Recovery everywhere - why to be scared?

Back from a long summer recess, although the lack of posts recently was not due to my activities (however overburdened I'm am with tasks and responsibilities) rather the lack of impulses and events. One could have seen a rising tide of good news (maybe even the favorite color has changed from green to a more ripened one), a series of countries posting positive growth figures for the second quarter (quarter-on-quarter, in yearly comparison it is rather pathetic) and economic sentiment soaring almost everywhere. As the latter is considered to be a so-called "leading indicator" (i.e. signaling in advance the trends of the respective economy) further economic expansion is expected in the coming month. The change was abrupt, and rather peculiar. While only a half a year ago (almost) everyone forecasted that the world is doomed, now (almost) everyone is prophesizing that our torture is already ended or it will soon end.

Hot Caucasian summers

I must immediately apologize to my readers - to those making efforts for a more vivid discussion and to those reading rather passively either - as the topic of this post will have not much to do with ECE and its crisis. Of course, if one covers Russia's moves at its "near abroad" zone there is always a chance to point out some kind of significance for ECE as well, but I do not want to rely on such cheap methods, especially as Russia's relationship with Georgia is only very loosely connected to the economic crisis. (Last year the conflict happened at the height of rising oil prices, many people envisioning Russia's re-emergence as a world power on the back of this phenomenon.) But the newly arriving disturbing news from the region gives me a chance to reshape and reiterate some ideas of mine, not discussed publicly at that occasion.

Europe's bottleneck

I'm living a honeymoon with my driving license. It is not a month old and I try to practic as much as I can. As I'm no spending my time in the middle of Romania (Sfintu Gheorghe/Spesiszentgyörgy) I could have reexperienced something I have noticed earlier as a passenger. The lack of the necessary infrastucture of traffic. There are no transversal motorways, crosing the country, no suitable fast traffic routes. Some of the main European higways were rebuilt in the last decade, but it is far from being enough. Especially if one takes into account the fact that Romania is situated along one of the most importnat landroutes in the EU. As the Western Balkans is still not a part of the common market the larger part of goods transported from Turkey and the Balkans to the West is crossing the country, having no alternatives. And without the necessary infrastructure the country literally became Europe's bottleneck. Trailers crawling along the two-lane roads with steep curves...

There is no direct relationship with the crisis, at least in a narrow sense. But as Romania's fast growth in the last decade was fuelled not only by a credit bubble and the inflow of financial transfers from the guest workers but the lack of major infrastructural development and investment it reveals a side of the low tax low redistribution approach not emphasized in the good years: without the necessary budget incomes there is no way to finance such works. (To be fair with Romania, it was amongst the most shbby countries at the end of the communist regime, therefore its need of infrastructural development was extraordinarily high, especially compared to the level of its GDP.)

It is not a major finding, nor a great discovery, but maybe could highlight how complex the situation in many ECE countries is. It is not only an issue of one or two percent more growth or 5 or 10 percent lower taxes. Many of those countries needed a thorough reconstruction and not simply a transformation. And once again, a problem of a single member state has far reaching consequenes for the whole of Europe...