Estonian crisis worse than 1998-1999

Estonian Institue of Economic Research just published its October survey results and now the picture in industry and construction has turned gloomier than it ever has been (since 1993, when the surveys were started).
Current order books (both local and export) for industry stands at historical low and forecast for employment during next three months is very close to that. It is good to remember that during the previous crisis the unemployment jumped from 9,6% in 1997 to 13,6% in 2000.
In construction, the overall confidence index is at its all time low. And the trend is certainly downwards - more and more companies see the next 3 months to be worse than previous and plan to shed workforce.
The mood among consumers and retail sector is somewhat rosier, although the trend is also downward there.
My conclusion from this? Unemployment is definitely going up, with new round of negative effects for retail sector and mortgage loans.

Danske Bank on Iceland

Although Danske Bank forecasts were not very well regarded in Estonia a year ago, the events on ground have proven them quite accurate. So it is interesting to read that they are even gloomier on the situation in Iceland:

The past 24 hours have been extremely hectic in terms of news out of Iceland. This is the news so far:
Yesterday, the Icelandic prime minister, Geir Haarde, addressed the nation. In his speech, Mr Haarde said that Iceland was facing very serious economic and financial challenges and that the Icelandic government would put forward a plan to parliament to stabilise the situation. However, the Icelandic government has so far failed to put forward any concrete measures.
The Icelandic authorities today surprisingly announced that Iceland would get a loan of EUR 4bn from Russia. However, a spokesman for Russian Prime Minister Putin has said that the Russian government does not have any knowledge of such a loan.
Today, the Icelandic central bank said it would peg the krona to the euro at a rate of EUR/ISK 131. Given the fact that the Icelandic FX reserve is less than USD 3bn, the peg does not look very credible, and we do not expect it to be maintained.
In March 2006, we wrote in our research note, “Geyser Crisis”, that Icelandic GDP could drop 5-10% if the country was hit by a credit crisis. Latest developments unfortunately confirm this bleak prediction.

Ouch!

Aftermath of the Georgian conflict

... is that I've started to read the Force Majeure clauses in contracts.

How to Jumpstart the (Estonian) Economy

There's a great post by Blog Maverick, serial entrepreneur Mark Cuban: "How to Jumpstart the Economy - Tax Free Small Businesses". Although the post is meant for American politicians, it gives ideas well suitable for Estonia as well. In Estonia, Reformierakond has been very consistent demanding continuing with reductions in income tax during the slowdown in our economy (though, less so recently). As Mark notes:

The one thing I know with certainty is that at no time prior to starting a company did capital gains or income tax percentages ever impact whether or not I would start a business. As any entrepreneur will gladly tell you, you have to have income before you are taxed, so how much you pay on your earnings is a good problem to have, and a better problem is how much you have to pay on capital gains.
What has impacted my decision on whether or not to start a business is the amount of paperwork involved and the local, state and employer taxes involved.

After comparing the costs of doing business in Internet and real world, he suggests a solution for pushing forward the economy and entrepreneurship:

No taxes of any kind on small businesses with 25 or fewer employees. No employer payroll tax. No state or local taxes. No taxes on earnings. Nada. The business owners will pay income taxes on their personal income they pay themselves, but not corporate earnings.
The only taxes they would collect and remit are sales taxes, the employee’s portion of payroll taxes and of course they would still file personal income taxes on their individual earnings.
Make this available only to individuals, and only for a single company (to prevent gaming the system by having multiple 25 employee and under companies).
The impact on the economy would be amazing and immediate. Those without jobs would be able to work for themselves, they would be able to join together and start companies.

Read the whole piece, think about it, and lobby your politician-friends.

Should Georgia-supporters boycott the concert of Mariinsky Orchestra in Tallinn?

Although culture and politics should not be mixed, they very often are. Sometimes this is done by the politicians but sometimes by the culture-people themselves. In an interesting turn of events the opening concert of Estonian national concert organizer Eesti Concert, is given by Mariinsky Theater Orchestra, which just this week gave a concert in South Ossetia to support Russian military activities there. If the orchestra chooses to be a weapon in a propaganda war, it should be only right to dismiss their cultural message. I would like to boycott their concert, but unfortunately i am in Crete at the time.

How many new countries will there be in Europe in 2050?

