Friday, October 3, 2008

Is Romania going down?

My personal opinion is yes.
I have reached those arguments after some long deliberation

1. The country seems not able to absorb structural founds from UE. Therefore no major investments can be done there.
Causes: Extreme fiscality, bureaucracy and CORRUPTION.
Consequences: No room for growth - therefore no real life standard increase.

2. No viable internal economy. Most of the goods are imported.
Causes: Ill fated privatizations and headless
Consequences: Unstable national money and growing inflation.

3. No longer viable education system.
Causes: Lack of money in education made the young capable people to avoid education.
Consequences: Mediocre generations to come

4. Massive emigration
Causes: Low life standard
Consequences: No more internal workforce for undertaking businesses

5. 4 milions active people vs. 6 milions retired. Apart from the army, justice, health, education and other kind of clerks.
Causes: all above are viable
Consequences: The state has to direct the funds that could support economic growth into social security.

All this sumber facts were triggered by the fact that the actual government decided to increase the teachers' wages with 50%. From where do this money come? I am not against it - it is mandatory to have good education in a country in order to be competitive, but Romania has really no financial resources to do it? I really guess that this is a pure electoral maneuver. The result of this BAD decision is a depreciation of RON with a couple of percent.
On long term it will generate inflation. I do not really believe that this depreciation will increase the exports because basically Romania sells nothing but workforce abroad. Romania is a country for lohn and outsourcing, there are almost no national brands and the existing are not well perceived.

The National Bank is already incapable to stop the inflation - thy have imposed stricter credit policies - but they are not synergistic with the demagogic governments.

I might be wrong, please contradict me, but I thing thar Romania will be in a crisis in no more than two years from now on. This is my most optimistic estimation. All those can happen sooner because of the global economic instability.

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