The credit crisis started in the summer of 2007 in USA and it was caused by diverse complex financial instruments, off-balance accounting entitites and increased use of leverage.. The first stage has been the failure of specific mortgage backed securities (basically subprime mortgages that were securitised and combined with derivatives such as Collateralised Debt Obligations and Credit default swaps). These caused the fall of specific funds and instruments. The second stage had seen the crisis spread to the very foundations of the organisations as the core of the financial system, the commercial and the investment banks on all continents. This third stage was a credit induced global recession, that put a break on borrowing and lending worldwide.
And this is one of my finance topics for the exam. Such joy!
Since I’ve started writing my bachelor thesis on the impact of the economic crisis on SMEs I had to analyze the financial implications that affect their economic activity. Here are some of the conclusions I’ve drawn while writing my thesis.
For instance did you know that the most important green field investments in Romania are made in commerce, constructions and IT?
Or that the top foreign investor in Romania is Holland (17.8%), followed by Austria (13,3%), Germany (7,9%), France (5,5%), Greece (5.2%), Cyprus, Italy, USA, Switzerland and Spain.
Foreign investments have influenced both the economic development and work productivity. The capacity of absorption of foreign investments is superior to the countries from this region, but the disadvantage is that these investments were started late and their effect can be easily seen.
After 2007 when Romania became part of the EU it started feeling the consequences of being part of a global market. Between 2007 and 2008 the number of enterprises had decreased, but the sum invested in them had increased. We could notice many mergers and acquisitions from the part of big companies that started incorporating small businesses. Furthermore Romanian firms became more competitive and took more risks, because they were trying to remain as competitive as other European companies.
Since the economic crisis started to impact the Romanian economy in the 3rd Quarter of 2008, the number of enterprises has decreased dramatically. And after a booming economy between 2002-2007, the recession was a wake up call, that economic growth does not last forever and we need to be prepared with a plan B.
The crisis built itself on a bubble favored by the real estate market. Romania was not directly affected by the economic crisis in the USA, but because of its indirect effects. We had no toxic actives, and our banks are quite protectionist- considered by others as a lack of sophistication.
At the beginning of this year we could notice the biggest decrease in the number of SMEs, because the fiscal policy of Romania does not provide any help for this sector. Furthermore adopting the flat tax and increasing taxes (VAT and profit tax) is not a happy choice, because it will deepen the poor economic situation as it is. Increasing VAT will lead to decreasing the buying power and as a direct consequence will increase inflation.
We cannot go on in this rhythm, because we need to build a solid infrastructure, invest in health and education and we need to look for the future. Our economy is not based on innovation, is not green and our government does not seem to think for the future. They are acting on CARPE DIEM, but when you rule a country, you should think a bit of the future.
The effects of the crisis were both negative and positive. The economic downturn has increased work productivity if we consider its correlation with wages in the private sector.
Since the economic crisis has started imports have decreased and consume has registered a downward trend. Unfortunately Romania exports goods that had a small economic value- especially in industry- textiles and furniture, and in commerce. 75% of the exterior commerce of Romania is related to the European Union where my country’s market share is of around 1%, a small figure taking into account that is 7th country in EU if we take into account the population. Moreover Romania is dependent on imports, because the country does not have a mechanism of industrial cluster.
I hope that by the time I finish my Bachelor Thesis I will see some realistic measures taken by our government. For the time being I am extremely disappointed.
I am beginning to believe that the political environment is surrounded by a cloud of confusion and complete craziness. I cannot explain the reasons why (some) politicians provide solid proof of their insanity, but sometimes this can be a source of amusement until you realize you are talking about the politics of your own country. One of the reasons why politicians become crazy may be considered the countless lies they have lost track of, or of false image they have created about themselves and that sometimes becomes an element of confusion. Another less realistic reason would be that their conscience is hurting because they cannot deliver their expected promised- but let’s not delude ourselves.
A recent example is that of Mircea Geoana- a politician who claims he was the victim of an energetic attack- something involving dark magic and some purple flames … and we are in the 21st century (let’s keep a moment of silence for those sain politicians who are twisting in their graves while seeing the current status of politics). His statement arrived as an explication of his recent loss in the ellections for the Romanian presidency, due to some energetical attacks that weakened his public speaking ability… Darn, so every time I was nervous during a speach was because I was suffering from an energetic attack. Who would have known? :O
We still have another case, but this was long debated and does not represent a ‘hot’ piece of news. It’s about Vadim- a politicians that sees theories of conspiracy everywhere and who doesn’t miss a chance to make a complete full of himself on almost every television appearance. You all know the renowned joke ‘ Medicins’ when refering to this colourful and unstable political character.
But our politics is not the only one we should amuse ourself with. The international politics provides some good laughs from heated fights in the parliaments (take for example women fighting in the Korean parlament, or Russian ministers generously sharing fists) to throwing of shoes. The latter could easily become a political sport since it’s practiced worldwide- the latest case was in the Serbian parliament, in November 2009. I assume we should attribute the foundations of this exciting new sport to the Iraqi journalist who hurled his shoe at th former US President George W Bush.
Do you know other juicy cases of craziness displayed inside a parliament or other institutions?
P.S. Now I wonder… I recently bought a pair of purple legwear. This means I’m planning an energetic attack? I wonder on whom? )
While reading the material for one of my projects I’ve discovered some sources of innovation that can be applied both in businesses/entrepreneurship and the overall economy.
Peter Drucker suggested seven areas where companies should look for opportunities to be innovative. The first four are internal to the company; the last three are external:
1 The unexpected success that is rarely dissected to see how it has occurred.
2 Any incongruity between what actually happens and what was expected to happen.
3 Any inadequacy in a business process that is taken for granted.
4 A change in industry or market structure that takes everybody by surprise.
5 Demographic changes caused by things like wars, migrations or medical developments (such as the birth-control pill).
6 Changes in perception and fashion brought about by changes in the economy.
7 Changes in awareness caused by new knowledge.
Drucker maintained that creativity was rarely a limiting factor: “There are more ideas in any organisation, including business, than can possibly be put to use,” he wrote. The issue is how to manage innovation so that it creates economic value.
These sources of innovation can become a safety net now- during the economic crisis.
But it is possible to get some idea of the sorts of companies that are doing well and the kinds of strategies they are pursuing… The most obvious winners are established giants: market leaders that entered the recession with cash in their pockets and sound management systems under their belts. These companies are reaping rewards from investors who are skittish about shakier rivals. They are also using their corporate muscle to squeeze their costs (for example, by negotiating cheap rates for advertising) and so win market share from their competitors. BCG, another consultancy, notes that 58% of companies that were among the top three in their industry had rising profits in 2008 and only 30% saw their profits decline. In contrast, only 21% of companies outside the top three had rising profits, and 61% had falling profits.
A second group of winners is made up of companies with a record of innovation. A third group consists of companies which are using the recession to reposition themselves.
Pentru a nu continua pe acelasi ton pesimist folosit in postul anterior vorbind despre criza -voi lasa imaginile sa vorbeasca de la sine- e bine ca romanul inca mai poate face haz de necaz. Aveti mai jos niste filmulete facute de cei de la Happy Fish Tv despre criza economica in diverse domenii. Baietii sunt pur si simplu geniali ). Sper sa va placa.
Solutii de criza :
In transporturi (carnatii merg cu Lufthansa )
In politica, dar si in aspecte mai personale :
In televiziune:
Si de ce nu si in industria berii :
Si daca v-a placut gasiti mai multe filmulete pe site-ul lor http://www.happyfish.ro/.
O zi faina sa aveti
)