While recently most new countries have been evolving in the Balkans, the Western Europe does not seem immune from it as well.
Last fall the Economist asked: "If Belgium did not already exist, would anyone nowadays take the trouble to invent it?". Belgium is divided along its linguistic lines between french-speaking Walloonia and dutch-speaking Flemish region. They only vote for their own political parties, thus after last election it took 9 months to agree upon a new government. Now, the new prime minister has decided to resign, so new talks about the viability of the country emerge. Certain Ideas of Europe blog is asking: "Time to dissolve Belgium?".
Also, recently i talked with some friends of my friend from Catalonia, a region in Spain. And it struck me, that there are many people want to break free from the Spanish rule there. And then there are of course the Basques and the Scottish...
One more question is, how would these countries become part of EU (if they want it, of course)? If the Catalans managed to break free from Spain, it is hard to see Spain allowing them to join the EU. And if Belgium would break up into two new countries, would Brussels be outside of EU until the new countries go through their accession periods?

Copenhagen Consensus - "Stop Kyoto!"

Second Copenhagen Consensus Expert Panel has published their analysis about where global aid and development projects could do most good for least amount of money (read here). And for second time in a row climate change is the worst case - a huge investment for rather limited and unpredictable gain.

This finding was based in part on research by a lead author for the Intergovernmental Panel on Climate Change – the group that shared last year’s Nobel Peace Prize – who noted that spending $800 billion over 100 years solely on mitigating emissions would reduce inevitable temperature rises by just 0.2 degrees Celsius by the end of this century. Even taking into account some of the key environmental damage from warming, we would lose money on the investment, with returns of just $685 billion.
...
It makes little sense for the world to impoverish itself by embracing a poor solution to one problem when there are more pressing challenges that can be resolved at smaller expense.

So maybe the developing world is right to say that if rich countries want to establish expensive schemes for carbon trading or carbon tax, they may do it, but having millions of poor people to feed and nurse, the less well off regions must focus on more burning issues.
So what were the most yielding foreign aid projects? Micronutrient supplements for children (vitamin A and zinc); The Doha development agenda; Micronutrient fortification (iron and salt iodization); Expanded immunization coverage for children. Simple and rather cheap ideas that would make a huge difference to the living quality of hundreds of millions of people in the poor world.

Alzheimer's Disease

Some biotech blogging:
Technology Review reports that a Californian company Satoris has developed a simple blood test that can detect Alzheimer's Disease (AD) 2 years before clinicians.
Currently, AD can only be definitely diagnosed after death, and before that clinicians define Alzheimer's as dementia for which they have found no other reason. So a good diagnostic tool is certainly required.
However, two issues arise. The company says that their test is "nearly 90% accurate". That might sound good, but then again for a 70-year-old, the probability of having a AD is around 0,5%. Now, imagine that we test million 70-year-olds and 5 000 of them have AD. Our test is able to detect 4 500 of them. But also the test gives us 10% false positives among the healthy 995 000, which amounts to 99 500 cases. Alltogether we receive 104 000 positive test results but only 4 500 of them actually have the disease. So all of a sudden, our 90% accurate test can only give us a 4,3% probability of a person having AD.
The other problem is reported in the article:

However, until there are better treatments for Alzheimer's disease, [David] Michelson [vice president of neuroscience at Merck] says that diagnostic tests will be most useful as a research tool because "what's the use of confirming a diagnosis early if you can't do anything about it, if you don't have a treatment that could change what can happen?"

Indeed!
Alzheimer's Disease certainly remains one of the most important challenges for pharmaceutical companies, but most obviously a real breakthrough is nowhere in sight. Well, they have 39 years before i turn 65 and enter the risk group!

Balkans - here I come!

I am soon to start a 13-day road-trip to South-Eastern Europe. The first stop will be Prague. After that my trip-mates and i will decide on the go where to go. My personal wish is to go to Albania, Montenegro, and Kosovo, but we'll see how it works out.
I will probably not be blogging during the trip, but i'll back soon!

Meanwhile, if you have a good idea how to recover one's e-mails, contacts, tasks, and calendar from an .ost file after deleting (#*@!?#£#*!!!) the respective e-mail account, i would appreciate your help!

Has there ever been a real-estate boom in Estonia?

On May 22nd Economist wrote that Spain has built more than 4 million dwellings during last 10 years. That makes 88 new dwellings per 1000 inhabitants. In Estonia, 26 000 new dwellings were built during 1998-2007 (28% of them in 2007). That makes only 19 dwellings per 1000 inhabitants. If you look at it that way, there has never been an oversupply of real-estate here.
Then again, the population of Spain has grown by 5,7 million inhabitants over the same period whereas Estonia's has fallen by 52 000. Considering that on average there are (roughly) two inhabitants per dwelling in Europe, 2,85 million new dwellings were needed to accommodate the new Spaniards, so only 1,15m new dwellings were constructed to improve the housing stock. That amounts to 25 new dwellings per 1000 inhabitants.
In Estonia, by the same calculation 26 000 dwellings were vacated, so 52 000 new free dwellings came to the market during last decade - that is 39 per 1000 inhabitants. So go figure who had more of a construction boom.

