global recession will affect manufacturing. Demand for Poland's exports is sure to take a dive. That will result in lay-offs.

Lay-offs will hurt demand and people with mortgages and people who buy or might buy cars etc on tick.

Expectations will also come into play. That may well affect demand for luxury goods and entertainment amongst other things.

Germany is in recession, Russia and Denmark have applied to the IMF, Hungary is in the cack and th Uk and French economies are going into recession. I don't see how Poland can remain unaffected by all of this. Poles abroad will also lose jobs.

Supply side inflationary pressures should also ease now that commodity prices, especially oil, are falling. What this will do to growth is uncertain.

Flats prices on mamdom and oferty.net have fallen as far as I can see. Flats I was looking at last year are still there but cheaper. In Poznan, construction sites are putting up the shutters. (I know that's a local issue).

It'll be interesting to see what will happen if unemployment does rise in this global downturn.

And, do you really think the benefits of Poland's recent growth are being shared by all or a minority? Or are a few people getting really rich? How will that play out?

What do you think is going to happen in Poland over the coming say, 2 years? Wages aren't keeping up with prices and if recession really bites, sectors like IT (the one you mentioned) will be outsourced to cheaper places. I know the Danish company my ex-wife works for has talked about moving production elsewhere because the Zl has been so high.

The tone of your post is long on attitude but short on substance. All I've said is that I can't see the boom time continuing for much longer, that certain things cost way too much there now and that the Zloty is over-valued against Sterling. If you believe in hysteresis theories about exchange rates and look at the last ten years, that argument could be a valid one. Although with volatility the way it is at the moment, now might not be a good time to make calls.

Will it affect me personally? Not really. I'll just stay in crappier hotels, eat more fast food and stick to beer and vodka when I'm there. Whisky at 25 zs a shout and truly terrible 'international cuisine' in the rynek in Poznan at dreadfully exorbitant prices won't be missed at all. As for hotels like the Mercure, they're not much better than those like Hotelik, which are a fraction of the price. I buy all my son's stuff in the UK, it's better quality and cheaper. Same for clothes and electricals.

Life must be hard for you guys on 60Zl/hour. I wouldn't want to try and have a family in Poland on that kind of money.

[Harry from NWE]

[lundjstuart]

Harry, I know that your mad at yourself for not finding a better deal and not spending that type of price! I really hope that you have a nicer side and your not always a gent with a stick shoved up his a$$ and a ridiculously anal pr_ck when it comes to meeting you in person! After that note, Have any of your students had to cancel their English lessons because they lost their jobs or their company's did? I'm going to go with 'no' for my sake and ask you where will all the lay-offs be at in the future? If the immigrant Polish people are losing their jobs in the UK, why is Poland still having a shortage with workers? Answer that question Mr. I think I'm so cool cuz I'm from NWE!! Go ahead lash out at me, I just hope that your not such an a$$ to your students or other people!

[lundjstuart]

Harry from NWE- Lets look at what a 'commodity' really is:

A commodity is anything for which there is demand, but which is supplied without qualitative differentiation across a market. In other words, copper is copper. Rice is rice. Stereos, on the other hand, have many levels of quality. And, the better a stereo is, the more it will cost. The price of copper is universal, and fluctuates daily based on global supply and demand..

One of the characteristics of a commodity good is that its price is determined as a function of its market as a whole. Well-established physical commodities have actively traded spot and derivative markets. Generally, these are basic resources and agricultural products such as iron ore, crude oil, coal, ethanol, salt, sugar, coffee beans, soybeans, aluminum, rice, wheat, gold and silver.

Commoditization occurs as a goods or services market loses differentiation across its supply base, often by the diffusion of the intellectual capital necessary to acquire or produce it efficiently. As such, goods that formerly carried premium margins for market participants have become commodities, such as generic pharmaceuticals and silicon chips.

So by attacking me saying that UEFA isn't putting commodities into the market, sorry to say it but they are! Iron, Copper- you need these to build a stadium. Iron- for re barb, posts, supporting structuring. Copper- To help the water get to the field, for the shitter that you'll need to use, unless UEFA isn't planning on putting restrooms in the stadium or an irrigation system for the field. So please tell me why you are trying to attack me saying that I don't know shit! Maybe you don't know squat and so you have to tell people that they're stupid to make you feel smart! You should be sorry for your quixotic thoughts!

[Harry from NWE]