And the Romanian economy, while growing and birthing a middle class, is more of a transitional economy than a developed one.
The new middle class is putting is disposable income into cars. There are too many for the streets of
A business man has a plan. At least a small one. He owns a parcel of land in the central city and has estimated the cost and earnings of building and maintaining a modest parking ramp – 600 cars – on the site. It will pay off with interest in 5 years. But he can get no investors to finance the project.
Romanians are in a speculative mode; quick turnaround of capital at a good return – get your money back in 6 months at 30% interest.
Asset speculation – whether on financial exchanges, in wartime economies, or in real estate – always leads to trouble. It is built on the twin pillars of unrealistic valuations and “irrational exuberance” – the human propensity to gamble when facing the prospects of making easy money. It is a dysfunction that undermines the rationality of capitalism and pre-dated the emergence of capitalist production and systemic accumulation of invested wealth.
But not for parking ramps, needed infrastructure and other long-term payoff projects.
The effect of the hedge funds is to further distort Romanian economic priorities towards short term speculation.
Is this really very helpful?