Ärileht: Viga Excelis võib eelarve uppi lüüa

Villu Zirnask kirjutab eelviimases Ärilehes vigadest Excelis ja väidab, et üle 90% Exceli töölehtest sisaldab vigu. Kuna olen ka ise oma elus Exceliga päris palju tööd teinud, siis kipun väitega nõustuma. Arvan, et ma pole näinud ühtegi vähegi keerulisemat Exceli arvutust, mis on tehtud ühe inimese poolt ja ei sisaldaks mõnda viga. Usun, et ka kõigis mu enda excelites on peale valmimist vead sees ja mõned on neist jäänud sinna pikaks ajaks.
Mis on lahendused? Niisama exceli tabeli kontrollimine peale valmimist on minu meelest mõttetu. See on ilgelt nüri töö ja oma vigu on ka raske tuvastada. Ja kui kasutada piisavalt palju funktsioone, siis läheb järje hoidmine üsna keeruliseks (eriti lemmikud muidugi funktsioonid offset, vlookup, jne). Siiski on üks vahend selle töö struktuursemaks ja tulemuslikumaks tegemiseks - väike makroproge TrafficLights.xla*. Olen seda ise kasutanud ja avastanud sellega kiirelt päris palju vigasid (nii oma kui teiste excelitest). Programmi häda on see, et ta töötab ainult arvutustega, mis mahuvad ühe sheeti peale.
Järgmine alternatiiv on lasta kellelgi teisel oma excelit kontrollida. Aga see on tihti veel võimatum, kui enda oma üle vaadata. Kui sa ikka ei tea, kust mingi info tulema peab, siis võidki jääda ühte sheeti läbi vaatama. Ja tõenäoliselt tekib pärast 10 minutit selline tülpimus, et vigade märkamise tõenäosus läheb nulli.
Kolmas ja tõenäoliselt kõige effektiivsem versioon on see, mida juba aastakümneid on kasutanud NASA. Nimelt tehakse igast olulisemast arvutusest teine versioon, mis tugineb samadele sisenditele, kuid mille koostaja pole esimest kalkulatsiooni näinud ja teeb nullist täiesti uue kalkulatsiooni. Loogiliselt peaks tulemus tulema sama. Kui ei tule, saab hakata otsima, kus on viga. Loogiline ja otseselt tulemusele suunatud tegevus.

*TrafficLights.xla peaks olema downloaditav sellelt lingilt: http://groups.yahoo.com/group/eusprig/files/TrafficLights.xla, aga selleks peab vist selle Yahoo-grupiga liituma.

Edusammudest prositutsiooni-vastasel mõttevahetuses

Kui veel aasta tagasi proovisid sotsiaalministeeriumi ametnikud võidelda prostitutsiooni legaalsuse vastu tavapäraste "prostitutsioon tuleb keelustada, sest prosituute vägistatakse ja kasutatakse ära" argumentidega, siis viimasel ajal olen täheldanud positiivset nihet prostitutsiooniga tegelevate inimeste argumentatsioonis.
Hiljuti ilmus Päevalehes kaks artiklit, kus prostitutsiooniteemat lahati.
Esimeses kirjutas Imre Rammul, et valdkonna peamiseks varjuküljeks on inimkaubandus ja lahenduseks pakkus laiemat diskussiooni ühiskonnas, mis prostitutsiooni hukka mõistaks: "alustuseks on vaja suuremat arutelu, mitte pimesi keelamist."
Teises artiklis rõhutas Iris Pettai, et tegeleda tuleks pigem prostitutsiooni algpõhjustega:

Eestis unustatakse ära või ei taheta teada, et nende tüdrukute elus, kes valivad prostitutsiooni “vabatahtlikult”, on varem tavaliselt olnud suuremaid ja väiksemaid õnnetusi, mida kinnitavad ka uuringutulemused. Ligikaudu pooled tüdrukud on lapsena olnud pedofiilia või intsesti ohvrid, kinnitasid esindusliku Eesti seksitöötajate uuringu tulemused 2005. aastal. Kolmandik lapsprostituutidest on pärit lastekodudest, selgus samast. Lisame siia nimistusse perevägivalla, alkohoolikutest vanemad, koolikiusamise jm tegurid, mida ühiskond pole märganud ega nendele noortele appi tulnud.

