Romanian Distribution Committe Magazine Volume 3 Issue 3

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Theodor Valentin PURCĂREA Editorial: Facing the reshaping of the world business, by adequately addressing the new realities via a change in response marketing across the full range of touch points specific to each customer-engagement ecosystem

Maria NEGREPONTI-DELIVANIS The end of the Eurozone: European North against European South

Victor GREU Smarter Information and Communications Technologies for Smarter People

George Cosmin TĂNASE The Significance of Strategic Service Innovation Management in Retailing

Adelina Georgiana BARBALAU Inflation Targeting: Dead or Alive?

Irina PURCĂREA The Conference Corner: ECRM 2012 (Bolton,England) and GIKA 2012 (Valencia, Spain)

Gabriela ALBA Photography as a Spiritual Path

Irina PURCĂREA A short presentation of the latest issue of our partner journal, „Contemporary Economics”, Vol.6, issue 2/2012, Quarterly of University of Finance and Management in Warsaw, Poland

The responsibility for the content of the scientific and the authenticity of the published materials and opinions expressed rests with the author.


Facing the reshaping of the world business, by adequately addressing the new realities via a change in response marketing across the full range of touch points specific to each customer-engagement ecosystem As we all know, every day we learn about different research, methods, testing, approaches on saving the world by saving the companies and people. It is a kind of a special play allowing us to cultivate imagination and innovation within the new culture of learning1 which needs to leverage social and technical infrastructures in new ways, knowledge being seen as fluid and evolving. In this way, we see that the world of business is reshaped today through four trends: “technological advances and the speed with which new technologies are created and copied, the loss of geographic advantage resulting from globalization, the shake-up of traditionally stable industries as a result of deregulation and the rising power of the consumer and their ability to get what they want, when the want it, from whomever they want”2; digital has disrupted the ability to cleanly separate communications from experiences and the first part of the customer experience journey is represented by the new-style landing pages3; in this more democratic marketing landscape, ideas and creativity are considered the big winners, there is accountability to test and testing is leading to knowing4; customers, situations, industries are different, so as brands have different strategies within an industry, and over time all this can change5; a customer experience strategy must describe, in detail, the customer experience you want to deliver , be aligned with your overall company strategy your company’s brand attributes, be shared with all employees6. On different occasions we have seen how difficult it is to capture the attention of the customers and gain their engagement. Of course, specialists explained, for instance, that customers like touching, trying, tasting, smelling, and exploring the world of desirable objects, and this artful juxtaposition of those objects can most of the times make all the difference in the world. And giving this opportunity to touch, try, taste, and smell the products offered by the retailer, this is probably the most powerful incitement to shopping7. Specialists also argued that in order to achieve a broader perspective on marketing, the key is to build customer relationships, by understanding that customer relationships are the most important company asset needing to be managed. On the other hand, the “Father of Marketing”, Philip Kotler, underlined the need to acknowledge and reconcile the sphere and complexity of marketing activities by using holistic marketing (relational marketing, integrated marketing, internal marketing and marketing of social responsibilities), while Kotler’s mentor, Peter Drucker, stated that the purpose of marketing is to know and understand the customer so well that the product or service is perfectly suited to him 1 2 Doug Leather - Competive Advantage & Customer Centricity (relevant to 99% of companies), July 29, 2012, 3 Scott Brinker – Landing pages are experiences, not just communications, September 21, 2012, http://www. 4 Justin Talerico – Predict or perform: Marketer choice, September 18, 2012, post-click-marketing-blog/2012/9/18/predict-or-perform-marketers-choice.html 5 Bob Thompson - Giving consumers the Right Stuff more important than great customer service, http://www. 6 Harley Manning - Does Your Company Have A Customer Experience Strategy? No, Really, September 4, 2012, 7 Paco Underhill – Why We Buy. The Science of Shopping, Updated and revised for the Internet, the global consumer and beyond, Simon & Schuster Paperbacks, New York, 2009, p. 170

and sells itself. There is no doubt that the customers want to know exactly what specific problems the products and services solve, and they want to hear this in their own words. That is why every time the organization writes a message for the customers, it has the opportunity to communicate with its customers, and at each stage of the sales process, well-written materials will help the customers to understand how the organization’s products and services will help them. 8 And that is why it is necessary to recognize that today’s real challenge is to be very responsive, and to give feedback9. The new abilities in accordance to the evolution and confrontation with the new opportunities and challenges help organizations to operate a retail environment that fits the particular needs of consumers.10 In June 2009, four representatives of McKinsey Company, David Court, Dave Elzinga, Susie Mulder, and Ole Jorgen Vetvik11 attracted our attention on the fact that: “Consumers are moving outside the purchasing funnel - changing the way they research and buy your products. If your marketing hasn’t changed in response, it should.” They underlined the history of the socalled “soap opera”, starting from identifying the “touch points” (understood through the metaphor of a “funnel”) when consumers are open to influence, and pledging for the need for more sophisticated approach named the “consumer decision journey” (an ongoing cycle: Awareness – Familiarity – Consideration – Purchase – Loyalty) in order to help marketers navigate this environment characterized by “the explosion of product choices and digital channels, coupled with the emergence of an increasingly discerning, well-informed consumer.” And this is due to the fact that, within the two-way conversation, marketers need a more systematic approach so as to reach consumers in the right place at the right time with the right message, by aligning all elements of marketing (strategy, spending, channel management, and message) with “the journey” (understood so as to direct spending and messaging to the moments of maximum influence) and by integrating those elements across the organization. Despite the fact that traditional marketing remains important, in the opinion of the four representatives of McKinsey Company, marketers must take into account that: two-thirds of the touch points during the active-evaluation phase involve consumer-driven marketing activities (Internet reviews and word-of-mouth recommendations from friends and family; in-store interactions and recollections of past experiences etc.); a third of the touch points involve company-driven marketing; it is necessary to focus the spending on the new touch points (making expanding the base of active loyalists a priority), and “to adopt new ways of measuring consumer attitudes, brand performance, and the effectiveness of marketing expenditures across the whole process.” To address 8 David Meerman Scott – The New Rules of Marketing and PR. How to Use News Releases, Blogs, Podcasting, Viral Marketing, & Online Media to Reach Buyers Directly, John Wiley & Sons, Inc., New Jersey, 2007, p. 145 9 Brad Berens - Don E. Schultz on What Companies Can Do to Integrate, iMedia Connection, December 06, 2006 10 Paco Underhill – Why We Buy. The Science of Shopping, Updated and revised for the Internet, the global consumer and beyond, Simon & Schuster Paperbacks, New York, 2009, p. 167 11 David Court, Dave Elzinga, Susan Mulder, and Ole Jørgen Vetvik - The consumer decision journey, McKinsey Quarterly, June 2009,

