3

Tuesday, 29.05.2012.

12:03

Stimulating consumption "no solution for Serbia"

National Bank of Serbia Governor Dejan Šoškić has said that stimulating domestic consumption in order to overcome the crisis was "not applicable in Serbia".

Izvor: Tanjug

Stimulating consumption "no solution for Serbia" IMAGE SOURCE
IMAGE DESCRIPTION

3 Komentari

Sortiraj po:

Slavko

pre 12 godina

I am happy that Soskic is bright enough to see that increasing domestic consumption (aka devaluing the dinar further by increasing the volume of fiduciary media and lowering the market interest rate in order to fool people that they have more in their pocket) is a defeated Keynesian method for further problems, even for large economies such as the US. In Serbia's case, these methods would indeed bomb the economy because of the problems Soskic enunciated, and just extend the painful road to recovery from false booms by not letting the market economy take control again.
But, Soskic ruined his insightful grasp of economics by bringing up the public expenditure/infrastructure "cure". This will not work as these projects will most surely be funded by further foreign loans, increasing the future indebtedness for Serbia's youth, leading to fiscal unsustainability on a grander scale. Projects funded through the budget seem highly unlikely, and the employment increase that these projects would bring would be temporary. Capital projects do not cause an overall positive benefit/cost ratio; the employments will merely cancel themselves out as transfer payments made between the government and the employees. This strategy is a quick fix that does not solve anything but instead retards future solvency.
It is hard medicine to take, but Serbia, like all other countries experiencing woes, needs to buckle down and cut out the extreme excess of government. Austerity is an ugly word, but needed.

Ecoman

pre 12 godina

If Serbia does not conduct a reform on its own, it is very likely the international and domestic market situation, to which it is very sensitive as a country, will force it to do so, Šoškić underscored. Let's hope this happens, because the clowns in BG's government are obviously not capable of improving anything in this economy. They are like children with daddy's credit card, just spend to the max, and not worry about the bill that will soon come.

T

pre 12 godina

All valid comments by Šoškić, but what Serbia really needs in order for long term growth to happen and the Dinar to strengthen is to support investments in infrastructure, (railways, road networks and communication like reliable high speed internet etc.) as well as to stimulate exports. For that the country will need to start producing something more than it currently does. Other items on this list should include dealing with bureaucracy and corruption, otherwise we'll end up like Greece. Not good.

T

pre 12 godina

All valid comments by Šoškić, but what Serbia really needs in order for long term growth to happen and the Dinar to strengthen is to support investments in infrastructure, (railways, road networks and communication like reliable high speed internet etc.) as well as to stimulate exports. For that the country will need to start producing something more than it currently does. Other items on this list should include dealing with bureaucracy and corruption, otherwise we'll end up like Greece. Not good.

Ecoman

pre 12 godina

If Serbia does not conduct a reform on its own, it is very likely the international and domestic market situation, to which it is very sensitive as a country, will force it to do so, Šoškić underscored. Let's hope this happens, because the clowns in BG's government are obviously not capable of improving anything in this economy. They are like children with daddy's credit card, just spend to the max, and not worry about the bill that will soon come.

Slavko

pre 12 godina

I am happy that Soskic is bright enough to see that increasing domestic consumption (aka devaluing the dinar further by increasing the volume of fiduciary media and lowering the market interest rate in order to fool people that they have more in their pocket) is a defeated Keynesian method for further problems, even for large economies such as the US. In Serbia's case, these methods would indeed bomb the economy because of the problems Soskic enunciated, and just extend the painful road to recovery from false booms by not letting the market economy take control again.
But, Soskic ruined his insightful grasp of economics by bringing up the public expenditure/infrastructure "cure". This will not work as these projects will most surely be funded by further foreign loans, increasing the future indebtedness for Serbia's youth, leading to fiscal unsustainability on a grander scale. Projects funded through the budget seem highly unlikely, and the employment increase that these projects would bring would be temporary. Capital projects do not cause an overall positive benefit/cost ratio; the employments will merely cancel themselves out as transfer payments made between the government and the employees. This strategy is a quick fix that does not solve anything but instead retards future solvency.
It is hard medicine to take, but Serbia, like all other countries experiencing woes, needs to buckle down and cut out the extreme excess of government. Austerity is an ugly word, but needed.

Slavko

pre 12 godina

I am happy that Soskic is bright enough to see that increasing domestic consumption (aka devaluing the dinar further by increasing the volume of fiduciary media and lowering the market interest rate in order to fool people that they have more in their pocket) is a defeated Keynesian method for further problems, even for large economies such as the US. In Serbia's case, these methods would indeed bomb the economy because of the problems Soskic enunciated, and just extend the painful road to recovery from false booms by not letting the market economy take control again.
But, Soskic ruined his insightful grasp of economics by bringing up the public expenditure/infrastructure "cure". This will not work as these projects will most surely be funded by further foreign loans, increasing the future indebtedness for Serbia's youth, leading to fiscal unsustainability on a grander scale. Projects funded through the budget seem highly unlikely, and the employment increase that these projects would bring would be temporary. Capital projects do not cause an overall positive benefit/cost ratio; the employments will merely cancel themselves out as transfer payments made between the government and the employees. This strategy is a quick fix that does not solve anything but instead retards future solvency.
It is hard medicine to take, but Serbia, like all other countries experiencing woes, needs to buckle down and cut out the extreme excess of government. Austerity is an ugly word, but needed.

T

pre 12 godina

All valid comments by Šoškić, but what Serbia really needs in order for long term growth to happen and the Dinar to strengthen is to support investments in infrastructure, (railways, road networks and communication like reliable high speed internet etc.) as well as to stimulate exports. For that the country will need to start producing something more than it currently does. Other items on this list should include dealing with bureaucracy and corruption, otherwise we'll end up like Greece. Not good.

Ecoman

pre 12 godina

If Serbia does not conduct a reform on its own, it is very likely the international and domestic market situation, to which it is very sensitive as a country, will force it to do so, Šoškić underscored. Let's hope this happens, because the clowns in BG's government are obviously not capable of improving anything in this economy. They are like children with daddy's credit card, just spend to the max, and not worry about the bill that will soon come.