Siiski ei ole ma nõus, et nende teemadega tuleks hakata võitlema selleks, et vähendada prostitutsiooni. Pedofiilia, intsest, perevägivald ja koolikiusamine pole aspektid, mis viivad prostitutsioonini. Pedofiilia, intsest, perevägivald ja koolikiusamine on iseseisvad ühiskondlikud pahed, mille vastu tuleb võidelda. Erinevalt prostitutsioonist ei saa nende kohta tuua ühtki filosoofilist õigustust nagu prostitutsiooni kohta, et tegemist on täiskasvanute vahel vabal tahtel põhineval tehingul.

Tartu beware - Jüri Liim is after occupiers monuments!

Although i am not very supportive of Jüri Liim style nationalism, i think his hands-on approach to his fight against anything reminding communism is kinda cool. Last week he rented a movable crane and took down two Soviet-time monuments which he found insulting for independent Estonia (read here and here). As expected, the Russian media quickly rushed to condemn the removal of "two statues of Soviet World War II heroes". Considering that one of the two statues was for Hans Pöögelmann, who was killed by Stalin's order in 1938, it seems that for Russian media WWII is a very general and flexible term indeed.
However, i think Tartu should watch out now. So why should Liim stop at removing Soviet-time monuments from University back-yards, when Tartu displays former occupiers in the very center of the city. Firstly, there is the statue of Swedish conquerer Gustav II Adolf right behind the main university building. Swedes occupied most of the Estonia for most of the 16th and 17th century. More notably, there is the statue of Russian military chief Barclay de Tolly with a nice small park. Definitely these two guys were more responsible for the Swedish and Russian occupation than bunch of school-children participating (and dying) in WWII to whom the other of the removed monuments was erected. So if you see Liim renting a crane again, you should warn the Tartu city government.

Tallinn lost 400 million EEK in a court case

There were some discussion a little while ago that Tallinn plans to borrow 1 billion kroons (ca. €64m) without even having specific plans what to do with the money. Well, today Baltic Business News reports that:

in March the Supreme Court ruled that the City of Tallinn must revise 125 cases concerning former property of so-called Umsiedlers who owned property in Tallinn before World War II, but left it behind when they went to live in Germany. In all these 125 cases the City decided that the pre-war owner had no right to claim the property or compensation.
Most of the property in question is apartments and houses in attractive areas, mainly in central Tallinn or even Tallinn Old Town.

The issue is very contraversial, and i probably tend to side with the Tallinn City in this argument. But this is a longer story.
What is currently more interesting, however, is that the 125 cases may easily amount to some 10 000 m2 of prime real estate, which could be valued at some 400 million EEK (€26m) in total. Well that is quite an expense for the capital city (ca. 7% of 2008 budget) and quite an outflow of funds from Estonia. That is also more than half of the amount Estonia had to pay as the infamous "sugar fine".

Läti haldusreform

Vähemalt haldusreformi läbiviimise kohapealt paistavad lätlased meist ees olevat. Nimelt kirjutab ETV24, et Läti plaanib 500 omavalitsuse asemel moodustada 103 novadsit ja 9 vabariikliku linna. Kaotatakse ka senised 26 rajooni. Projekti sujuvamaks läbiviimiseks antakse igale "vabatahtlikult" ühinevale omavalitsusele riigi eelarvest 4,5 miljonit krooni toetust. Ehk peaks meilgi kaaluma altkäemaksuga omavalitsusi efektiivsemaks meelitada.