the new realities of this “journey”, they recommend four kinds of activities: prioritize objectives and spending; tailor messaging; invest in consumer-driven; win the in-store battle. They also pledge for the need for marketers to integrate all customer-facing activities, adjust the spending and view the change as an opportunity to be in the right place at the right time, giving consumers the information and support they need to make the right decisions. Allow us to remember that two years ago, Kevin Stirz12 argued that in order to be successful in any business, that involves knowing how good the company is in the eyes of the customers, taking into account that only the sum of the experiences of the customers and of the employees make up the company’s reputation. But to help your company perform at its best, it is necessary to get everyone involved (by connecting with them on an ongoing basis and developing feedback) and to create and publish standards which differentiate your company from your competition (“customer service standards” or “brand promise”, real roadmap for management in empowering the employees to do and helping customers and employees to understand the goal, the actual experience and the gap and to easily communicate that gap to management), by identifying and eliminating the gap between promise and expectation, giving on this way your customers what they want and increasing customers’ loyalty. We also remembered that in today’s business climate there is a real need for having an informed approach to marketing based on facts and goals, a framework as Quaero’s “Six Dimensions” (actionable strategies, organizational alignment, appropriate measures, effective processes, information assets and analytics, enabling technologies - aligned strategies, processes, and organization driving the technology decisions) offering a solid understanding of marketing effectiveness and a clear roadmap for improving it13. In the summer of this year, three other representatives of McKinsey Company (Tom French, Laura LaBerge, and Paul Magill)14 invited us to move in the right direction and look at some ways to jump-start customer engagement across the organization, considering the fact that customers are demanding very different kinds of relationships with companies. In their opinion, in order to orchestrate customer engagement for the entire organization, the marketing function must be able to influence touch points it doesn’t directly control, ant that is why it is necessary to make << five “no regrets” moves >> which improve the coordination of activities across the broad range of touch points and enable more rapid and adequate responses: hold a customer-engagement summit (engagement going beyond managing the experience at touch points, and participants coordinating the activities required to reach and engage customers across the full range of touch points specific to the customer-engagement ecosystem); create a customer-engagement council (could be a strategic-planning or a brand council, which has a critical role in breaking the “silo” mind-set and allows to coordinate tactics across touch points in a more timely manner, by bringing together all primary forms of engagement, by translating the findings into specific actions at individual touch points and by making fact-based decisions in accordance to a a customer-engagement charter); appoint a “chief content officer” (responsible for both, to feed consumer demand for information and engagement and to manage the content consumers themselves generate, and working closely with colleagues to deeply understand the company’s character and to gain a full perspective on how the company interacts with external stakeholders); create a “listening center” (which monitor what is being 12 Kevin Stirz - How good are you, May, 26, 2010, 13 Your blueprint for success, 14 Tom French, Laura LaBerge, and Paul Magill - Five “no regrets” moves for superior customer engagement, McKinsey Quarterly, July 2012,

said in order to both, complement internal metrics and traditional tracking research and feed consumer feedback); challenge your total customer-engagement budget (by looking at total spending on customer engagement and putting the money in the good places, by communicating with customers much more productively thanks to digital and social channels, and determine customers to voluntarily serve as advocates for the company’s brand and building more lifetime loyalty, by optimizing the impact of investments across the entire set of touch points and by a proper balancing between the strategic assessment of how customer expectations are evolving and how competitors are changing their methods of customer engagement). And as four years ago, Professor Ion Smedescu, Founding Rector of the Romanian-American University chose the 5th of October, to step on the path of eternity, also allow us to remember that Professor Ion Smedescu lived with intensity, making a constant and coherent effort to transpose in the academic landscape powerful ideas specific to the „cultural architect” that is his beloved „Marketing”.15 As a true Holistic Marketing Manager, Professor Ion Smedescu proved the right understanding of the interaction between the managerial culture, the university culture and the surrounding culture, bringing together marketer and customer into a lasting marketing relationship while considering the importance of the quality of team relations, as well as the quality of the network in initiating partnerships in adequately addressing across the full range of touch points specific to the customer-engagement ecosystem. Professor Ion Smedescu will always remain alive in our memories as a standard, bringing all University staff, Students and Partners renewed trust, hope and inspiration.

