Romanian protests

Well the biggest demonstrations may have been in France but the most effective were in Romania.

Romanians were in the streets several times last week, culminating Friday in a protest led by 6000 police officers in uniform.  They marched to the capital building where they proceeded to shout fantastic abuse, “Get out you miserable dog”, and threw first eggs and then articles of their own uniforms.

The President wasn’t in the building at the time. In fact he was in his car stuck in traffic, busy breaking the law.  Bucharest television spotted him and filmed him talking on his phone while driving.

As in most countries it rings alarm bells when police appear on the ‘wrong’ side of the protest march.  The government obviously forgot the simple rule – If you have to cut wages and pensions make exception for those who you want to have staunchly on your side. The Romanian police were told that they, like everyone else, would have a 25% wage cut.

Like all the countries around them, Romania is tip toeing along the edge of defaulting its debts. The IMF has ‘insisted’ on massive austerity measures otherwise it will not give Romania the loan it needs to even be able to pay its people. So the government has been forcing draconian cuts on its already poor people.

That the anti-austerity protest has spread to the police has raised the political temperature of the crisis. Yesterday Interior Minister and ‘close ally of the President’, Vasil Blaga resigned. Leaving his ‘close ally’, the President, significantly weakened and facing calls from the opposition, for his own resignation.

But is the alarm bells ringing in Austrian and Greek banks, that we should be paying attention to. Remember Austria is exposed to €42 billion of Romanian debt, while Greece is exposed to €25 billion.

I think this can only add to the over all sense that Europe’s sovereign debt problems are staging a spirited come back. Expect CDS costs for insuring debt from Greece, Romania, Bulgaria, Italy, Portugal and Ireland to all keep on climbing.

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