Lithuanian Commercial Register

I have recently tried to gather information about some Lihtuanian companies. As in Estonia and Latvia companies have to submit their full annual financial reports to local commercial register and these reports and ownership data are readily available, i was quite surprised that the Lithuanian commercial register only has the balance sheet, profit and loss statement and cash flow statement of each company. Also, i was unable to get any ownership data for most of the companies.
What more, as i was explained by a helpful employee of the company, such data is not available online so i had to send an e-mail about the companies i was interested in, then i was invoiced 1.45 EUR per page for the reports and then they mailed them to me by usual mail (it took a week to arrive). Well, it was nice that each of the copy had a stamp of the register, stamp "Kopija tikra" and a stamp with the name of the employee + handwritten date and signature (on every single page!) but that was not really what i needed.
In Estonia at least all the annual reports are scanned and posted on the register web-page and other information (including about management and owners) is available in standardized forms. However, as 1-2 euros is charged for downloading each report, you still have to sign some kind of contract and somehow transfer the funds to the register. So it might be a bit troublesome for a foreigner.
That made me think - are the 2 euros really worth it? Maybe it would be easier to make the companies to submit their reports electronically and make them automatically available for anyone interested free of charge. After all, it should be in the general interests of the state to provide transparent information about local businesses to potential foreign investors and counterparties in trade. (unless you believe that it is the government's role to protect our economy from the negative effects of international business and especially from all those foreigners buying up our companies).
But first of all, the Lithuanians should really reform their services in the commercial register and demand a little more thorough reporting from their companies. A helpful, active young lady (she sent one e-mail to me on Sunday evening) with good english and nice hand-writing is just not enough.

Päeva lause

"No kuulge, mis tähendab – meeldib avalik haldus? Eestlasele ei saa meeldida olla bürokraat."

Juhan Parts Eesti noorte rumalusest haridustee valikul. HEI nr. 2- 2008

Riigikogu palgavaidlus riivab minu õiglustunnet!

Minu arvates on Riigikogulaste aja viitmine selle peale, kes ja kuidas määrab Riigikogulaste palga, ajaraiskamine. Veel suurem ajaraiskamine on see, kui mingid targad inimesed hakkavad igal aastal või iga nelja aasta tagant oma aega kulutama sellele, et arutada ja vaagida riigikoguliikmete uut palka. Lõppude lõpuks on ju 5 000 krooni kuus siia või sinnapoole kuupalga muutust kuus ainult ca. 8 miljonit krooni aastas kogu Riigikogu peale. See on üsna tühiasi võrreldes 3,1 miljardiga, mille võrra vähendatakse lisa-eelarvega selle aasta eelarve kulusid.
Minu õiglustunnet riivab, et riigikogulased tegelevad nii mõttetu teemaga, aga ma olen oma riivatuses vist üsna üksi...

Estonian GDP growth - OMG!

That was much worse than i expected:

According to Statistics Estonia, by flash estimations gross domestic product (GDP) growth was 0.4% in Estonia in the 1st quarter of 2008 compared to the same quarter in the previous year.
...
The seasonally adjusted GDP at constant prices decreased by 1.9% in the 1st quarter of 2008 compared to the 4th quarter.

That is pretty hard landing. Quite on the level with Latvia and the worst quarter for at least 12 years (the worst quarter we saw during 1998 economic crisis was -1,0%).

Magnumil ei lubatud osta Saku Apteeki

Äripäev teatab:

Konkurentsiamet otsustas 8. mail keelata aktsiaseltsi Magnum kontserni kuuluva tütarettevõtja Terve Pere Apteek OÜ ja OÜ Saku Apteek koondumise.

Minu teada on see üks esimesi koondumisekeelde Eestis üldse. Siiani on Konkurentsiamet tegelenud peamiselt ikka lihtsalt dokumentide kogumise ja kontrollimisega. Kui eelmise nädala liigutus märgib Konkurentsiameti otsust hakata mängima mingit olulisemat rolli Eesti majanduses, siis on see ainult tervitatav.
Kuna ei tea antud otsuse tausta, ei oska ka täpsemalt kommenteerida. Kui Sakus on praegu mitu erinevat apteeki ja pärast tehingut oleks jäänud ainult üks, on otsus kindlasti põhjendatud. Pressiteatest (ja kes meil siis pressiteates sisulisi asju räägib) räägitakse küll pigem Tallinna ja lähiümbruse turust. Kui koondumise keelamise põhjus oli argumenteeritud sellega, et Saku apteegi ostmine vähendaks apteekide konkurentsi Tallinnas, siis see tundub natuke kauge põhjendus. Vaevalt, et hakkaksin selle pärast Sakusse sõitma, et seal rohud paar krooni odavamad. Aga mina pole ka kindlasti apteekide põhiklientuur.
Huvitav on ka veel see, et apteekide turg on riiklikult üsna reguleeritud just nimelt konkurentsi vastu. Apteekide litsentside arv on piiratud, kuigi nende tahtjaid palju. Kusjuures litsentside vähesuses pole määravaks teguriks mitte apteekide suutmatus nõuetele vastata, vaid lihtsalt riiklik otsus apteekide arvu vähendada. Kas poleks lihtsam tihedamat konkurentsi tagada vabama litsentside jagamisega, kui Konkurentsiametipoolsete ettekirjutustega?