Theodor Valentin Purcărea

Editor - in - Chief


The end of the Eurozone: European North against European South* By Maria Negreponti-Delivanis

Professor Maria Negreponti-Delivanis, the distinguished Member of the Editorial Board of the “Romanian Distribution Committee Magazine”

( ), allowed us to publish her article below, a paper to be delivered in french to the International Economic Conference to be held at the University of Valahia in Romania, 4-6 October 2012, being also under publication in Paris by L’HARMATTAN, as part of an effort to publicize the problems faced by Greece. It is worth to remember once again within this context, that two years ago, Professor Maria Negreponti-Delivanis posted on July 6, 2010 some comments to James Galbraith’s expressed opinion on the occasion of his appearance, on June 30, 2010, before the US Commission on Deficit Reduction (July 4, 2010, ). As Economist-former Rector and Professor in the University of Macedonia Maria Negreponti-Delivanis argued, while agreeing with the analysis made by James Galbraith, that the economic particularities of Greece make awfully dangerous for its future a long term austerity policy

*Paper to be delivered to the International Economic Conference to be held at the University of Valahia in Rumania, 4-6 October 2012 (in French). It is also under publication in Paris by L’HARMATTAN, as part of an effort to publicize the problems faced by Greece.

Introduction The dramatic events taking place during the last two years and especially during the last few months within the EU and the eurozone, make it impossible to hide the harsh reality. The latter consists of a breach between the rich European North and the poor and indebted South, which is constantly growing and leaves no hope for convergence. This is because the bluntness with which the EU headquarters treat the indebted economies indicates a total absence of cohesion and solidarity among the member states∙ and something even worse: that the belief these elements ever existed is clearly utopian∙ that the enthusiasm towards the united people of Europe which prevailed during the ‘50s and ‘60s, especially among the young, as well as all those promises supporting its birth lacked a solid foundation. They were organized attempts at camouflaging the real objectives of the union’s leaders who belonged to the same nationalities as today’s leaders. Namely Germany, who through the EU wished to finally pursue its twice failed dream: ruling over Europe. In order to realize this dream, Germany was persuaded to adopt the common currency which enabled the unification of the two Germanies1. As for France, the second country playing a leading role in the development of a united Europe, her objectives were always narrower in scope. It would be enough for her to acquire a permanent leading position in Europe. The problem France faces however, and which partly justifies its full adoption of the German choices2, is its largely ambiguous identity. It is not fully clear whether her economy belongs to the European South or the European North, while it is perfectly obvious that she would like to fully identify herself with the latter. However, there is a possibility that the situation was not so cynical initially. One cannot rule out that the founders of the EU may have had good intentions and most importantly, that they may have believed in their ability to fulfill them. Personally, I feel a great need to still believe that the fathers of Europe3 were striving to achieve peace, democracy, equality and prosperity for all, rapid growth and full employment and that they would be crushed if they were able to see the degeneration of their ambitious idea4. For they would be horrified to realize not only that nothing has been implemented out of their initial designs, but furthermore, that an undeclared but devastating war has recently broken out between the North and the South of Europe. A terrible and peculiar form of conflict, without weapons of mass destruction, but with munitions which prove more potent, more 1*Paper to be delivered to the International Economic Conference to be held at the University of Valahia in Rumania, 4-6 October 2012 (in French). It is also under publication in Paris by L’HARMATTAN, as part of an effort to publicize the problems faced by Greece. According to the well known economic analyst Max Keiser, as recently aired on the central news bulletin of the satellite TV station Russia Today 2. At least during the presidency of Nicolas Sarκozy 3.L’acte fondateur de l’Union européenne est la Déclaration du 9 mai 1950 de Robert Schuman, ministre Français des Affaires Εtrangères. Sous l’impulsion de personnalités politiques surnommées « Pères de l’Europe », comme Konrad Adenauer, Jean Monnet et Alcide de Gasperi, six États créent en 1951 la Communauté européenne du charbon et de l’acier. Après l’échec d’une Communauté européenne de défense en 1954, une Communauté économique européenne est instaurée en 1957 par le traité de Rome. La coopération économique est approfondie par l’Acte unique européen en 1986. (Wikipedia) 4.Because I was one of the first European students to participate in the initial meetings in the Netherlands in the ‘60s, aiming at the promotion of United Europe

effective and more toxic than all traditional weapons. In fact, Germany who is exploiting the debt of the European South as a Trojan Horse, seems to be rapidly entering the implementation phase of a plan to subjugate the South to the North, which relies on a form of neocolonialism with herself as the undisputed leader. Apart from the now openly expansionary ambitions expressed by Germany, this hellish plan is supported by the rapid developments in relation to the global economy which threaten to marginalize Europe and the West as a whole.5. These refer mainly to the growing competition from emerging economies, led by China. Germany’s competitiveness is being seriously endangered and as an antidote, the country is on the look-out for abundant and cheap labor6. This is exactly what the European South promise to secure7, in case the latter is indeed subjugated to some form of colonialism. In this paper, I shall attempt to show that the European South which has suffered as a result of an economic union whose directives where since the beginning designed to serve the more powerful partners instead of its own needs, which has being witnessing the long-term erosion of its development potential, which is the victim of a constant although disguised exploitation by the wealthy North8, has reached the moment when it will transformed into a holocaust on the altar of the rekindled German plans. In Part I of my Paper I shall refer myself to the brutal frontal attack led by the wealthy North on the European South, naturally led by Germany, while Greece serves as the tip of the iceberg. Part II of my paper shall refer to the consequences, mainly for Greece, which however are already spreading to the rest of the European South.

