Dr. Alexander Mirtchev Warns Against the Mid and Long-Term Repercussions of Unbalanced and Even Mindless State

Alexander Mirtchev, Washington-based economic strategist and expert,
reviewed the actions of governments in the emerging markets in support of
the beleaguered financial sector and their potential effects with
Mergermarket, the partner publication of the Financial Times.

Dr. Mirtchev explained that governments had little choice in taking urgent
measures to the financial crisis. “With the crisis looming, it was not
possible to stick to ideological positions or specific doctrines — you do
not consider the price of the carpet you are using to put out the fire in
your house,” said Mirtchev. However, he believes that it is high time to
look beyond the immediate short-term pressures, and devise a broader
policy response that would address the long-term needs to encourage
productivity, competitiveness and growth. He is of the view that, when
devising such strategies, governments have to take into account the truly
global nature of today’s financial system. “The world financial system
has evolved to the point where no economy functions as a closed circuit.
Economic interaction in a specific market cannot be considered a zero-sum
game.” In the case of emerging markets such as India, China, Mexico,
Indonesia and others, “participation and integration in the global
financial system makes sense,” in particular with a view to the
productivity and growth-generating role that these markets have in the
world economy.

He considers that in the short-term direct government support and
recapitalization can help banks and institutions continue their function
as the mechanism that pumps capital throughout the global economy, and it
seems already unavoidable. However, the key is, at the end of the day, to
face the reality of the newly emerging global financial system of the XXI
century, not to try and “put the genie back in the bottle” by returning to
the model of the 1990s, and jumpstart the new, inclusive financial order
that could accelerate the recovery and sustain growth.

Dr. Alexander Mirtchev is President of Krull Corp., a Washington-based consultancy and serves as senior economic adviser to the country’s Prime Minister. Follow Alexander Mirtchev on Twitter

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