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Dr. Alexander Mirtchev Discusses the U.S. Government's Measures to Deal With the Global Economic Crisis and Stresses the Imperative for Viable Exit Strategy on the Riz Khan Show
Alexander Mirtchev Assesses the Short- and Long-Term Implications of U.S. Government Intervention to Counter the Recession for the Restoration of the "Social Contract" Between Main Street, Wall Street and the Government; State Intervention Should Not Only Be Balanced, but Also Have a Clear Exit Strategy
| Source: Krull
WASHINGTON, DC--(Marketwire - May 14, 2009) - Dr. Alexander Mirtchev, founder and president
of Krull Corporation,
discussed the U.S. government's actions in response to the crisis in the
economy on Al-Jazeera's Riz Khan Show. The complexities created by the
precarious economic and financial situation are exacerbated by what is
perceived as a "failure of the reigning 'social contract'" between Main
Street, Wall Street and the U.S. government. "To put it simply, Main Street
was relying on Wall Street to go about its business, with the government
perceived as the arbiter and even guarantor of sure returns. Presently, the
collapse of this 'contract' is giving rise to calls from different quarters
for overhauling the whole system," according to Dr. Mirtchev.
"The public wants to see the government being pro-active, but 'there is no
silver bullet, indeed,' that would eliminate the current crisis with all
its complexities, and particularly the presence of the 'elephant in the
room' -- the specter of economic depression, looming debt and incipient
inflation," he pointed out. The U.S. government has only a limited set of
tools at its disposal to address a plethora of frequently divergent and
contradictory problems. While the mammoth government intervention is
already an unavoidable fact of life and would hopefully contribute to a
shorter and shallower slump, it does not yet constitute economic policy.
"On one hand, the criteria of success are that government intervention
should alleviate the fear and uncertainty about the future, boost market
confidence, and ultimately bring a new level of productivity,
competitiveness and entrepreneurship, utilizing rather than rejecting the
'strong hand of the market' and gradually weaning the market from
government 'fixes.'"
Mirtchev considers that "much more important at this stage is the
imperative for the formulation and articulation of a clear exit strategy
that would comprehensively address the duration, prospects and targets of
the government intervention, as governments are not always the best
stewards of the markets nor are government officials the best executives to
run industries."
"The bailouts, for example, appear to be utilized as a form of 'cure-all'
and substituting as quasi-bankruptcy proceedings for failed companies and
sectors. Such unprecedented measures, however, could impede normal market
operations that ensure that failed companies do not 'malinger,'" he warned.
The bailouts are inevitably perceived by a number of constituencies to be
rewarding failure, often without clear public benefit.
"Attention has also been focused on the effectiveness of the massive
government intervention, which is often forced to rely on mechanisms not
geared to deal with, or efficiently channel programs and resources of such
proportions. Given the sheer size of government funding, the potential for
waste and graft is substantial," according to Mirtchev. "An important issue
is the accountability of the recipients of government funding, in
particular in the wake of the anger against bonus payments to AIG
executives," he added. "If laws have been broken, then obviously the guilty
will be punished. But this is more of a systemic failure, and attempts to
place individual blame sometimes result in complications and even cause the
introduction of even more controversial measures and legislation."
Commenting on the claims that bailouts represent a form of "state
capitalism" and sometimes even a slide towards "socialism," Mirtchev
reiterated that "historically, the role of the state expands during times
of crisis." Government plans and outcomes are "akin to a Rorschach test, in
the sense that different constituencies see what they are inclined to see."
Paradoxically, at present the flow of funds is from the public to the
private sector, rather than the other way around, making it more
complicated than it looks at first glance to ascribe unambiguous ideology
or philosophy to such intrusion in the markets. "It remains to be seen what
shape government intervention would evolve into, what and how efficient the
exit strategy will be, and what will be the long-term consequences," he
commented.
For more information, visit www.KrullCorp.com. To view the entire
interview, visit http://www.youtube.com/watch?v=DUr9v2KDB6I
About Krull Corporation
Krull Corporation is a Washington,
D.C.-based advisory and project management firm with expertise in dealing
with economic growth, industrial expansion and restructuring issues.
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 and transitional economies. Over the years,
the firm has provided its clients with outstanding strategic guidance and
professional services in various areas. Combining a unique blend of global
reach and understanding of local markets, Krull is able to consistently produce
high quality results and returns.