Part I. The outright attack on the South The obsession, especially of Germany, to implement tyrannical, and yet totally ineffective measures initially in Greece, which however are already affecting almost all of southern Europe, can no longer convince that these are intended to save it. However, before dealing with the final, as it seems, phase of the tragedy facing the South, I would like to recall that all kinds of attacks against the latter do not represent a recent phenomenon. On the contrary, the European South has faced since the beginning, the negative consequences of the coexistence, within the same economic union, of more and less advanced economies. What however practically demolished the less advanced European economies was, undoubtedly, the Stability Pact9, which Ger5. Published 17 years ago in Eleftherotypia, on 9.5.1995 and signed by ΜΑR. POL.: «People - declared a VIP Nazi 50 years agoforget fast. This is exactly their difference in comparison to a nation with a good memory, like the superior race of the Germans. The money channeled towards the restoration of Germany is a lot. Those who have fought against us will come to work for us. We are an industrious race which will recreate a strong, united Germany. You will see that we shall become the strongest country in economic terms. And then Goebels will be able to rise from his grave and shout: “We have finally won”. 6.The independent evaluation agency Egan Jones degraded the German economy from Α+ to ΑΑ—under the justification that the deepening debt crisis in the eurozone shall affect the German exports. 7. During the first semester of 2011, the number of immigrants from Spain and Greece to Germany rose by 84% and 49%, accordingly Voir Une enquête d’Olivier Cyran “L’effroi du retraité allemand face à l’épouvantail grec” (2012), Le Monde Diplomatique, No 700-59e année, Juillet 8. Thanks to the surplus trade balance of Germany, the obligation of the South to buy military equipment from the North and the very negative consequences of the Stability Pact for the weaker European economies 9 A significant drawback for the development of the member-states but necessary support for the euro, because of its serious inherent problems

many demanded in order to abandon her strong and stable mark in favor of the euro. However, as I have already mentioned in10, it was not the weaker economies of the European South which were unable to withstand the strict and recessionary provisions of the Stability Pact, but rather Germany which inspired them. In fact, without the slightest hesitation and seconded by France and Great Britain, on 25.11.2003, Germany triggered the decision to suspend the implementation of the Stability Pact, for about 4 years, with the excuse that “it dangerously limits its growth rates “. The obviously scandalous nature of this decision is not the abortion of a pact, which certainly had a devastating effect on Europe, but the exception from this abortion, of southern Europe. Indeed, the two mighty European economies, Germany and France, excluded themselves from the risky application of the stifling provisions of the infamous pact, while still demanding from the miserable European South to adhere even more strictly to the latter11. This decision of November 2003 essentially turned the South responsible for the stability of the euro, while strangling all its development potential. It is only today, nine years after the conviction of the South by the EU leaders, that the German magazine Spiegel12 reveals that Germany has “built the euro to suit herself” and thus saved herself, by destroying the South. Specifically: “This effort was secretly initiated by the Chancellery in the summer of 2003. At the time, the German economy was stagnant, with almost zero growth rates, while unemployment and public deficit were constantly increasing”. Another major negative consequence on the South was the permanent and huge trade surplus of Germany, as well as the extremely dangerous, for the weaker economies, enforcement of a common rate of interest for all the member states, in spite of their very different inflation rates. This common interest rate was largely responsible for the increased indebtedness of the South13. However, these very important issues were deliberately ignored by Germany, which during the last two years has been leading an unprecedented pogrom against the South, having chosen Greece as the weakest, as well as the most symbolic link for Europe14. In addition to the other wealthier member states of the European North, the IMF was also invited to join this pogrom, thus raising quite reasonable, although still unanswered questions surrounding its exact role in dealing with purely European problems.

1.Measures aiming at robbing rather than saving the South In Europe as in the rest of Europe, prevail since the ‘70s the views imposed jointly Mrs. Thatcher and Mr. Reagan. These 10 Negreponti-Delivanis,M., (2004), The fate of the euro, Delivanis Foundation and Cornelia Sfakianaki, Thessaloniki, p. 32 (in Greek) 11 ibidem 12Published in olympiada on 18.7. 2012 13For a more detailed analysis, see M. Negreponti-Delivanis (2011), The whole truth about the debt and deficits and the way to be saved, Delivanis Foundation and Ianos (in Greek) 14As a consequence of the subjugation of Greece, the foundations of Europe are endangered

consist of a mixture of extreme neoliberal fanaticism and the belief that the alleged trade liberalization is beneficial to all. The extremities of this macroeconomic regime created an environment that seems to ignore completely the passage of John Maynard’s Keynes on Earth, in spite of the fact that the very rapid growth rates of the western economy after the end of the Second World War, as well as the more equitable distribution of the fruits of progress, were largely attributed to the implementation of these views. It was within this Europe of rampant new liberalism that the Troika and the bankers began the looting of Greece. Let us now examine one by one the phases of this robbery:

A. warming Since almost two years, a singular genocide15 is taking place in Greece, combined with a gradual depletion of the European South as a whole. The organized destruction of Greece began with a masterly attempt at presenting her as a very exceptional case, which can under no circumstances be compared to the other southern European economies16, even if they share common problems. This totally conscious attempt to isolate Greece from her geoeconomic space which could have been perfectly attributable to Goebels, excluded a priori the development of any common front formed by the southern European economies in order to confront the German plague, as one would reasonably expect. On the contrary, until very recently, it was quite common to hear formal statements on their part that “they are not and will never be like Greece”. Thus, all the terrible hardships cumulatively imposed on this unfortunate tiny European country, according to the view held by Merkel that the latter should be harshly penalized for her “crimes”, were disguised under some form of legitimacy. And almost as in the Middle Ages, all witnesses enjoy the tortures imposed on those convicted, in the hope of their own salvation. This is the reason why the awareness of the people of the South, the only factor which could prevent the worse from happening, was delayed for so long. The Spaniards only recently began to finally realize what is happening to them and are rioting in the streets shouting “Help! This is a robbery”. The criminal attack against Greece, a member state of the EUeurozone, began with desultory insults, especially on the part of German officials, as well as a portion of the German Mass Media, full of unimaginable ironic remarks – although highlighted by the beloved German comparison between the alleged superiority of their people and the supposed inferiority of all others- , numerous mockeries and unimaginable threats, all embellished by tremendous and highly imaginative lies. Thus, the Greeks appeared as “lazy”, in spite of the fact that according to official data they work more hours per week on average17, in comparison to their European counterparts, as conscious “tax 15«Greece is a crime scene”,(2011) Video CNBS, «Dylan Ratigan Show» 15.11. 16 The former socialist economies belong to this group, with varying degrees of the difficulties they face 17 Eurostat

