Romania hit but not down from financial crisis

A relatively new member of the European Union, "Romania is one of the most beautiful, intriguing, and little-known countries in Europe," says the blurb on John Villiers's upcoming book.

International institutions have stepped up lately to help Romania weather the current financial crisis and revamp its ailing economy. The Executive Board of the IMF (International Monetary Fund) approved a 24-month SDR (Special Drawing Right) Stand-By Arrangement for Romania of 11.4 billion (about €12.9 billion, or US$17.1 billion). This aid will be combined with money from the European Union, the World Bank, the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), and the International Finance Corporation (IFC), for a total international support package of €19.9 billion (about US$26.4 billion) to address Romania's 2009-2010 financing gap.

Lots of wallets, for a sum that pales in comparison to what your typical failing large bank or car company in the States got used to receive...

Foreigners can invest and buy stocks in Romania through a stockbroker, though trading volume on the Bucharest Stock Exchange is small.

Beer, Fries, and Globalization

The day started with pouring rain in Toronto and bad unemployment numbers in the US. In the afternoon, the sun is out and North American markets are in the green again, which might offer a crumb or two of comfort.

I met an old friend for lunch today, and we discussed business and our kids' education. On the subway (instead of at Starbucks as usual), I enjoyed reading through Tim Harford's book The Undercover Economist.

The post's title above is the name of one of the chapters in this book. Some excerpts, for the benefit of my cognitive fog, follow:

Once upon a time there was a prosperous trading city called Bruges, nestling on the Zwin estuary in what is now Belgium. Bruges grew up around a castle built in late ninth century by the founder of the Duchy of Flanders.

[I]t was the center of gravity for the Hanseatic League of trading cities. But in the fifteenth century something strange began to happen. The Zwin began to silt up. The great ships could no longer reach the docks of Bruges. The Hanseatic League moved up the coast to Antwerp.

Antwerp, still connected to the world via the Scheldt River, took over from Bruges as the greatest economic power in Western Europe. The wealth of that time is clearly visible today. Antwerp remains an economic powerhouse. It is still the diamond capital of the world, and the mighty port on the Scheldt operates around the clock.

The contrasting stories of Bruges and Antwerp suggest a simple message: if you would like to be rich, then it is a good idea to forge close links with the rest of the world. If you prefer nothing to change, then it is best to have a harbor that silts up. If you would like to be rich and have nothing change, then you will be disappointed.

The last sentence, a veritable call to action, is thoroughly edifying...

Antwerp

Bruges - Venice of the North

Europe, and Lesser Europe

As was to be expected, Europe's suburbs are in deeper, shall we say, crisis. A systemic response appears to be in order.

Collapse in Eastern Europe? The rationale for a European Financial Stability
Daniel Gros © voxEU.org
25 February 2009

The European periphery faces significant economic turmoil. This column argues that Eastern European woes threaten the core of Europe and necessitate a systemic response. It proposes a new, massive European Financial Stability Fund (involving about 5% of EU GDP) run through the European Investment Bank.

Read the article here.