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Archive for September, 2010

Why Google delayed the Page Rank update?

Because of Google Instant. You’ll see that in Google Instant, the new Google’s interface that was officialy launched few days ago, some key search operators aren’t working.

For example:

  • – Google instant points to the traditional search (with “enter”)
  • – the same
  • inurl:[word, page.php] – sometimes works, sometimes is broken (works, but it collapses)

Thus, it’s obvious that Google’s engineers waited to launch the Google Instant, but as long as  Google Instant isn’t fully working and some searches still need the old way of search, this is a sign that Google’s search infrastructure still has to be fully updated. Including the Page Ranks.

Romanian Revolution against… the banks!

Romania is a new EU member (since 2007). Because of the lack of legislation, and when it was crystal clear that Romania would become an EU member (sometime in the years 2002-2003), a lot of banks came into this country and started lending money backed by a lot of doubtful practices. For example, nowadays the EURIBOR (Euro Interbank Offered Rate) is ~0.9% and many credit contracts signed in the good years (2005-2008) stated that the interest rates are variable, function of EURIBOR. Well, the reality is that these contracts contained also a lot of small prints, such as:

…but the bank can change the interest rate and commissions at any time…
…the bank can change the list of commissions…

Unfortunately the Romanian population had a zero degree of banking education. During the communist regime there were few banks in this country and money lending was a strictly regulated activity. When a worker wanted to borrow money, he was going to CAR or CEC and the rates were automatically taken from his monthly wage. Everything was “mechanized” because all the economy was centralized, so even if somebody was moving with the job in another town, the CEC bank knew that and automatically asked his new employer to pay the debt. There was no competition on the credit market, and if someone knew that he must pay 3% interest rate, this 3% was really equal with 3%.

Then, during the ’90s, Romania experienced a very high inflation and even if some private banks started to appear, nobody was taken money (except the State) because the interest rates were huge (40-50%). Thus, the credit market started to develop only after 2003, when the inflation was under control, the economy started to experience some very nice growth rates (6-7% y-o-y) and, due to the international context (country’s access to NATO and EU), foreign banks began to flourish.

So, many people started to borrow money from the foreign banks that opened branches all over Romania. These banks are, in vast majority, Greek, Austrian and French banks, but there are also banks from Holland, UK and Hungary. The demand for credits was so huge that the banks were lending money without even show to the clients a money lending agreement. The clients could access the agreement only after they signed the papers – and, of course, nobody really bothered to read the agreements! The credit frenzy was so huge that today Romania has only 4,3 millions employees and more than 5 millions credit agreements!

But little by little, step by step, the world financial crisis started to spread in Romania and more and more families had difficulties in paying back the rates. And people started to ask why, if EURIBOR is so low (under 1%), the banks doesn’t cut the variable interest rates?! And they discovered the small prints from above. Yes, your interest rate is variable, but me, THE BANK, decide … how much :) Yes, we reduced the “risk commission” with 0.15%, but from the next month you will pay a “blue sky color commission worth of 0.25%” :) … and so on!

So, people started to loss the cars and the houses (by the way, if you are in Europe and want to buy a cheap car, come to Romania!). And everything was 100% legal. People have signed the agreements, nobody pushed them to do so. But those who didn’t want to accept such a humiliating situation, began to organise themselves into anti-banks groups. On the other hand the Goverment (who is dependent from IMF and banks’ money) was forced by the foreign banks to delay the enforcement of the Personal Bankruptcy Act because the bankers were, and still are, afraid that, with such a law, a lot of Romanians would say: “F… you!” and abandon the house, the car, whatever they bought. But, between Scyla and Charibda, the Government was forced however to implement recently an European act that calls for more transparent banking services. This act gives more rights to the clients. This was enough for a lot of clients to organise themselves in huge, really huge groups, and to attack in justice the agreements signed with the banks. For example, the anti-Volksbank online group already has 1700 members and they have hired together a lawyer (a very good one) that will take the case to the justice. The anti-BCR-Erste group has 700 members. The anti-ING group has 250 members. And so on. Other groups are still small, but people are beginning to gather and to react because they heard from the newspapers that the anti-Volksbanks have managed to hire a lawyer. In total, thousands of angry Romanians have adhered to a group or another, but their number is growing day after day at a fast pace.