evaders”, although the structural peculiarities of the Greek economy, with nearly triple the rate of self-employment in total Greek employment, largely explains the reasons behind this certainly significant tax evasion, as maintaining an oversized public sector, which supposedly should be instantly cut down, although official data indicate exactly the opposite, as obviously corrupt, although the activities of Siemens in Greece would have to discourage this kind of conclusions18, while the same applies to Ferrostaal19. Unfortunately however, as one may learn from all past genocides, the targeting of a people, aiming at its destruction -physical, economic, ethnic, geopolitical, cultural- while a whole conspiracy is being organized to label this people as useless, alcoholic, fraudulent etc., will eventually and fatally result in its disappearance from the European and global community. This is exactly what is being attempted against Greece20 for the past two and a half years, with admirable consistency and the results so far are so spectacular, that a large part of the Greek population has been convinced that it is fit for nothing .... not even to engage in development process. And, yet, tiny Greece was not the only fiscally naughty country, compared to other EU member states. As far as the fraud concerning its basic statistics in the aim of acceding to the eurozone, I will not make use of such mitigating factors as the undeniable fact that there is almost no member state that does not have recourse to some form of “creative accounting” to beautify its financial picture. I shall mention the self-evident fact however, that the EU officials should be held equally responsible to Greece, the main tasks of which clearly include monitoring the statistics of the member states, especially of the candidate members of the eurozone . Therefore, these European supervisors should have been aware of the acrobatic activities of Goldman Sachs, in relation to the Greek case -and they certainly were. It is more likely however, that they preferred to visit the Athenian departments and offices with eyes wide shut, so as not to impede the easy flow of procurement of defense equipment to Greece- submarines, frigates, fighter planes, etc, mainly from Germany and France. Also, in the midst of the indiscriminate torrent of accusations, against Greece, which is supposedly responsible for the destruction of the eurozone, we are ignoring some very important dimensions of the problem. First, that it is not only Greece facing fiscal problems, but unfortunately almost all of southern Europe is drowning. Secondly, that Greece’s debt represents only about 2,5% of the total European debt, estimated at 8.215 trillion €, while Germany, France, Spain and Italy record debts that are three times higher than the debt of the 13 other member states of the eurozone, and these debts amount to 6.44 trillion €. Third, that there is no evidence to support the usual accusations related to an allegedly wasteful South who supposedly lives at the expense of the North, since there is no evidence in any of the official statistics towards a virtuous financial management on the part of the North. Let me indicatively mention that Germany records a debt of 81.2% as a percentage of GDP in 2011, corresponding to 85.8% for France, and 120.1% for Italy respectively. Should these countries not be ousted from the eurozone, on the basis of the strict German standards? At least, shouldn’t this joke of extremely bad taste against Greece, come to an end? Isn’t it ridiculous to aim this absurd fury against Greece, which is supposedly to blame for the intractable fiscal problems faced by the EU? Finally, we are forgetting the most important fact: that the economies of the South who became, in effect, hostages of the famous markets are no longer able to react efficiently, as long as they have abandoned their national currencies. Since the beginning of the Greek crisis, the Troika strongly supports “that it is saving” Greece, and that mainly the Germans are sacrificing themselves, by providing untold monetary sums. However, the truth is very different because it impoverishes the Greek people, while the total of the loans added to the initial debt go to the lenders, mainly banks. Following, are some indicative relevant data: * public spending was € 170 billion for 2012. However, out of those, only € 21 billion will cover net government spending, while € 149 billion goes to lenders. * Official data was published according to which Germany gained € 55 billion since the beginning of the Greek crisis, due to differences in the interest rate at which it borrows and then lends to Greece. * Banks are borrowing from the ECB at 1% and then lend to the government at 7%. Naturally, the difference is borne by the Greek people. * The ECB has also speculated against Greece, buying Greek bonds from the secondary market, which were underestimated at 25% of their nominal value, and then refusing to accept a 50% ‘haircut’ of the latter, although its gain would still be 100% compared to the sum at which they were purchased21. * Within the last 15 years Greece has paid € 265 billion for annuities and €156 billion for interest on loans. As noted by the economic editor of the BBC, Stephanie Flanders, in her analysis of the Greek debt in the website of the British network22, the interest paid by the country in 2011 was by 23% higher compared to 2010, despite the “low interest” loans provided by the Europeans and the IMF. The author also points out that capital has already been repaid and that now the country is paying out interest. 18 Negreponti-Delivanis, M., (2012), « Lettre ouverte à Madame Christine Lagarde », Le Monde électronique, 18.06 19 As derived from the relevant Munich brief, the head of Marine- affiliate of Ferrostaal in Greece, declared the following: «We all knew that if necessary, we would give money to the decision makers». Again according to the same brief, the German company was looking for the adequate people in Greece in order to promote a batch of submarines, as early as 1996-97. 20 Klein, N., (2010 for the Greek translation, The Shock dogma , Livanis, Athens. 21 22

*The famous “haircut” of the debt, which was supposed to alleviate the economy was in fact a fiasco, which reduced the debt by only €30 billion , but also dangerously “clipped” pension funds, hospitals and universities. However, given that Greece received a new loan, which was added to the existing one, the debt continues to grow and from € 250 billion in the beginning of 2010 is currently estimated at € 303,52723 billion.

