Balcerowicz: Financial Crisis Caused by Flawed State Regulation

The top Polish economist, Leszek Balcerowicz, gave a lecture in Sofia on Tuesday. Photo by BGNES

The renown Polish economist, Leszek Balcerowicz, said in Sofia Tuesday the current financial crisis was caused by flawed state regulation, and not by the market.

In a lecture in the Sheraton Hotel in Sofia, the father of Poland's "shock therapy" and transition to market economy, stated the intervention of the US regulatory institution to stimulate crediting and the ensuing tremendous growth of the property market laid at the bottom of the global economic crisis.

According to Balcerowicz, the crisis started from the most important part of the market economy in the USA, the financial sector, and spread globally because the US gave one fourth of the global GDP.

The top Polish economist noted also that while faulty government regulation might have spurred the crisis in America, each individual state had specific internal factors that led the crisis to take over their markets.

Thus, there was a boom of construction investment and cheap credits in Spain, Ireland, Sweden, and Central and Eastern Europe.

Balcerowicz also said every state was supposed to find the best medicine to tackle the crisis effects on its own; the prescription of uniform measures would be wrong. In his words, the anti-crisis measures should not be viewed as short-term measures, and the presumption that an intervention was necessary at any prices was dangerous.

The Polish economist concluded that the anti-crisis measures of small, open economies should be directed towards providing growth, introducing innovations, enforcing strict fiscal policies, cutting expenditures, deregulating the private sector, and ensuring the proper functioning of the judicial system.

Balcerowicz was in Bulgaria for the presentation of a biography book about him by the Polish journalist, Witold Godomski.

 

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