Today, both Romanian and foreign financial media intensively discussed the new ratings issued by Fitch Ratings for EMEA on November 9, 2008. Many have said that the downgraded rate for Romania is just a speculative action orchestrated by big financial groups that tried to put down the Romanian financial market in the last weeks. But beyond all the comments, we can easily see that there is a huge interest in making all the 'emerging financial markets' feel the international crisis.
One question I have is how could they consider a two-notch downgrade for the sovereign rating when the credit crisis in Romania has been prevented by the Romanian National Bank? Moreover, how could they consider Transilvania Bank as the only Romanian bank that has proven a steady development? Is there a specific interest in making this bank available for future interbanking relations? If I remember correctly, Transilvania bank just suffered a powerful attack from foreign investors and speculators. (read here)
Here is the explanation offered by Fitch Ratings in its press release:
I have been following these ratings in the last two months and I can say openly that Fitch and other similar institutions are just one tool in the hands of big western banks and investment groups. At this moment, their interest (both of the western banks and investment groups) is to transfer all negative risks and unprofitable packages to the emerging financial markets because it is easier for them to leave the hot pie in other hands and eat the most of it when it will be ready-baked. From another perspective, they want to make more money even if their native or adoptive markets became unproductive (because of them and not because of somebody else). In other words, we are dealing with a huge greed.
It is very strange how suddenly the representative of the International Monetary Fund visited Romania before this new rating and soon after Hungary asked for financial help from European Union. Is it a way of damaging the image of a country with relative financial stability? We certainly did not invite them to discuss potential refunding of our economy. Our experience with them -- as in the case of all the other countries where they pushed in their strategy - was really bad, especially because their economical tools are inappropriate for Romanian context.
Taking into consideration all these and many other "incidental" events, I conclude that Fitch ratings is playing with the country/cities and banking ratings as their contributors dictate. It is a way of influencing the financial market, it is a way of making money on the backs of the poorer ones. From my own point of view, this is the most unethical behavior we could see these days. I think I am not saying anything wrong when I associate Fitch's current behavior with the Enron experience. They play with figures just like the managers from Enron played with financial reports and energy production.
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Nov. 11, 2008
The article from the Financial Times is very interesting. Although the author tries to describe what happened, you can easily understand that our economic and financial situation is far better than those of Hungary or Bulgaria. The last has a 25 percent current account deficit, while the first received an important financial help from the European Central Bank.
One question I have is how could they consider a two-notch downgrade for the sovereign rating when the credit crisis in Romania has been prevented by the Romanian National Bank? Moreover, how could they consider Transilvania Bank as the only Romanian bank that has proven a steady development? Is there a specific interest in making this bank available for future interbanking relations? If I remember correctly, Transilvania bank just suffered a powerful attack from foreign investors and speculators. (read here)
Here is the explanation offered by Fitch Ratings in its press release:
"Romania: the two-notch downgrade reflects Fitch's concerns about the macroeconomic policy framework in Romania and its ability to avoid a severe economic and financial crisis. With a widening current account deficit - expected to exceed 14% of GDP this year - fuelled by excessive credit growth, Fitch believes a much stronger policy adjustment, especially in fiscal policy, is needed to avoid a currency crisis. Given private sector foreign currency balance sheet mismatches, such an outcome could require substantial external financial support from the international community to prevent a sovereign credit crisis. The rating Outlook is Negative."
(Source: Fitch Ratings' website)
I have been following these ratings in the last two months and I can say openly that Fitch and other similar institutions are just one tool in the hands of big western banks and investment groups. At this moment, their interest (both of the western banks and investment groups) is to transfer all negative risks and unprofitable packages to the emerging financial markets because it is easier for them to leave the hot pie in other hands and eat the most of it when it will be ready-baked. From another perspective, they want to make more money even if their native or adoptive markets became unproductive (because of them and not because of somebody else). In other words, we are dealing with a huge greed.
It is very strange how suddenly the representative of the International Monetary Fund visited Romania before this new rating and soon after Hungary asked for financial help from European Union. Is it a way of damaging the image of a country with relative financial stability? We certainly did not invite them to discuss potential refunding of our economy. Our experience with them -- as in the case of all the other countries where they pushed in their strategy - was really bad, especially because their economical tools are inappropriate for Romanian context.
Taking into consideration all these and many other "incidental" events, I conclude that Fitch ratings is playing with the country/cities and banking ratings as their contributors dictate. It is a way of influencing the financial market, it is a way of making money on the backs of the poorer ones. From my own point of view, this is the most unethical behavior we could see these days. I think I am not saying anything wrong when I associate Fitch's current behavior with the Enron experience. They play with figures just like the managers from Enron played with financial reports and energy production.
--
Nov. 11, 2008
The article from the Financial Times is very interesting. Although the author tries to describe what happened, you can easily understand that our economic and financial situation is far better than those of Hungary or Bulgaria. The last has a 25 percent current account deficit, while the first received an important financial help from the European Central Bank.
