Business puzzles (me)

I started the day with two things on my mind. One is some bankers’ idea – foreign bankers, that is, that the Romanian state should help them out survive during the tough times ahead. So on one hand the state is now expected to help out all the foreign investors which have made lots of money (sometimes after buying state assets at discount prices). The idea itself is ludacris. On the other, these bankers – I say “these” expecting others to follow suit in asking for help- have already received help from their home country states. Should they go on asking for help from any country they have branches in. What’s funny is that the banking system has screwed it all up to begin with. True, it happened in the US, but had it been peaceful and calm, I am sure European banks would have done quite the same, bending so much the lending rules, accumulating toxic assets, creating crazy banking products, and so on. So they’ve made the mess and now they’re asking the states to help them out. Well this puzzles me. 

The second thing today was the US Senate’s NO to the $14 billion bailout for the three US carmakers. I am sure this decision would trigger a wave of effects which maybe we’ll feel even here, in Romania, but I thinks it was a wise decision. I mean, how long can the US treasury or whatever other funding sources they have, keep supporting all these companies. I would assume the three carmakers had a backup plan, or have thought of options to restructure when they saw the country nearing recession. The beginning of this was more than one year ago. So when you see and understand people will have less money to spend on cars, on those huge American cars and on fuel, you realize you need to come with different products to cater for the new needs and more importantly possibilities.  I am very curious to see what happens next. It’s like an economy lesson tought live, with victims.

I was recently assesing the possibility for the Romanian state to help its weakening economy and market players. Aparently, the Romanian state would need to inject EUR 10 billion into the economy, EUR 5 billion to help rebuilding trust in the banking system, and the rest just for supporting the real economy. I wish I have had the tools to have come up with this numbers, but I haven’t. Herbert Stepic, general manager of Raiffeisen International gave these estimated numbers yesteday. So Romania would either take the money out of its reserves, or ask for help from the EU, said Stepic. One way or another, the future Government would have to deal with it.  Romanian president Traian Basescu nominated Teodor Stolojan, leader of the democratic Liberal Party yesterday to fill in the PM position – and now parties are discussing how to create the new Government and have it voted in the Parliament. 

While we were talking numbers, let’s look at how much has the US state put to save its economy. It was hundreds of billions of dollras for the banking system, and how the carmakers would need more than 100 billion dollars in total to survive until next spring, they say.