Anyway, this is very interesting because I think that this is the first time in recent history when a large mass of consumers is fighting so organised against the banking system. We have seen here and there throughout Europe some anti-banks movements in late years, especially in Greece, but they were rather random and anarchic. Will Romanians start a Revolution against … the banks?

Funny: A Romanian ghost feints… the IMF!

This is the kind of story that those who live in a normal, not insane, country, will never see.

Some Romanian journalists and bloggers discovered last year (in 2009) that in 2008 one of the biggest “contributors” to the Romanian economy was a company from Brasov county that reported zero employees, zero spendings, zero investments and almost… $700.000.000 revenues! All generating a net profit worth of … $700.000.000!

The journalists tried to investigate this marvellous company and they discovered that the company’s “official” address is somewhere in a marginal village from Brasov county, in the house of some poor family that never heard about this company. In a word, in Romanian law this is called “illegal headquarter” and it was a sufficient reason for the authorities to investigate and eventualy close this company. But the authorities decided to take no action.

Recently, the Romanian Ministry of Treasury published all the financial data for 2009. In 2009 Romania had a deep economic fall, with (officialy) -7,2% economic growth y-to-y. This was a little surprise because everyone expected the fall to be somewhere between -9%-10%. So, the official data contradicted somehow the popular feelings.

With the crisis so deep, the Governement decided in February 2009 to take $  (twenty billions) in loan from IMF (International Monetary Fund). But, of course, the IMF asked for some reforms and some economic parameters (such as budgetary deficit) to be reached. Very difficult task for a Government whose main task was to ensure the (fraudulent) re-election of Traian Basescu as President!

So, speaking again about that company, the journalists discovered that in 2009 the Ministry of Treasury considered the Brasov company as a … “big budget contributor” and that this ghost company reported now … $ (four billions) as revenue, equal to profit! This equals 2,5% from Romanian GDP and it is bigger that the combined profit of Orange, Vodafone, Carrefour, Cora Hypermarche, Petrom OMV (the oil company), Erste-BCR Bank (biggest bank), Coca-Cola Romania and many other big Romanian businesses.

However, one mystery remained. Was it, or not, taken into account this “company” when calculating the GDP? Because, if this company’s turnover was taken into account for the GDP’s calculation, the implications were huge:

  • In 2009, Romanian GDP fell not with -7,2%, but with almost 10% !
  • The Romanian authorities have lied the IMF regarding the budgetary deficits that were well over the agreed limit !
  • The state of Romanian economy is worst than reported!

This is why some journalists have immediately phone to the head of statistics and asked whether the officials took into account this company when they calculated the GDP for 2009.

And shock: initially, the answer was YES !

Then, only few hours later, when the answer was already published in several newspapers, a lot of State representatives (from Treasury, Statistics etc.) started to bombard the press with “explanatory” press-releases stating that this company was never included in GDP calculation. Even the head of statistics motivated that, when questioned about this problem, he was in… holiday and he answered yes, but in fact it was no!

Now the authorities have promise that they will conduct a very thorough investigation and, if needed, they will close this company. But this is crazy. It’s almost sure that the authorities used this ghost corporation to “improve” the statistics and to trick the IMF. And the Romanians. And themselves!

Conclusion: You should never underestimate the resources of Romanian bureacracy to produce lies. Since the inception of the national state, in the XIXth century, Romania was one of the most bureacratic countries in the world. In the XIXth century Romania had more state employees in office jobs (public clerks) than Germany or France. This situation continued during the XXth century. In Romania the sanitary or educational systems are lacking personnel, but town halls in villages with 2.500 of inhabitants have frequently 15-20 employees (and they are often relatives).