5 ms·

It started before the war. The cash that the governments printed via negative interests to give to the VCs and to real-estate owners really skewed the local ma

by _njyk 4y ago

It started before the war. The cash that the governments printed via negative interests to give to the VCs and to real-estate owners really skewed the local market (increasing both prices and costs of producing). The Estonian gov has basically no tools to fight against the real estate bubble either or to bankroll the most fragile startups (and they may not be as strong as they seem), so we're basically fucked. Regarding energy, we had 4000 EUR / MWh prices a couple of weeks ago for an hour. Think of it as oven / sauna / air conditioner costing you 10 to 25 euros per hour (if I remember right, it didn't matter that much when you have no other choice than turning them off). For energy this is mostly because of the war, but ecological policies also affected (Estonia was known for "dirty" petrol, known as shale oil, and they are restricted there). The only retail companies that try hard to provide good prices are LIDL and IKEA, and in that regards, they are great. Other distributors have very poor logistics as they consider Estonia as the very end of their distribution chain (no matter if for Baltics, or for Scandinavia we are at the end of the West).

Etheryte 4y ago
This makes no sense, the majority of the inflation is simply due to rising energy prices, what does the small Estonian startup scene have to do with any of this?
- _njyk 4y ago
  It's a mix, but startups clearly skew prices higher. Salaries gets higher too because of much corporate cash, there is this nasty infinite loop of inflation -> salaries -> inflation -> salaries. This is why in the newspapers we occasionally see rants from the population that foreigners destroy the quality of life by pushing prices higher. One cause is that there is a limited amount of space in Tallinn but high attractivity for IT foreigners (due to low taxes and high startup funding). This means that good housing is though to find for a decent price (check kv.ee for example), and that there is not enough housing for everyone. Not enough housing means lot of construction needed. Lots of construction worldwide + scarce construction supply + abundance of money + lot of people = potential housing catastrophe. Concretly, for example, I wanted to buy a reasonably priced house in the countryside (500K EUR for 160m2 / 1700sqft), and someone who sold his Pipedrive or Transferwise shares (I don't remember) came and offered over 100K more than the list price. This is very broken (and I say that though I am also a startup guy, so I feel it's sad/wrong for the non-IT Estonians). The city also have 50K to 80K refugees that came in a few months. Where do you host them ? Well, you pay high price for rent.
  - djhn 4y ago
    I noticed recently when looking for a job that I was getting higher offers and in general seeing higher salary ranges in Tallinn compared to Helsinki. About 20 % higher.
zoobab 4y ago
"The cash that the governments printed via negative interests to give to the VCs and to real-estate owners really skewed the local market as well (thus increasing prices)." Finally someone who undestood this was not linked to the war in Ukraine, but to the policy of the ECB to print money at will.
- epistasis 4y ago
  Are you saying that it's "not links" and that Ukraine did not have an impact on energy prices? That does not seem plausible but I may be misreading you.
  - rawTruthHurts 4y ago
    One does not exclude the other. But the important bit here -per rvnx's comment- is "It started before the war."
    - epistasis 4y ago
      I would agree entirely, there are likely many contributing factors.
- pydry 4y ago
  I'll never understand people who try to chalk up inflation to one reason alone.
epistasis 4y ago
That's not the full picture. Demand for gas is still down below pre-pandemic levels. Inflation may be too much money chasing too few goods, but the "too few goods" part is absolutely crucial here. And if we want and expanded economy, the "too few goods" part should be the focus.
mrtksn 4y ago
IMHO free movement of capital without free movement of labor is a true plague. Any country that has achieved good living standards sees their citizens pushed out of housing by the rich people of other countries. Since the inflow is capital-only, you don't see inflow of people who can contribute to the society but you see people who come and consume resources just because they made wealth buildup oversees. People like to blame it on immigrants but when working class immigrants come they works their a*ss off and contribute huge amount into the society. It's almost like enslavement. Someone in a corrupt county somehow builds up some wealth, which is essentially what the society owes them(IOU). Normally they would figure out what is actually owed to who by themselves but they take that IOU's and move to, let's say a country that has good living standards, like Portugal. Now the government is happy about it because they have IOU inflow that they can tax or stir up the economy but these rich people often don't use the IOU's to bring machinery or pay Portuguese to do research or anything like that. What they do is real estate investments. Normally that would have been O.K. but since that money is not moving in a free market(remember, only the money can move. It's very hard to move around people and services), what you have is extreme market movements due to extreme capital movements without extreme movements in labour. For example, when a Russian oligarch brings 10 billion dollars to London, suddenly huge demand is created but Russians who owe the oligarch the services can't come to build houses needed. Obviously their money goes into other parts of the British economy but you end up with Russians in poverty, overpaid people in some sectors where the oligarch money flows and local residents who cannot afford to pay rent despite working very hard. That's why I'm proponent for restriction of capital movements wherever there are restrictions on human movements OR removing all restrictions on all kind of movements. In the first case we will have a patchy world where those societies who got their act together flourish(but they might do nasty things to the weaker ones. Also we lose many benefits of globalisation, like specialisation) and with the second option we will have an equalised world based on merit(however the transition will be very painful for those who are in a good standing currently, it also takes generations to learn to live together).
- cloutchaser 4y ago
  I think you are right about the symptoms but misdiagnosed the disease. Unfortunately I think our minds cannot comprehend how much wealth has been created in the world in the last 30-40 years, and how many rich people that's created out of the 8bn world population. Something like 1.4m americans have a net worth above $10m. 1.4m!!! And that's just the US. Can you imagine how many millionaires the world has created? Now imagine how much real estate actually exists in the city centers of large cities in the world. Not that much. Especially in popular cities. Nowhere near enough for this wealth to go into. This isn't about oligarchs, or rich dictators. There's nothing illegal going on here (there is a little, but its negligible). It's the world population and the wealth we've created. It's insane. A lot of people have gotten very rich.

by _njyk 4y ago

Etheryte 4y ago

This makes no sense, the majority of the inflation is simply due to rising energy prices, what does the small Estonian startup scene have to do with any of this?

