Hungary to "junk". CRAs revived panic in Eastern Europe, having already warned that Western states are threatened by the global ratings euro area. A seemingly endless crisis, a war of nerves that seems endless.
Or we have a solution on December 9? Germany wants to impose a menu of all austerity, bringing unbeatable argument in Europe the strongest economy in Romania will receive this moment.Ce place at this table, when still a company announces its withdrawal from the country?



I never had much time rating agencies U.S. Standard & Poor's to demote rating debt in domestic currency of Romania in the "junk", ie the country unsuitable for investment after another rating agency, Moody's just downgraded the rating of sovereign bonds of Hungary the same category. The reasons vary. In the case of Hungary, low uncertainty rating is based on the country's ability to resist risks of potential state propagated by the debt crisis in the euro area, while Romania was penalized for high exposure of banks in Greece and Austria in the local banking system.



According to Fitch, Romania, Austrian banks have owned the largest share of local banking assets, 31.5%, followed by the Greek capital, 15.8%, and French, 13.7%, and the Italian capital, with a share of 7.1%. Foreign institutions hold 85% of total banking assets in the country. What before strengthen the local economy, foreign money, here it now turns out to be weak. On the other hand, foreign debts in excess of 60% of total debt, which is Standard & Poor's for a high level of "euroizării economy." In other words, because of foreign currency debt, Romania becomes vulnerable to a possible default entries.

Credit rating agencies have taken viewfinder Eastern Europe after the Western continent already warned that credit ratings are at risk of unresolved crisis in the euro area. He stood, here, a common question. How will support Member rating downgrades, since that means, first, high cost loans?



"FINANCIAL APPEAL". Clearly, the offensive rating agencies of foreign banks with subsidiaries scare in Eastern Europe. With nerves stretched to tensions within the euro area, the Austrian National Bank The institutions of credit has already recommended to reduce funding in the Austrian region, even out of some markets. Which, of course, gave cold shivers down your spine governments in the region. Associate Director of Fitch sovereign ratings department, Michele Napolitano, had said some time before that, "given the strong economic and financial linkages, tensions and could extend the euro area banks in Central and Eastern Europe". The same official said that "the presence of foreign banks in the banking sectors in Central and Eastern countries supported the ratings in the region." Budapest swallowed hard Moody's decision, interpreting it as a "financial attack", probably from America. Proponents of conspiracy theories could link this situation with U.S. President Barack Obama's declaration, made at the summit "United States-European Union", held recently at the White House that is willing to help the Union. Interest that the EU would increase mess to justify revoking the American presence at the table. The reality is that Hungary should expect such a sanction, because anti-crisis measures they took and brought him not even half of the budget estimates were in total disagreement with the market economy: the nationalization pension system, higher taxation of credit institutions and retail sector and the establishment of a currency being fixed dollar / Swiss franc. Hungary is at this moment, the most indebted country in Eastern Europe, with a share of public debt to GDP of 71.6%. In fact, Prime Minister Viktor Orban country pays arrogance, which refused in 2010, aid from the International Monetary Fund (IMF), although in 2008, Hungary has avoided bankruptcy with an emergency loan granted by the Fund. The agreement did not last long, because the Hungarian authorities did not accept the IMF's austerity plan. Now, Hungary announces negotiations with the Fund for a precautionary agreement worth 4 billion euros after VAT increased from 25 to 27%, the largest in the European Union, as that will slow economic growth. But what good is that Romania counts on growth and next year, if not positive light weight the rating agencies, which endangers the targets. The last report of financial risk analysis company Coface (made before the Hungarian bond rating downgrade) indicates an increase in the local economy in 2012, 2% ahead of expected growth this year of 1.5%, driven mainly agriculture sector, moreover, is also the basis of forecasts for next year, along with attracting European funds. However, these targets are easily missed, given that agriculture depends on uncontrollable factors, climate, and capacity to attract European funds is a precedent absolutely disappointing.



