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Liquidez frente a solvencia - Una elección con profundas implicaciones para abordar la crisis y el período de recuperación, y, sobre todo, de Global Post-Crisis de la Seguridad Económica

Krull Corporation President Considers That Progressively Expanding State Intervention Is a Foregone Conclusion That Has Gone Past the Point of Debate, but Believes That the Criteria for Success Is, at a Minimum, Countering the Fear and Uncertainty About the Future, Boosting Market Confidence, Whilst Dealing With the Social Fallout of the Crisis, and, at the End of the Day, Bringing a New Level of Productivity, Competitiveness and Entrepreneurship, Combined With a Feasible Exit Strategy

WASHINGTON, DC, Feb 19, 2009 - In an interview with Voice of America television, Dr. Alexander Mirtchev, a prominent economic policy practitioner and president of Krull Corporation, answered questions about the challenges faced by the governments worldwide in dealing with the financial crisis and the economic downturn. He offered his comparative analysis of rescue options and current measures available to the governments of the U.S. and other G-7 economies and the large emerging markets such as Russia, Brazil and China.

"Even though the greatest focus has been on the U.S. and other developed economies, the financial crisis and the concurrent steep economic downturn that are mutually interlinked and reinforcing each other, are a global phenomenon," indicated Mirtchev. He stressed that "virtually every significant economic crisis gives rise to an expanded role of the state, aimed at expediently dealing with the massive problems at hand. In this case, the over-reliance of the general public (and some financial and industrial institutions) on the government, exacerbated by the public perception that there was a 'failure of the market,' and even of capitalism itself, combined with the often demanding political calendar, shaped the course of events. The 'elephant in the room' is the 'D' word -- depression, as well as its price-tag, inevitable toll on society and its long-term repercussions."

"Across the board, the measures attempt to integrate in a more or less coherent way differing concepts for dealing with a wide range of pressing issues -- insolvent banks, toxic assets, failing mortgages, problematic securitization, outdated industry models, rising unemployment, etc., via increased government or consumer spending, which amounts, predominantly, to a consumption-driven recovery. The practical outcome from the interplay between these concepts in the context of the global deleveraging is still unclear, and would probably remain so for the foreseeable future, even though the resulting measures should have a certain positive impact," said Mirtchev.

"As ever-expanding government intervention in the markets is already a fact of life, the issue from a mid and long-term perspective is how to work out the best ways to utilize this intervention in order to boost productivity, competitiveness and entrepreneurship, with a set time limit and transparent exit strategy, and, simultaneously, to help and take care of the people that have been most affected by the economic downturn and the financial turmoil." In the short term, these measures should quickly lay the foundation for increasing market confidence to combat the sentiment of uncertainty and gloom among consumers, producers and investors worldwide. In the long run, Mirtchev considers that the economic recovery package of the U.S. government would need to include "quite creative measures," and, most importantly, do their best to make the private sector part of the process, in order to deal with the extraordinary economic situation and the concomitant financial crisis.

"It becomes obvious that national and international financial systems need to be fixed before a lasting economic recovery can start in earnest -- the key seems to be to address the issues of the XXI century as opposed to trying to 'put the genie back in the bottle.' Whatever solutions are put forward for the international financial system, they would need to recognize and utilize, rather than restrict, its newly developing nature, and consider global, rather than rely on 'local' measures to deal with the crisis. The measures could consider gradually building the elements of a 'global financial supermarket' of mass participation, based on the technologies and infrastructure that is already in place, that empowers the market players and individual consumers in a constructive way, incentivizing rather than restricting, establishing clear, consistent and transparent rules of the game, and, respectively, educating about the new realities."

Taking as an example the auto industry, Mirtchev indicated that "faced with a range of unfortunate choices, the U.S. government is confronted with the question of how to assist the industry to update its business model for the 21st century, advance the technology, and become adequately productive and competitive." Irrespective of the stated aims, "it is unlikely that the government can efficiently manage car manufacturing or other industries," said Dr. Mirtchev. "Some of the questions to ask, in this context, are: would the government intervention in the market be successful and what does success mean; does the bail-out simply extend the agony of companies that are 'too big to fail' and what is the price of failure; what are the implications of government rewarding companies with unfair advantages and de facto picking the winners; what is the best exit strategy? Clearly, measures taken to assist one industry sector are occasionally fraught with unforeseen consequences for other sectors, not to mention the looming specter of protectionism."

The economic crisis has affected emerging markets and the rapidly developing economies just as much as it did the developed economies. The measures undertaken by the G-7 governments not only have a significant impact, but also induce, to a certain extent, the shape of their own response to the crisis. "There is no 'decoupling,'" according to Dr. Mirtchev, "and the U.S. recovery measures and their effectiveness are interdependent with the developments in the rest of the world."

"The economies and the financial systems of the developed and developing countries are intertwined; the remedial measures would perforce a need to be coordinated, even when some governments are more surgical and balanced in their intervention than others." From Mirtchev's perspective, emerging market countries, such as Russia, China, Brazil, etc., should be elevated to the position of players with a much greater say in dealing with the current crisis and bringing about the recovery, commensurate with their contribution to global economic activity. "For example, economies, such as Russia, would need to be engaged in the process of assisting global economic recovery, and their role should be acceptable and beneficial for all the players, and obviously, perceived as beneficial by Russia itself." His view is that "not fully integrating the emerging markets in the solution to the economic crisis may result in their becoming not only part of the problem, but may lead to a significant fragmentation of the markets, and even, by some accounts, a tendency towards a reversal of the globalization process that would impede the recovery." Dr. Mirtchev believes that not just their inclusion, but rather a new type of coordination and cohesion of measures by governments in the emerging markets and developed economies, are needed.

To view the interview, visit

About Krull Corporation:

Krull Corporation is a Washington, D.C.-based advisory and project management firm with expertise in dealing with economic growth, industrial restructuring and modernization. Founded by Dr. Alexander Mirtchev in 1992, Krull Corporation capitalizes on his extensive professional experience in market developments and reforms and focuses primarily on emerging market and rapidly developing economies. Over the years, the firm has provided its clients with outstanding strategic guidance and solutions. Combining a unique blend of global reach and understanding of local markets, Krull is able to consistently produce high quality results and returns.