Economic Mournings

[Mir]

Thousands of car drivers in the Ukrainian capital angrily blew their horns for several minutes Monday, protesting what they call incompetent and corrupt government policies that led to a devastating financial crisis. The Ukrainian currency has lost some 40 percent of its value since September as a fall in the export of steel, the heart of the economy, led to a shortage of foreign currency. That was coupled with a loss of confidence in the hryvna and the banking system.


Monday's protests branded "Enough" and organized mainly through the Internet were a sign of growing anger and opposition to the government which experts say could boil over into mass protests in the coming months.

Many Ukrainians think that their leaders, brought to power on a wave of the 2004 pro-democracy protests known as the Orange Revolution, have betrayed their promises of turning Ukraine into a prosperous European nation. Instead, the government has been paralyzed by infighting and failed to deal efficiently to deal with the financial meltdown even after receiving several billion dollars on a loan from the International Monetary Fund.

"We've had enough of the authorities," said one protester, Ihor Ratushny. Prime Minister Yulia Tymoshenko has accused the National Bank officials of making huge profits on the shocking devaluation of the hryvna by allowing speculation on the foreign currency exchange. The National Bank denies the accusations, which were seen by some analysts as aimed at Tymoshenko's arch-rival, President Viktor Yushchenko.

Ukraine is sinking into a deep depression. Yushchenko has forecast that the economy will contract by up to 10 percent in the first quarter of next year. Tens of thousands of workers face layoffs as steel and other plants across the country freeze. Industrial output shrank nearly to 30 percent in November, from a year earlier, the sharpest drop in a decade.

On top of the crisis, Ukraine is facing Russia's threat to cut natural gas supplies on Jan.1 over its debt for the past supplies.


From: http://www.kyivpost.com/nation/32265

[Makkin]

  Scott said it would not be very bad for Ukraine?

[krimster]

Not bad for Ukraine?

Holod Amour

As always, Ukraine is slowly fasting
hungry for starvation it seems is everlasting

Some observations:

While living in Ukraine, my daughter's pediatrician told me 25% of his patients had illnesses that were the result of an inadequate diet
Soon, I imagine that number will steeply rise and it would correlate to foreclosed homes and futures
Not too bad?

[Mir]

Makin

How are you? I have not foregoten that you still owe me a beer or two

Well it is yes and no.
For Ukraine as a whole it is bad, for the Ukrainians who want to live like those in West, in Europe and US it is bad.
But for the Ukrainians who never had anything, who were never touched by the miracle of capitalism, it will not be much different, it will be just another day.
I think Scott referred to them.
I have seen them as well, just go 30-40 miles outside of Kiev to a village and you well see such people. Financial crisis or not, their life goes on as before.

[ScottinCrimea]

  Scott said it would not be very bad for Ukraine?

I think you totally misunderstood what I said.  My position was that the average Ukrainian would be able to handle a global financial crisis better than the average American.  You are hearing reports from the major cities. For the majority of Ukrainians who don't live in the largest cities and who didn't buy luxuries on credit or count on ever increasing property values, which is the majority of Ukrainians, things go on as always, like Mir said.  They are impacted by increased food prices and shortages of gas, but this is nothing they haven't dealt with before. Most own their homes so foreclosure isn't a threat.  They are accustomed to growing their own food and using a barter system to obtain what they need.  Step away from the media reports and spend some time outside the major cities and you will understand what I mean.

[krimster]

