[Freedombox-discuss] Poland on its Way to Greece

[Austin]

Creative Public Finance
Poland on its Way to Greece

Link: http://www.strategy.xaa.pl/Poland-on-its-way-to-Greece.pdf

 
 
Fragments from the publication:

Polish public debt revaluation  
Poland’s public debt, but also the citizens’ has been growing like an 
avalanche in the most recent period. Poles’ debt increased to 500 billion 
zloty, but the most important is the dynamics of the increase of the debt. 
Due to mortgage credits the private debt of the Poles grew from 34.5 
billion PLN in March 2005 to the amount of 286 billion PLN in May 2011, so 
within 6 years, the mortgage debt of the Poles grew by 728%. It is the 
dynamics of debt increase translates into the dynamics of disposalble 
income of households. 
For many years Poland will feel a great increase of obligations due to the 
increase of mortgage debt of its citizens. Every crisis and even a period 
of poorer market lookout will remind the Poles of the credit boom of the 
past 6 years. Even in the United States or Spain there has not been a 
similar percentage of increase of debt of the citizens resulting from 
mortgage credits. 
The situation is even more dramatic in Poland because more than half of the 
value of mortgage credits is denominated in Swiss franc. The borrowers, 
apart from the purchase of the house, they have taken speculative positions 
in foreign exchange market. However, mortgage credit for a house or an 
apartment is not the best instrument to invest in the Forex market. (
)

Margin Analysis in Economy
The Union’s expenses for Poland in the amount of 2.3 percent of the Polish 
GDP influence the growth of the GDP by at least 6 percentage points. It is 
one of the symptoms of the multiplier effect of one event on another. 
However, the influence of the economic stimulus may be more diversified. 
(
)
Therefore if the increase of assistance from the Union had a multiplier 
effect on the growth of the GDP in Poland, there is probably also a reverse 
dependency. The fact that one is a net payer by Germany or France limits 
their GDP much more significantly than it appears from the amounts 
transferred. In case of Germany who pays the most into the Union budget, 
the net spending of 12 billion euro annually means that, already with the 
view of the perspective of next year, this expense lessens the GDP of 
Germany by about 40 billion euro. Since it is the life cycle of analysis, 
then the lack of means translates in a multiplier effect into subsequent 
years, etc. The final effect means that the long-term contribution of 
Germany may turn out to be an excessive burden that is visible only in 10-
15 years. The amounts that the Germans are giving away to the Union budget 
now plus the multiplier effect in long-term may bring about the fact that 
the Germans will pay for the Union several hundred billion euro (near one 
trillion) expressed in current euro – this is the power of the multiplier 
effect in a long period of time. (
)
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