B.The program towards an impossible “salvation” The second phase of the unacceptable activities, followed in order to supposedly save Greece, refers to Memoranda, the loan contracts, updates, medium term commitments and all this unbelievable ragbag which impoverishes the people and the land. In spite of the fact that there were indeed Greek officials who agreed to sign while they should have publicly denounced these agreements – as the Spaniards are currently doing – by shouting “help, they are robbing and murdering us”, these signatures cannot however change the atrocity of these agreements and Greece could possibly be rid of them by appealing to the International Court24, as there is no moral basis in the demands of the lenders who impose their own interests at the expense of the survival of an entire people. The philosophy behind the program’s alleged rescue of Greece, - which applies to the entire European South with a few variations-, is based on two assumptions, which are not only unproven, but also prove to be completely erroneous. These are: * First, Mrs Merkel’s obsession, which is unfortunately not contradicted by those surrounding and deciding with her, - that everything is the fault of the irresponsible and wasteful South, which should be exemplarily punished, which should suffer and pay”25. It was very intelligently, stated26, that “the debate about the current crisis brings to mind a crusade, in which white horsemen attack the infidels.” Certainly, we should note that, although it seems inconceivable, it is estimated that since the beginning of the crisis, real government spending brutally fell by 25%, with no provision to assess the consequences of this dramatic reduction on the well-being of the people27. Nevertheless, our partners support that we .... “are doing nothing”. * Second, Berlin operates as if it believes that constant restrictions of all forms of expenditure lead to development28. Berlin does not view this austerity policy as a short-term measure, but on the contrary, as a permanent one, which has been incorporated in the new Competitiveness Pact, constitutes an obligatory provisions in the Constitutions of all member-states and provides for severe penalties for those who do not comply. The program which has been imposed on Greece however, and extended to one after the other of the southern European economies seeking help to deal with their debt, is unprecedented29 on a world-wide level. It consists of a policy of internal devaluation, intended to replace, the traditional policy of external devaluation and is aimed at economies that no longer have a national currency, such as the eurozone economies. The consequences of this policy for Greece are tragic. At the same time, all serious economists in the world, including international financial journals30argue that this is a destructive and ineffective which must urgently be replaced. Germany, however, not only insists on its continued enforcement, but in the case of Greece, demands a gradual intensification of the latter, with the result that this small European country has already been forced to third world conditions. The same behavior towards Greece has been adopted by the IMF. Obviously, however, the persistence of the troika, which not only seems inexplicable but incoherent, and alleged belief that this program may in fact be successful, can only be explained by a lack of other alternatives. Indeed, in spite of been aware of the fallacy, the troika has no other solution but to accuse Greece of being “responsible” for the disaster that the troika itself has brought upon the country. The internal devaluation, therefore, consists of massive, arbitrary cuts of wages and pensions, as well as all forms of expenditure in the economies where the program is enforced. Wages initially in the public sector which is being victimized, and eventually in the private sector, are being heavily cut, on the excuse that this will restore the diminished competitiveness of the indebted economies, as an increase of exports will signal the beginning of economic recovery. The restriction of expenditure also refers to the welfare state31, and includes education, health, public administration and the defense of the economy in question. We are talking of a total dissolution of the economy, society, education and public administration, of a program which lacks any theoretical basis and has never been applied before32. Especially in the case of Greece, it is a priori unrealistic to expect a revival of the economy as a result of 23 According to the Bank of Greece, july/2012 24 In 1936 the Greek government under Metaxa declared that it was unable to service a loan by the Belgian Bank Société Commerciale de Belgique,and explained in a special memorandum that “the interests of the Greek people concerning public administration, economic life, public health and internal and external defence of the country did not leave the government any other choice”. The International Court accepted the argument and vindicated Greece, creating a legal precedent, which was later exploited by Argentina in 2003, in an effort to proceed to a suspension of payments. 25 Krugman., P., (2012), “Europe’s great illusion”IHT, 5.6 26 Fehrie, B., (2011), “Pourquoi Mme Merkel a raison de douter”, Frankfurter Rundschau, publié dans le Courrier International du 6 au 12 octobre 27 Based on the last FMI report on Greece : 28 Εwing, J.,(2012) , “Berlin clings to austerity despite pleas”, IHT, 9.1 29 As ascertained by the former representative of Greece to the IMF, P. Roumeliotis. ( 30 31 32

Including the new liberalistic journal The Economist As long as it attracts the hate of fanatic new liberalists Lately, there is an effort to present the consequences on the Baltic countries, as a success of this policy. However, the satisfactory growth rates in these economies where achieved at the expense of very high unemployment rates