Scott,
   I am afraid I must respectfully disagree with your assertion.  Specifically, "For the majority of Ukrainians who don't live in the largest cities...who didn't buy luxuries on credit or count on ever increasing property values...".  Ukraine is actually fairly urbanized, so much so, that the majority are in fact urban dwellers.  Source:http://en.wikipedia.org/wiki/Ukrainian_Census_(2001)  Secondly, just as the drop in real estate prices in the USA was triggered by a relatively small percentage of sub-prime defaults, it had an effect on EVERYONE'S  real estate value, credit, jobs, etc, (EVEN PEOPLE IN FOREIGN COUNTRIES!).  So it is in Ukraine.  No man is an island unto himself.  I still own a tiny farm in the village of Shevchenko, about 15 miles outside the city of Sevastopol, this would be the archetypical rural Ukrainian village to which you make reference.  My wife's family occupies this farm, and so we talk with them every week.  The effect of the crisis on this small village with its dirt/mud streets has been profound.  The men in most of the families there worked outside the village as there was no local work for them.  Most were construction laborers.  During the crisis they have been laid off and they sit at home now with their families and are completely broke.  My wife's parents like most middle-aged people in the village are pensioners, their combined monthly income is about 1,000 Hryvnia (at one point worth a little over 100 USD), however they haven't received their last month's pension, and there are rumors they may not get the next one either.  All these families still have to pay their utility bills which have had massive increases in the past several months, however they have no money at all.  Maybe their wives had a small garden in the spring/summer and they put away a few potatoes and vegetables.  Not one single family in this village of 800 or so is completely self-sufficient in providing their own food, so some food must be purchased, how exactly when they have no money, I don't know (especially when food prices are rising daily).  You can be sure the average diet in this village is now pretty meager, and I'm sure you're aware of its effect on children's development and health. 

In my humble opinion the people in this village are suffering far more from the effects of the global financial crisis (hunger) than any community in the USA or Europe.

[John K]

Talked with the missus earlier this morning.  She said that no matter what ATM she tries in Sevastopol, she cannot get any money - not dollars nor hryvnas.  She finally went to the bank, passport in hand to get money directly from them, at their poor exchange rate and high "processing fees".  I don't know if this is intended by the banks or not, but that is her current situation...

[kievstar]

John, sometimes the banks run out of money in the atm machines.  Happens all the time in Kiev and I have seen it happen in Sevastopol on occasion.  In the very city center near the sushi restaurant in the harbour (forgot name of restaurant) there is a very good atm machine - try that one.   It usually gets filled with  Ukraine cash several times a week.  There are banks that only charge you 2% in Sevastopol to withdraw money inside.  Even on $2,000 usd withdrawal that is only $40 usd. 

[Mir]

Krimster

So before the men went to work in Russia etc and sent money home how did the people survive?

[krimster]

Mir,
   Most of the villages in Crimea were established for the purpose of housing workers for agricultural production including vineyards.  In the post Soviet period the vineyards practiced a form of "share-cropping", where workers grew grapes on government land, splitting the harvest between themselves and the government. The farms and vineyards began to decline, compelling many people to simply leave or at least to seek employment in larger cities.  The average amount of land that a villager will have access to (their home) is roughly 15 sotek.  If you subtract the area of their dwelling you simply do not have sufficient land to be self-sufficient.  In the village I previously mentioned and in the surrounding 5 or 6 villages there are only a handful of government jobs that are available locally.  People have always had to look elsewhere.  The difficulty for them is compounded by their general lack of education or trade skills.  As a result, they generally work as basic low paid laborers with a minimal income.  In any form of economic downturn these are always the people effected the most.

[kryten41]

Quick question--I am heading to Simferopol in the next couple of days, where am I most likely to get the best exchange rate, exchanging dollars for UAH at a bank, or using an ATM to withdraw UAH?  A few weeks ago, the wisdom seemed to be to exchange dollars for UAH at a bank, but it sounds like that might have changed?

I don't mean to sound unsympathetic to those that live there, I truly hope that the currency stabilizes at an exchange rate that is good for Ukraine and the people that live there.

[krimster]

Kryten,
   An ATM never provides the optimal exchange rate.  If this is your first time, stick with banks.  Take cash with you, buy a "money belt" keep your cash with you at all times in the belt, make sure whatever currency you bring to Ukraine is in perfect condition, declare it when you arrive.  Use an ATM ONLY for emergencies.

[kryten41]

Thanks Krimster, this is my third time.  I've always taken a moneybelt in the past, but never used the money in it.  I haven't quite figured out the logistics of keeping it hidden but still having it accessible (I don't feel comfortable digging around under my shirt/beltline in public).  In November it sounded like cash would be the way to go this time, but I somehow got the impression that the banks have been told to pay 6UAH to the dollar, but the machines might be closer to the "official" exchange rate.  Maybe I misread the situation.  I generally prefer using ATM's because I don't have to carry as much money on me.

