Now Poland Under Attack

Polish CDS prices are nowhere near the PIIGS, but they are moving in that direction. CDS rates earlier today: 5Y Poland CDS +20% at 152bps, Portugal +13% at 440. Greece at 945bps.

Poland's Donald Tusk: A New Free Market Leader or Just Confused Technocrat

FT recently interviewed Poland's Prime Minister, Donald Tusk.

The theme of the interview was the Prime Minister's view that Poland in needs maintain a free market approach to the economy. Indeed,to be a role model in free market development, for Eastern Europe. At one point he says Poland has the courage to be such. Yet, the start of the video has Tusk talking like an econ technocrat has he discusses how he wants a limit on the size of the government budget BUT a limit that is actually annual growth in the government budget of 1%. Methinks real courage would be a politician or government that shows how to decrease government's annual budget, not increase it. He sounds more like President Obama then a free market advocate here.

Tusk also discusses energy purchases as though there needs to be a national energy buying policy. Indeed, he calls for EU solidarity in energy policy. This is a bit away from what Milton Friedman might think is a free market energy policy. Why not just let energy providers, including Russia's Gazprom, simply compete to sell gasoline and heating oil to Poland's consumers? What does a national oil policy have anything to do with free markets?

Tusk talks a good game about free markets and private property throughout the interview, which is a good thing. Talk about private property and free markets is important, but I wonder if he really understand what it means. In the two examples during the interview, when he leaves generalities and starts talking specifics, the budget and oil "policy", he sounds more like a technocrat than a free market disciple. Somebody in Poland should call him on it.

Here's the video.

Murray Rothbard's Impact On Poland

Poland always had warm open arms for the great free market economist Murray Rothard. He visited the country for a week in 1986, before the Berlin Wall fell and before the collapse of the Soviet Union.

At the time, he wrote:

In March 1986, I spent a fascinating week at a conference at a hotel in Mrogowo, in the lake country of northern Poland (formerly East Prussia). The conference, a broad-ranging symposium on "Economics and Social Change," was hosted by the Institute of Sociology at the University of Warsaw, and sponsored by a group of English conservative and free-market scholars.

Even though economically, as one of the Western participants noted, Poland is a "giant slum," its countryside, small towns, and cities in evident and grim decay, this gallant nation is intellectually the freest in the Eastern bloc. There is no other country in the Soviet orbit at which a conference of this sort could possibly be held.

Rothbard would be proud to know that the Poles took to heart what he must have told them during that week, about the importance and beauty of free markets, and that they must have also taken to heart his writings and those of other great free market economists.

Here's Peter Schiff writing today, more than 20 years later, on the progress the Poles have made:

Last summer, I was invited to speak at the Economic Forum in Krynica, a resort town in Southern Poland. I was amazed at the level of economic activity and civic spirit that was on display throughout the country. I also was fairly surprised that my economic views, which are routinely ridiculed at home, have much wider support among the Polish economic officials who presented at the conference.

This common sense understanding was showcased in an opinion piece published this week in the Financial Times by Polish Finance Minister Jacek Rostowski. Contrary to the public flogging of the free market currently underway in Washington, under the auspices of the Financial Crisis Inquiry Commission, Rostowski explains how governments caused the Crash of 2008 by removing the necessary element of fear from the markets. He states that this was symptomatic of the "deep Keynesian project," in which governments over the last half century have looked to smooth the economic cycle through periodic floods of monetary expansion and government spending. I couldn't have said it better myself.

A product of the Solidarity movement that opposed the Polish Communist Party in the 1980's, Mr. Rostowski, like many of his colleagues in the current Polish Administration, is intimately familiar with the hazards of central economic planning. He has seen this movie before, and he knows how it ends.

Instead, Poland has enacted economic policies that are informed by a belief in Austrian School (read: free market) economics. After the downfall of the Communists in 1989, Rostowski was part of a group that called for "shock therapy": the rapid privatization of state-owned enterprises and the dismantling of price and currency controls.

In 2007, the center-libertarian Civic Platform party was put in power, with Rostowski as Finance Minister. Along with Prime Minister Donald Tusk, he has continued the process of transforming Poland into a laissez-faire paradise. Not accidentally, Poland is the only EU member state that showed positive GDP growth in 2009, at 1.9%. Also its public debt, at roughly 55% of GDP, compares favorably with its neighbors - and with the United States.

A top priority of their administration was reduction of the income tax. The previous system, with three-tiers of 19%, 30%, and 40%, has been reduced to two tiers: 18% and 32%. In addition, the system's minimal use of deductions and credits makes it radically simpler than the U.S. income tax.

Snapshot: Poland

Of the central European emerging markets, Poland is best placed to weather the western slowdown. With a bigger domestic market, and larger share of exports going to still fast-growing Russia and Ukraine, only about 20 per cent of gross domestic product comes from exports to the eurozone, against about 40 per cent for the Czech Republic, Hungary and Slovakia. Poland has avoided Latvia and Estonia’s boom and bust, and Hungary’s public spending spree followed by painful belt-tightening. The governing coalition looks relatively stable in a region known for political volatility.

Europe of the Future: Germany Shrinks, France Grows, but UK Population Booms

Britain will overtake Germany and France to become the biggest country in the EU in 50 years' time, according to population projections unveiled yesterday. A survey of demographic trends by the EU finds Britain's positive birth rate contrasting strongly with most other large countries in Europe.

The survey predicts that Britain's population by 2060 will increase by 25% from the current figure of just over 61 million to almost 77 million.