internal devaluation for two additional reasons. First, because the contribution of exports to GDP is low and less than 20% and second because more than half of its exports compete with products exported from emerging economies. It is certainly not serious to expect that the level of wages in European economies could drop to the level prevailing in emerging economies33. What happens in Greece, is already being generalized in the European South and described in great humor, and with great astuteness in the excellent article by Slavoj Zizek in the newspaper Le Monde34. Summary: “Those who deciding in Brussels could be compared to juggling Chinese plates ... the difficulty is in maintaining the movement, without which the plates fall and break.” Also included are excerpts from the film Nitotchka of Ernst Lubitsch, which aired in 1939. Someone ordered a coffee without cream, and the waiter replied, “Sorry, but we no longer have cream, we only have milk. Can I get you a coffee without milk? “. In an effort to argue that “it will not be the Greeks who will benefit from the ordeals imposed on them”, but the banks. Also Dominique Strauss-Kahn recently said from Beijing35: “The IMF’s prescription has not been implemented correctly in Greece and that is a shame.” Nobel laureate Paul Krugman36, is also on the same wave length . The Greek debt is not manageable, like any debt in excess of 90% of GDP37. The famous “haircut” did nothing to alter this grim reality. On the contrary, while at the beginning of the crisis the debt represented 115% of GDP in 2012 it is approximately 170%, while there has been an effort which is already considered unsuccessful to bring it at 120% in 202038. The deep recession, which was caused by the austerity program in the Greek economy constantly worsens the existing debt as a part of a GDP which is dropping at frightful rates. Therefore, any discussions referring to a Greek bankruptcy, to when or how this will happen, to a possible reversion to the drachma, to the alleged intentions of the troika etc, are simply designed to save time. The realization, beyond any doubt that the Greek debt will not be manageable even as late as 2020, which also signals the failure of this policy, may serve, among others, as an explanation of the recent statement by the IMF that it will cease to finance Greece39. It is well known that the IMF Constitution prohibits it to finance non-manageable debts. Therefore, the clumsy efforts at disproving this reality constitute still another deception against Greece. 33 Although their level is already rising quite rapidly 34 «Lamentable fiction, l’austérité continue de servir et de servir les Banques, » 13.07.2012 35 Who in spite of all his problems, is still one of the most famous world economists and IMF experts.. =22769&subid =2&pubid =63592023 36 “The troika’s scenarios are irrational” (2011) article published in the electronic newspaper of Νew York Times, 7.2 37 According to relative studies by Carmen M. Reinhart and Kenneth S. Rogoff 38 Meaning that the whole effort at an alleged “salvation” would under the most favorable conditions lead –but will not- 11 years later and in spite of the inhuman sacrifices of the Greek people, to a worse point in comparison to the starting point 39 Der Spiegel by economicos, 22.07.2012

Still, the troika with the tacit consent of the Greek officials commute to and from Athens, and undaunted, completely detached from the “Greek deadlock concerning the memorandum,” claim that “the Greeks are to blame for failing to meet the objectives,” and that “there will be no discussion about modifying the program, if there is a failure to implement the commitments.” Those commitments leading Greece to its doom.


The obscure objectives of the alleged rescue The obvious certainty that memoranda, loan agreements etc. not only do not help the Greek economy to overcome the crisis, but, on the contrary keep pushing it deeper into the dark tunnel, naturally led to the quest for other objectives, apart from those officially declared. Because all of the world economists, whether neoliberal or Keynesian, succeeded in doing something in the case of the Greece, that seemed impossible in principle: that is to unanimously agree that the program imposed on Greece leads to the destruction rather than the salvation of the country. Even more amazing is the fact that several of the alternating members of recent Greek governments have, at times, publicly and categorically stated that ..... “the program imposed by the troika leads to a deadlock!” However, when they come into power, they exhaust all their energy and intellectual power towards the greatest possible satisfaction of the members of the troika, who now openly behave as conquerors of the country, and their willingness to play along with them at the expense of the Greek people. Undoubtedly, both sides, the troika and the Greek government, are fully aware that the measures, which the former impose on the latter drain the economy from any development opportunity and deepen the impoverishment and despair of the Greek people, leaving no room for any hope towards recovery. This is an integrated plan for a peculiar genocide, which directly affects the survival of the country for an indefinite number of years. Under these tragic circumstances it would be inexcusably naïve to refrain from seeking the real objectives of this unholy policy of the troika, which, clearly is a crime against humanity. One should obviously reject interpretations of the kind that the troika committed an error, that they are, supposedly unaware of the particular elements of the Greek problem, or even blinded by ideological fanaticism. Any such interpretation hides the real objectives of this Armageddon, which engulfed Greece and are now very clear. These are:

A.The end of the Wefare State

B.The plunder of our national wealth

The simpler would be to attribute the fury of the troika against the public sector and especially the welfare state, to their clear ideological choices. Obviously, however, this interpretation is now extremely inadequate to interpret the brutal objectives pursued, and which can only be justified on the assumption of establishing a world government and a world currency, passing through a Germanized Europe40. The global economy, which was prepared thanks to globalization, shall be totally dominated by banks and bankers, whose physical manifestation is an extremely small group of people who tirelessly and in all geographical latitudes, shall collect and accumulate global wealth. This process has already begun, mainly by means of reducing the high tax rates imposed on high incomes, which have shrunk the middle class in America and Europe41 and led to the culmination of inequalities.

The second paramount objective, pursued through the Greek genocide, is the seizure of public wealth. Greece, of course, will not be able to meet its obligations, which were undertaken in absentia, on its behalf, on the part of the signatories, who, in some cases, did not even take the trouble to read them. Quite simply, these are obligations that cannot be achieved. However, they will deepen the despair of the people, will rob them of any national dignity, convincing them that they are useless and preparing them to passively surrender their fate and property to their conquerors.


There is no longer any doubt that the welfare state was developed in the West just to prevent the uprising of workers as a result of the social welfare programs, taking place in the Soviet bloc. For this reason, they were hastily abandoned as soon as this danger was eliminated. The overt goal of rulers now in America and Europe, is the rapid application of so-called structural reforms to eliminate all labor rights and restore the labor market to the regime prevailing in the beginning of the 19th century. This disproved the widespread anticipation of the ‘60 and ‘70 under which the development and maturity of capitalism would be accompanied by greater equality and prosperity for all. The ugly truth can no longer be hidden, that Greece was chosen as a guinea pig, and this objective was achieved almost without reaction. However, Greece is not the ultimate goal of this project, just the bridge over which the impoverishment of workers, with wages corresponding to those prevailing in China or Africa, and no form of protection in the labor market will pass and spread across Europe. Therefore, there is no question of improving this program of genocide, imposed on Greece, until the completion of her total destruction.