_njyk 4y ago
It's a mix, but startups clearly skew prices higher. Salaries gets higher too because of much corporate cash, there is this nasty infinite loop of inflation -> salaries -> inflation -> salaries. This is why in the newspapers we occasionally see rants from the population that foreigners destroy the quality of life by pushing prices higher. One cause is that there is a limited amount of space in Tallinn but high attractivity for IT foreigners (due to low taxes and high startup funding). This means that good housing is though to find for a decent price (check kv.ee for example), and that there is not enough housing for everyone. Not enough housing means lot of construction needed. Lots of construction worldwide + scarce construction supply + abundance of money + lot of people = potential housing catastrophe. Concretly, for example, I wanted to buy a reasonably priced house in the countryside (500K EUR for 160m2 / 1700sqft), and someone who sold his Pipedrive or Transferwise shares (I don't remember) came and offered over 100K more than the list price. This is very broken (and I say that though I am also a startup guy, so I feel it's sad/wrong for the non-IT Estonians). The city also have 50K to 80K refugees that came in a few months. Where do you host them ? Well, you pay high price for rent.
- djhn 4y ago
  I noticed recently when looking for a job that I was getting higher offers and in general seeing higher salary ranges in Tallinn compared to Helsinki. About 20 % higher.

zoobab 4y ago

"The cash that the governments printed via negative interests to give to the VCs and to real-estate owners really skewed the local market as well (thus increasing prices)." Finally someone who undestood this was not linked to the war in Ukraine, but to the policy of the ECB to print money at will.

epistasis 4y ago
Are you saying that it's "not links" and that Ukraine did not have an impact on energy prices? That does not seem plausible but I may be misreading you.
- rawTruthHurts 4y ago
  One does not exclude the other. But the important bit here -per rvnx's comment- is "It started before the war."
  - epistasis 4y ago
    I would agree entirely, there are likely many contributing factors.
pydry 4y ago
I'll never understand people who try to chalk up inflation to one reason alone.

epistasis 4y ago

That's not the full picture. Demand for gas is still down below pre-pandemic levels. Inflation may be too much money chasing too few goods, but the "too few goods" part is absolutely crucial here. And if we want and expanded economy, the "too few goods" part should be the focus.

mrtksn 4y ago

IMHO free movement of capital without free movement of labor is a true plague. Any country that has achieved good living standards sees their citizens pushed out of housing by the rich people of other countries. Since the inflow is capital-only, you don't see inflow of people who can contribute to the society but you see people who come and consume resources just because they made wealth buildup oversees. People like to blame it on immigrants but when working class immigrants come they works their a*ss off and contribute huge amount into the society. It's almost like enslavement. Someone in a corrupt county somehow builds up some wealth, which is essentially what the society owes them(IOU). Normally they would figure out what is actually owed to who by themselves but they take that IOU's and move to, let's say a country that has good living standards, like Portugal. Now the government is happy about it because they have IOU inflow that they can tax or stir up the economy but these rich people often don't use the IOU's to bring machinery or pay Portuguese to do research or anything like that. What they do is real estate investments. Normally that would have been O.K. but since that money is not moving in a free market(remember, only the money can move. It's very hard to move around people and services), what you have is extreme market movements due to extreme capital movements without extreme movements in labour. For example, when a Russian oligarch brings 10 billion dollars to London, suddenly huge demand is created but Russians who owe the oligarch the services can't come to build houses needed. Obviously their money goes into other parts of the British economy but you end up with Russians in poverty, overpaid people in some sectors where the oligarch money flows and local residents who cannot afford to pay rent despite working very hard. That's why I'm proponent for restriction of capital movements wherever there are restrictions on human movements OR removing all restrictions on all kind of movements. In the first case we will have a patchy world where those societies who got their act together flourish(but they might do nasty things to the weaker ones. Also we lose many benefits of globalisation, like specialisation) and with the second option we will have an equalised world based on merit(however the transition will be very painful for those who are in a good standing currently, it also takes generations to learn to live together).

cloutchaser 4y ago
I think you are right about the symptoms but misdiagnosed the disease. Unfortunately I think our minds cannot comprehend how much wealth has been created in the world in the last 30-40 years, and how many rich people that's created out of the 8bn world population. Something like 1.4m americans have a net worth above $10m. 1.4m!!! And that's just the US. Can you imagine how many millionaires the world has created? Now imagine how much real estate actually exists in the city centers of large cities in the world. Not that much. Especially in popular cities. Nowhere near enough for this wealth to go into. This isn't about oligarchs, or rich dictators. There's nothing illegal going on here (there is a little, but its negligible). It's the world population and the wealth we've created. It's insane. A lot of people have gotten very rich.