Brainforum

There is no alternative to regulation

The collapse of Lehman Brothers in midst of September 2008 made people become sensitive towards bonus payments in the investment banking sector.We all know that they are different from the ones in middle sized or big companies.
Of course, everyone was aware of the fact that investment bankers receive an especially high remuneration – but until the beginning of the crisis, it did not matter to anyone but a few people outside the sector.
With the collapse of Lehman and the start of the financial and economic crisis, lots of credit institutions had to get back to governmental interventions in order to not break down Lehman style.
It was then that the public realized what the bonus system in the investment sector really was about and how it worked.

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Hungarian Rhapsody: How to boost potential growth?

If there’s something that never works in Hungary, then it’s the economy. Unfortunately, this is not only a bad joke, but the reality.

Hungary’s economy was severely damaged by the financial crisis – public debt has soared to almost 80 % of the GDP, national currency (forint) lost more than 25 % versus the euro when the crisis peaked, unemployment rate reached its historical maximum at 10,3 % at the end of 2009 and may even increase in 2010. What structural weaknesses have led to the current situation? Well, inefficient allocation of resources, distortionary taxation system, low employment and high social expenditures are some of them.

This is the bitter truth and the boring numbers, but since every failure holds the possibility of success, let’s be optimistic and forward-thinking. I was thinking of some suggestions that , in my view, may shake up the Hungarian economy and boost the potential growth. Just to make it clear, my goal is not to give a detailed picture of the Hungarian economy, nor to find solutions to every economic challenge, however Hungary’s problems are not unique and may serve as a good lesson for others.

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What about this financial and economic crisis?

Right now, in February 2010, hysteria and fuss which were created by the global financial crisis throughout all social ranks and countries worldwide has nearly subsided. You can even hear people asking: Does the crisis continue or have we left turbulent times? Optimism is surfacing again.

But what exactly happened since the downfall of Lehman Brothers? Several meetings of the heads of states, discussions about a global regulation of the financial sector and stimulus packages in all sizes have come over us so far. Time has passed and some concerns have not come true. But huge imbalances in our financial and economic system are still existing. Nevertheless, efforts to commonly and globally fight for a sustainable, stable and equitable economic system after two years of crisis seem to be pretty hushed.

So will we continue as usual, as if the crisis was merely a bad dream? If so, same difference there. Another crisis won´t wait to arise.

We observe an increasing acceleration of global economic processes. This acceleration, if it is not guided – this is our task -, will lead to cause and effect chains that are hardly traceable anymore. If you want to put it that way, it will lead to steadily more complex and chaotic economic processes which will especially provoke short term actions.

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