Germany is the biggest country in the EU, with more than 82 million people, but it is likely to shed almost 12 million by 2060, says the report.

The French population will rise to almost 72 million by 2060.

Of the biggest six EU countries (Germany, France, Britain, Italy, Spain and Poland) Britain has by far the greatest birth rates. Only Luxembourg, Cyprus, and Ireland are growing faster than the UK.

The average age of Europeans is now just over 40; this will be 48 by 2060. The average age for Britons is 39 and will be 42 in 2060 - the lowest age in Europe with the exception of Luxembourg.

The EU's population now stands at 495 million and is projected to rise to more than 520 million by 2035, before falling to 505 million by 2060.

The strongly Roman Catholic countries of Europe are having fewer babies. The Italian population will stay the same over the next 50 years, while Poland's and Lithuania's will shrink considerably. Spain's population is forecast to increase by 6 million. Life expectancy is also rising. In Ireland, women will live to 89 and men to 85. Almost one in three Europeans will be of pensionable age if 65 remains the threshold.

Crude Oil Soars on US Mischief With Russia

GW has found a new way to drive up the oil price. The war in Iraq and the threat of war with Iran are not enough. GW has decided to surround Russia. First by turning Georgia into a US proxy and then by placing a military defense shield in Poland.

The plan(?) is working.

Crude oil futures are above $120, again.

Crude for October delivery rose $5.64, or 4.9%, to $121.20 a barrel on its first full trading day on the New York Mercantile Exchange.

To understand the national psyche of Poland that would allow the US to plant a missile defense shield there, see Peter S. Rieth's important analysis,Oh, Me! Me! Shoot Me!: A Summary of Contemporary Polish Foreign Policy

Russian Response To US Missle Shield In Poland Will Go Beyond Diplomacy

Russia's Foreign Ministry has issued an official statement saying the U.S. missile shield plans are clearly aimed at weakening Russia.

Russia says its response to the further development of a U.S. missile shield in Poland will go beyond diplomacy.

And the egging on of Russia continues:

"When you threaten Poland, you perhaps forget that it is not 1988," Secretary of State Condoleezza Rice said. "It's 2008 and the United States has a ... firm treaty guarantee to defend Poland's territory as if it was the territory of the United States. So it's probably not wise to throw these threats around."

Does GW have a mad plan to takeover the world before he leaves office?

Rice Signs Missile Defense Deal With Poland

Secretary of State Condoleezza Rice and her Polish counterpart signed a deal today to build a U.S. missile defense base in Poland.

The deal calls for the installation of 10 U.S. interceptor missiles just 115 miles from Russia's westernmost border.

U.S.' Gates Dismisses Russian Warnings to Poland

Ok, get this straight. We attacked Iraq because of non-existant weapons of mass destruction. We may attack Iran because they may have nuclear missiles some time in the future.

At the same time, Russia which has nuclear weapons (lots of them), threatens Poland wth them. The US reaction: "Hey, no biggie."

Reuters reports:

Pentagon chief Robert Gates dismissed as "empty rhetoric" on Sunday Russian warnings that Moscow would target Poland for a possible military strike because
Warsaw agreed to host part of a U.S. missile shield.

"Russia is not going to launch nuclear missiles at anybody," Defense Secretary Gates said on ABC News' "This Week." "The Poles know that. We know it."...

"I'm not quite sure why this deputy chief of staff felt compelled to make those kinds of threats," said Gates, an expert on Russia, terming his words were a throwback to
the old Soviet Union, when Moscow was Warsaw's overlord.

"We just want those in Russia who seem to be willing to look to the future, people perhaps like President (Dmitry) Medvedev, to perhaps begin to exercise more influence here and get some of these people's rhetoric under control," he said.

Buchanan On Agitating The Bear

Pat Buchanan writes:

Bush, Cheney, and McCain have pushed to bring Ukraine and Georgia into NATO. This would require the United States to go to war with Russia over Stalin's birthplace and who has sovereignty over the Crimean Peninsula and Sebastopol, traditional home of Russia's Black Sea fleet.

When did these become U.S. vital interests, justifying war with Russia?

The United States unilaterally abrogated the Anti-Ballistic Missile treaty because our technology was superior, then planned to site anti-missile defenses in Poland and the Czech Republic to defend against Iranian missiles,though Iran has no ICBMs and no atomic bombs. A Russian counter-offer to have us together put an antimissile system in Azerbaijan was rejected out of hand.

We built a Baku-Tbilisi-Ceyhan pipeline from Azerbaijan through Georgia to Turkey to cut Russia out. Then we helped dump over regimes friendly to Moscow with democratic "revolutions" in Ukraine and Georgia, and tried to repeat it in Belarus.

Read Bucahnan's complete commentary here.

Russia: Poland Risks Nuclear Attack

A top Russian general, Gen. Anatoly Nogovitsyn, said Friday that Poland's agreement to accept a U.S. missile interceptor base exposes the ex-communist nation to attack, possibly by nuclear weapons, the Interfax news agency reported.

Poland and the United States on Thursday signed a deal for Poland to accept a missile interceptor base as part of a system the United States says is aimed at blocking attacks by rogue nations. Moscow, however, feels it is aimed at Russia's missile force.

"Poland, by deploying (the system) is exposing itself to a strike — 100 percent," Nogovitsyn, the deputy chief of staff, was quoted as saying.

Clearly, the United States is egging on Russia on many fronts. It appears it was first moves by American influenced Georgia that provoked Russia's attack into Georgia.

Is this George Bush's endgame to his presidency, to get the entire world at war?