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Simeon Mitropolitski is a Canadian analyst, of Bulgarian origin, and a former syndicated columnist with the Bulgarian News Agency (BTA). He is the author of several hundred articles dealing with hot political and economic topics, both national and international.
He was part of the first group of Bulgarian intellectuals and students that began the opposition movement that finally put an end to the communist regime in this country in 1989, and in 1996-1997 participated in international observation teams during the elections in several Balkan countries - Romania, Albania and Bulgaria.
In 2002 Simeon and his family moved from Bulgaria to Canada where they live now in Montreal, province of Quebec. Simeon is a Master of Political Science from McGill University and a B.A. of Political Science and History.
Global Real Estate Project
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Financial Crisis Freezes Romanian Real Estate Market
In the past couple of weeks (for the second time in the recent years), the Romanian financial system literally collapsed. The International Bank of Religions went down first. It was followed soon by the huge National Investment Fund (NIF). The head of NIF, Mrs. Vlase, took the savings of more than 300,000 Romanians and escaped to Venezuela. On June 1 police issued arrest warrants for five top bankers involved in the collapse of the NIF. The same day the Romanian government suspended the executive board of the country's capital market regulatory agency, which had monitored the fund's activity. The agency's former chairman, Mr. Boboc, was one of the five bankers named in the arrest warrants. On June 5 the Romanian Popular Bank announced that it had suspended withdrawals for six months. The reason was temporary liquidity difficulties due to the panic triggered by the collapse of the NIF. The same day the Romanian government replaced the chairman of CEC, the country's largest state saving bank, and five of the seven members of its administrative council. The current financial collapse in Romania so far has annihilated the people's savings worth almost $1 billion, which represent around 20 percent of the total amount of savings kept by the population in the country. The first victims of the financial crash (not to mention the people who lost their savings) were the durable goods markets - real estate, cars, washing machines, dryers - in other words, everything that lies beyond the mere need of physical survival. Trouble never comes alone. In the last Sunday local elections in Romania the opposition Party of Social Democracy (former communists) scored a major victory over the ruling center-right coalition. Even in the capital of Bucharest, the candidate of the left is in pole position before the second round and for the first time since 1992 a former communist has a real chance of becoming the next city mayor. In our last article dedicated to the real estate market in Romania we noted that the coming presidential and parliament elections this autumn risk bringing back into power the former communists. We also mentioned that this particular circumstance is an obstacle to the development of the national economy, in general, and of the real estate market, in particular. Recent financial events and alleged links between the ruling coalition officials and the financial pyramids pharaohs * can only further aggravate the situation for the current administration. During the last opposition rallies before the local elections in Romania protesters shouted, "Thieves, thieves, we want our money back!" The past decade in the Eastern European history taught the lesson that there was not a case, even one, when depositors were fully compensated for their losses. The second lesson was that every such financial collapse was a blow to the real estate market in the country involved in this drama. In Bulgaria, for instance, the financial crisis of 1996-1997 froze the market for about a year, in Russia after the August of 1998 - for about 18 months. Such crises influence the real estate market by decreasing the number of foreign companies ready to operate in the given country. We have already mentioned that the only kind of solvent buyers that were present on the Romanian real estate market (concentrated mainly in the capital of Bucharest), were the foreign companies and their expatriate employees who until now afforded the prices, considered as prohibitive from the ordinary Romanians. The current financial crisis in Romania raises the question of professional adequacy of the local bankers and the other financial managers in Eastern Europe. Former communist rulers, expecting to create a society without any market relationships, didn't stimulate professional development in this area. The first private bankers were either former state-owned bank employees or people without any specific skills. In the early 90s they created several private financial institutions in every country of the region, which collapsed within years. In the countries where the financial systems now function without major crises, owe it not to the financial agents professional skills, but to the strict regulations and state-administered restrictions. They actually hamper the credit market because every restriction brings higher interest rates. The financial crisis in Romania once again shows how fragile the market situation is in Eastern Europe and that the road to prosperity will be long and winding, as in the Beatles song.
*In Eastern Europe the term "financial pyramids" applies to the mostly illegal financial structures that promise high returns by paying the first clients with the money received from later investors. An investor makes a deposit of $1000. The pyramid promises a return of 100 percent a year which is paid from the deposits of later investors. So the structures are like pyramids, they need more and more clients -- a larger and larger base -- just to survive. If for any reasons the number of new clients decreases or stops growing they go bankrupt. As you can imagine, such financial structures can operate only with political protection. Indeed they are linked to the politicians who usually take their money back just before the collapse (with the highest possible returns). That's why the people who run such illegal financial structures can escape from the country. The term "pyramid" was so widely used in Eastern Europe in recent years that the people who run them were called "pharaohs". --------------------
See also the directory of companies providing real estate services in, and general real estate information of Romania.
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