CONSEQUENCES. The repositioned rating to "junk", Romania should expect a decrease in investment, increasing capital costs and, of course, to a reduction in funding from the Austrian capital of credit institutions, even if the head of Erste, which controls the large local bank, BCR, Raiffeisen and the subsidiary in Romania, authorities have assured that they will not respond to a line drawn from Vienna. Their statements were completely calm and neconvingătoere, however, is known, such decisions take the parent bank. On the other hand, will be difficult for Romania to attract foreign investment to come. Theoretically, however, investors interested in Eastern Europe should look at the numbers. Romania has the lowest level of public debt in the EU, twice smaller than Hungary, for example, has over growth prospects. The first effect appears to have already produced, increasing the cost of capital. "The Ministry of Finance stopped bonds in dollars, and this is a sign that at least for the next six months, the cost of capital will increase, not only state but also private," estimates Matthew Peacock, Managing Partner of consulting company BAC Financial Investment. But we see the bright side. Romania's rating return "junk" can be a good opportunity for authorities to reconsider their objectives, to eliminate unrealistic targets, which could be materialized only in waste of energy, such as accession to the euro in 2015. "I believe that Romania's chances of joining the euro are void, and not just for 2015 but for a much larger," says Matthew Peacock, who believes that "it must be objective." Romania is not ready in terms of the real economy to join the euro area, because there is a long way in terms of per capita income and lack of sustainable engines, autonomous and diversified growth, believes Lucian Isar analyst. "Lack of correlation between economic cycles makes catching the last of the other countries is difficult," he adds. On the other hand, after eurozone leaders have fooled with Greece, it is clear that they will blow and yogurt when he comes to accepting new members. Assuming that there is still the possibility that the three criteria in the euro area nominal access be handled, as they did in the past Greece and Italy, "for Romania, the result of such manipulations will be further prolonged economic stagnation," said Isar. Moreover, these criteria should be good for mature economies, but plenty of room for growth in emerging economies, which ultimately leads to increased polarization in the block discrepancies and money, says analyst. On the other hand, uncertainty about the future of the euro area is that Romania's objective to move to the euro in four years not to slip into ridiculous.



Sores on the inside. "The current situation shows that the criteria for admission in the euro area (the convergence criteria in the Maastricht Treaty set limits on percent budget deficit, inflation, interest rates and currencies within the ERM parameters - no) are insufficient and the real economy is that matters, "says Lucian Isar. "As a political project rather than economic theory has relied on negotiation inspired by historical facts that suggest that if you burn all bridges (boats), you seem more credible," explains the analyst. It is obvious that steps have been wrong in the enthusiasm of politicians to build a monetary bloc, without thinking, but the common fiscal policy. Now they have to amend the Treaties, to establish how to use the tools at hand, the European Central Bank (ECB) and European rescue fund, the so-called European Financial Stability Facility Facility (EFSF), to address urgent crisis of sovereign debt.



"Economically, it is evident that there are problems with such construction (euro area - no) and that several mechanisms are needed to operate the valves to eliminate such excess pressure over a level considered dangerous," admits Isar. Such mechanisms can be pencil, "but the construction is political, and not economic, and solutions expected to be acceptable in terms of politicians, who have national elections in 2012," concludes the analyst. In fact, technical, financial crisis in the euro area could be solved much, say some anlişti, but the measures failed to pass the plan statement, persistence with which European leaders have always imposed their views.



"On one hand we have Germany, which imposes its authoritarian vision and the other part remaining states, which will, in turn, to put their own imprint philosophy," says Matthew Peacock. "The crisis may be terminated at any time," said the consultant, "but Germany has not yet reached the goal, namely to impose its vision in the euro area". "Germans cat shows undisciplined countries that have not adopted the Teutonic attitude," adds Peacock, in the opinion that "this psychological warfare, with an important issue will be concluded with a barter: Germans will agree to work with existing tools, and the rest countries to adopt the German view that the ECB is not willing to use until it is warranted. " Indebted governments must demonstrate that they are able to implement investment plans, coupled with austerity measures, and not heavily indebted. Germany has remained firmly in place against the active involvement of the ECB buying euro zone sovereign bonds. ECB intervened several times in the last three years, secondary market yields to control bonds issued by euro area countries with problems.