Nouriel Roubini in Bulgaria. Growth opportunities for a small economy in the global world
26 February, 2013. The big questions have their answers

The questions asked so far include:

Bernard H Casey, University of Warwick
How do you react to the suggestion that the second pillar pension scheme should be closed and its assets "nationalised"? What motivates this proposal, are the arguements in favour justified, and what will be the short and longer term implications of such a "reform", if it were to be made?

Prof. Dr. oec. Sci. George Chobanov, Sofia University St. Kl. Ohridski
What kind of mechanisms could you suggest for avoiding crises, or at least for reducing their negative effect?

Christo Mihajlovski, BCRA - CREDIT RATING AGENCY
There are certain industries in the USA which are nationally supported. Is this applicable for Bulgaria in your opinion?

Bertram Rollmann, Pirin Tex
What will be the impact on the economies of the new EU member states of the subventions from the EU-Cohesion fund which are injected selectively and in a very complicated manner into the private businesses in those countries? (in terms of corruption, local and inernational competitiveness, administrative burden, sustainability) What danger for the growth of Bulgarian economy do you see in the fact that inter-company indebtedness amounts to 200% of GDP? In the last years, following the many unsuccessful investments during the boom in the real estate sector, the banks have significantly decreased the financing of the production sector. Currently, a large number of companies are overindebted without control, but due to the lack of effective legislation on insolvency and the ineffective judicial system, they don't declare insolvency and thus an important mechanism for natural market cleaning is missing. Please comment this in terms of national competitiveness, social system, labor market, bank system and currency value. What is the outlook for a country whose economy and young workforce is getting strongly dependent on outsourcing?

There are certain industries in the USA which are nationally supported. Is this applicable for Bulgaria in your opinion?

Ani Gesheva, NYU
It looks like the recent crisis that originated in the developed world affected Bulgaria with a lag (many people did not believe the US sub-prime and financial crisis have anything to do with Bulgaria in 2008 when GDP growth was above 6%). Now it looks like it also takes longer for the Bulgarian economy to recover, in fact there is a double dip warning (some economists expect technical recession in the data for the quarters of 2012). Why is that for Bulgaria? Why the crisis “arrives” later and “leaves” later? Can this be explained only with exports or could there be other reasons?

Ani Gesheva, NYU
Where - geographically or in what asset - do you see the next bubble forming?

Peter Petkov, RISK & Energy RISK magazine
Long or Short on European Bank Debt?

Do you see an improvement in risk management at major financial institutions after the crisis?

Vesela Georgieva, New point Consulting
Is gradual but steady economic growth possible in Bulgaria in the next five years? How can we achieve economic growth over the next five years? What are the promising areas for the Bulgarian business?

How do you think will the war of currencies end, and even the misery race for the global economy and especially for a small underdeveloped economy? How and whether it is possible to achieve a balance between increasing labor productivity, income and demand? Is it possible to stimulate demand in a global economy and to find a balance between income and profits.

Dimitar, AEF
I was born and raised in Bulgaria but left in 92 as the country took a "democratic" dive into a process of destroying its economy built by the socialist system. I left the US (an American-educated economist) after having spent 17 years there convinced that the FED system has doomed the country to inevitable economic death. How prepared is, in your opinion, the American population for the upcoming decades of poverty?

Apostol Popov, Finance Capital AD
Mr. Roubini, do you think that private pension funds have a future or should they be nationalized?

Vladimir Mirchev, VHM Capital Consulting
How should the new democracies that are characterized by weak institutions deal with corruption and organized crime?

Georgi Gushlekov, Association for Innovative Development
Can a small economy grow in a global world without innovation being its main engine? What is the role of the state in the innovative development of the economy? Where is the boundary between the state and the private sector in a globalized world?

Ivan Ivanov
Almost five years have passed since the start of the so called sovereign debt crisis. It seems what has only been achieved is to blow another bubble. Governments don't seem to have learned the lessons that there is no free launch, that living on credit is not sustainable; and that at some point you can't grow by printing money. Don't you agree that if they had let Greece fail in 2008/2009 Europe would have been much better now? That is don't you think this constant "kicking the can" and this reactionist mode of operation in EU is actually costing more than a one off write down adequate to the economic reality in suffering economies?

Ani Gesheva
What would be the effect of a Grexit for Bulgaria? Would you say that the currency board arrangement in Bulgaria has been successful?

Summarized questions from the business

Using the well-known SWOT analysis, what would you point out about the Bulgarian economy?

To what extent can the political governance and the economic structure counter the statement that, on one hand, small economies as well as small businesses are very dependent on larger ones, and yet, on the other hand, they are more flexible in dealing with the consequences of the financial crisis?

Have defined benefit pension plans gone out of fashion or is it simply that there are not enough funds for the payment of such generous promises, and therefore the defined contribution pension plans have no alternative?

What is the impact of the crisis of public debt and deteriorating demographic conditions on pension provisions (explicit and implicit deficits)?

Could demographic imbalances (more people living longer coupled with declining birth rates) be a cause for crisis?

Poverty as a constraint to growth and your suggestions how to overcome it?

Should we expect accelerated inflation that would lead to the devaluation of both debts and savings?

What is the role of political leaders in creating crisis conditions as well as in their subsequent resolution?

Given your statement that in the present globalized world, crises will become more frequent and more severe, can we expect the globalization process to continue, thus making the economies more vulnerable and more dependent?

Could you explain the essence of the “Fiscal Cliff” issue and its potential influence on the EU and Bulgaria?

Should we speed up our accession to the European Monetary Union?

What impact does the crisis in neighboring Greece have on Bulgaria?

What is the economic and political future of the EU and its impact on Bulgaria?

What are your expectations for the development of the crisis in the next few years and its impact on capital markets?