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I have been following daily the unfolding migrant humanitarian crisis and like many other people I have mixed feelings. I wish they weren’t turned back from Europe’s borders and left to fend for themselves. I am thinking of our aging nations and of the chance these new, dynamic and success-hungry people might open up for us. I am thinking too of assimilation problems which beset practically every country that has opened its borders in the past – problems which stoke fears of migrants.

Despite all the thinking, I haven’t made up my mind yet where I stand on all of this, but there is one thing I am sure about. And it is a very important lesson: globalization is no longer a financial phenomenon involving only multinational corporations. Globalization has come to the people, who, as in the times of early human migrations, simply get up and go if the place where they have lived is no longer fit for habitation.

As a result, distant local civil wars are no longer too distant or too local to worry about. A conflict that has gone on for more than a few months becomes a problem which taxpayers thousands of kilometers away will have to pay for, one way or another. If the money is not spent on sending in a mediation force, it will be spent on dealing with a refugee crisis.

As scuffles break out along the Serbian-Hungarian border, traffic grinds to a halt on Danish motorways and German railways, as fear stares into the eyes of the Europeans and despair looms over North African and Middle Eastern refugees in search of a better and safer life, interest rates can hardly be expected to rivet our attention. They are, however, critically important.

Indeed. I meant to start with the FED’s latest decision. But it is not without reason that I started where I did. More about that later.
Meanwhile, America’s central bank has kept the interest rates unchanged. And it is a relief to know because if the U.S. interest rates suddenly went up from zero, or almost zero, we’d be seeing a massive outflow of capital from developing markets (safe investment alternative). Janet Yellen’s explanations during her press conference have not calmed my nerves, though. Inflation in the U.S. may be non-existent at the moment, but the reason this is so is the weakness of the global developing markets, in particular that of China, and that certainly is not good news for us. It is not good news for the Americans either – wage increases linger close to zero (see the link below to the FT’s commentary on Ms Yellen’s speech, including the changes she had made to it – very interesting!).

There had been a lot of hype around this decision. Will they raise the rates or won’t they? As speculations had intensified and subsided, markets had risen or fallen accordingly, FX exchange rates had swung wildly (and with them the returns for many companies), not to mention the returns on short- and medium-term corporate bonds. Speculators have now turned to the question of WHEN interest rates will rise. Some say in four months, others – not before 2017.

2017! That would be one for the books! The FED has kept interest rates between 0% and 0.25% since 2008. Its decisions are driven not only by attempts to stop inflation but also by a desire to stimulate economic growth, so interest rates at current levels are just a symptom of the drawn-out recession. Funny this about the States! Look at Europe! The ECB’s rate has been at the level of -0.2% since 10 October of last year. As if the bank was crying out: invest in business! Do not put your money into financial instruments! Cash on the table and get on with it! Spend, spend, spend! Drive up business!

Unfortunately, despaired cries are not working. Economic growth in Europe is sluggish. After it has revised its figures upwards a few times, the IMF has now put the Eurozone’s GDP growth at 1.5% in 2015 and 1.7% in 2016. But we are stuck with deflation for good, and if we are to go by the recent Polish economic figures, lower prices have not made us spend more. Quite the opposite! According to GUS (Office for National Statistics), we are buying less. Retail sales have fallen (fallen, not slowed down) by 0.3% year on year and by as much as 2.6% on July sales. Admittedly, the figures refer to the value rather than the volume of purchases, but the statistics combined with reports of lower than forecast VAT receipts (main source of money for Poland’s treasury) show that not all is well.

Our Polish problems and our European problems will be further compounded by those of the Chinese economy, and that’s what globalization will mean in our daily life. A part of this life will be the sight of refugees pouring across the border, however out of the ordinary we may think this to be, and whether we like it or not.

Any lessons from this for business? Think the unthinkable. Don’t assume that some things are too far away to be of relevance for you.

Read about the FED’s decision in Polish:,75/stopy-procentowe-w-usa-bez-zmian,578185.html,202,0,1906378.html

Retail sales statistics for Poland:,116,0,1906036.html

… and falling VAT receipts:,budzet-2016-naprezony-do-wytrzymalosci-i-sztywny.html

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