[krimster]

Kryten,
   Keep the bulk of your money in your money belt, NOT to be taken out publicly in any circumstance. Keep in your side pocket the amount you'll need for the day.  From the sound of things ATMs will not be reliable.  I've known a few people who relied on ATMs in Ukraine, only to have had their plans disrupted when the ATMs didn't work.  If you have a friend there you can completely trust they may know a businessman/merchant who is in dire need of dollars and will give you a better rate.  Do this only if you 100% trust the people involved.

[ScottinCrimea]

If I were going now I would take as much in dollars as I felt comfortable with and exchange it at the currency exchange booths where you will get a better rate than the banks.  I'm not sure what the ATM exchange rate is at the moment, but our daughter in Simferopol is using the ATM's there on a regular basis with no problems other than one glitch a month ago that was quickly remedied.  We used to be able to get dollars from one of the ATM's on Karl Marx Street, but it seems that option is no longer available.

Also, avoid exchanging too much at once, as when you leave you won't be able to convert your hrvn back to dollars.

[Makkin]

Hello Mir,

  Yes I do owe you beers and intend to pay you whenever you want them..lol

  Been busy with the Texas Football Championships for high school level and they have just completed last week.

  I plan again to be in Ukraine soon and maybe we can meet this time?

Makkin

[Muddy]

Thanks Krimster, this is my third time.  I've always taken a moneybelt in the past, but never used the money in it.  I haven't quite figured out the logistics of keeping it hidden but still having it accessible (I don't feel comfortable digging around under my shirt/beltline in public). 

What happens if the police stops you, search you and find your money belt with all that cash?
It happens. I always try to hide my cash in 1-2 places in the apartment

[Muddy]

Kryten,
   An ATM never provides the optimal exchange rate.  If this is your first time, stick with banks. 

Western Union offices sometimes have very good rates too

[Mir]

Makin

I am just starting a project with a US physician (Dr. Schmidt) who  runs an educational/medical/charity organization based in Lviv.
So I am likely to be in Lviv a couple of times this year.
I will let you know when.

Have a nice Christmas and new year

[Turboguy]

Wonder what approval rating for Stalin were.

Actually Mir, Stalin's approval rating was unusually high.  At least among those who were still alive and wished to remain so.   100% of that group thought he was wonderful, however among those  dead victims of his purges it was 0% but they were not saying much about it.

[krimster]

Muddy,
   I lived in Ukraine for three years, was never once stopped by the police or interacted with them in any way except socially at dinner and parties.  Overall, carrying your money with you is the best way.  You certainly should never leave it in a hotel or rented apartment.  Russia might be a different story as far as the militsia are concerned, but I followed this practice there as well, never had a problem with this approach.  Ultimately, you are relying on something to protect your money, in my case, I would rather it be me...

[kryten41]

Thanks for the info guys.  I wasn't trying to start the cash v ATM debate again. 

Scott, that is exactly the information I was looking for in light of the previous posts about the rate being 6 to 1 in Crimea (I am going to Simferopol and Yalta) but 8 to 1 in Kiev.  It sounds like I would do well to inquire about the exchange rate at the airport during my layover at KBP, and to do my exchanging there if it is close to 8. 

[Mir]

You will get the worst possible exchange rate at the airport.
Exchange rates do not vary from city to city but from kiosk to kiosk, so look around to find what suites you.
It is possible you will get 10 for one on Monday and 6 for one the next day, that is just how Ukraine is right now.
I would be careful carrying wads of dollars around these days, the crisis is certain to increase crime.

[Mir]

Actually Mir, Stalin's approval rating was unusually high.  At least among those who were still alive and wished to remain so.   100% of that group thought he was wonderful, however among those  dead victims of his purges it was 0% but they were not saying much about it.

Exactly........so Mr. Putin has maybe 70% approval ratings now, he wants to work up to 100% as well I am sure

[Makkin]

Mir,

  Sounds good and possibly I can give you those beers or a dinner if you like.

Makkin