Various misleading terms such as the purported “exploitation of public property,” the alleged effort to “attract investors”, the socalled “reorganization of the public sector”, the so-called “longneeded reforms,” ​​and other similar views aim at justifying the tragic conditions under which is planned the most atrocious crime against Greece and its people: the general sell-out of its wealth. One should not assume that I am expressing ideological objections concerning the Greek privatization program. I do object however, -as every Greek man or woman ought to- to the methodology as well as to the primary objective which is being pursued and which is solely the contribution of privatization to the repayment of the debt repayment and certainly not the exploitation of Greek public assets. It is indeed clear that this anti-national activity does not concern public firms, or public assets in general for which some sort of serious previous comparative study has shown that they might perform better if passed by the state to individuals. Even more so, neither certain sensitive services to the welfare of the citizens have been excluded from this criminal enterprise, such as electricity, water, communications, defense, public health, etc. Under a constant pressure, intimidation and blackmail as to the non-disbursement of installments, or the possibility of an uncontrolled bankruptcy or expulsion from the eurozone our partners are forcing Greece to hasty privatizations- or a total liquidation of all public assets- at any cost or sacrifice. Regardless of the fact that public service companies must not, under any circumstances, be privatized42, let alone be passed on to foreigners, it is now clear that, for Greece this is the worst possible timing for privatizations or asset sales. The reason is not only the limited value of anything Greek abroad, but also, the unbelievable declaration of the Greek minister of Finance , that whatever is liquidated “can be paid through Greek bonds”, meaning that any such assets will be practically given away considering the devaluation of their nominal price by as much as 80%. The sell out was fortunately delayed due to technical reasons, as

40 41

M. Dassù, M., (2011), “Une Europe allemande est née”, Courrier International, no 1095 27.10-2.11 Sachs, J.D., (2012), “Why America must revive its middle class”, Time, 10.10


Negreponti-Delivanis,M., (1993) Private and public enterprises, Thessaloniki-Athens, Sakoula, (in greek).

there are many difficulties in selling43, and even mature cases need 2-3 years for the process to be completed. One can still hope, therefore, that things may change in order to avoid this outrage, equivalent to a lifetime bankruptcy of Greece, even at the last minute.

C.The protectorate of GREECE

Last but not least, all this shadow shoe, all these delays in decision making, all this embarrassment and all-night meetings aiming at simply gaining time, not finding solutions to all these threats and exhortations, seem to conceal still another evil objective, which is being pursued through the existence of the debt, and may no longer be easily concealed. The EU-eurozone, if it manages to survive instead of dissolving - although the latter is more than likely- will no longer consist of equal partners but of rulers .... and serfs. The dividing line between these two categories is the financial condition of the partners. As aptly pointed out by the economist Philippe Murer44 this division is really the restoration of the ancient custom of enslavement of a people due to indebtedness, which was abolished by the Romans 2000 years ago. Indeed, very recently, all European newspapers published Mrs Merkel’s intention to post a non-Greek “supervisor” at the top of the budget department of Greece, which equates to the establishment of a protectorate. The dismal fate of this, which has been currently reserved for Greece -if it does not react instantly and decisively- shall undoubtedly be extended, with several variations, throughout the European South. This refers to the scenario which is already being promoted by the leaders of the EU-eurozone concerning a Europe of two or more speeds. Let me remind that such an intention existed since the creation of the EU but was decisively rejected by the leaders of that time. There is a number of indications, not to say evidence, that Greece has been selected as a guinea pig to voluntarily abandon its national sovereignty and democratic elections to lead to a sham democracy. This is because those who are ultimately elected –with various manipulations-- to occupy key positions belong to a tank of preselected powerful individuals connected to Bildemberg or other similar organizations. It is therefore reasonable to expect that such people will not have as a priority to serve the national interests of their country, but rather to promote, the orders given by their principals. 43 44

Pavlopoulos, P., (2012), “The constitutional limits of privatization”, olympiada,21.07 Vidéo ici


Part II: The consequences so far In Part II I shall now deal with some of the consequences of all these dramatic developments that have transformed Greece into the first “guinea pig of the EU.” The attitude towards the Greek debt has already totally ruined the Greek economy, society, education, public administration, defense of the country and has crushed any future perspective. It should however be clear that this policy of inhuman austerity is not a “Greek privilege”, but rather a ‘moment of death foretold “ for all the indebted economies of southern Europe. Greece becomes the holocaust of Europe, unwittingly, paving the way for the same fate hitting the whole of southern Europe45. I will now briefly refer to these disasters, which have already occurred in Greece, and the erosion of the European idea, which tarnishes the EU-eurozone:

1. The Greek economic genocide Based on serious considerations, if we had the opportunity for development - or even a recession not exceeding 2% we would succeed in balancing our budget in 2013, meaning that would no longer have to borrow, while from 2014 onwards we would be able to start repaying our debt. The truth is however, that our partners have - consciously- excluded this possibility, forcing us to implement a program that is literally strangling any development potential for our economy. This recession of the Greek economy, unprecedented in peacetime, both in terms of duration and intensity, is stifling it for the fifth consecutive year. We are witnessing a depression which is even longer than the one which hit the U.S. following the 1929 crisis. Apart from its duration however, the recession has literally ravaged the Greek economy, having already caused a cumulative drop of GDP exceeding 20%, of the average purchasing power exceeding 50%, of unemployment around 22% (52% for the young). It is furthermore estimated that the depreciation of assets, reduction of bank deposits, discouragement of development initiatives, especially investment equals 500E billion. It is therefore extremely naive to maintain any hope for the recovery of such a weakened economy through investment of such scale, while such an evolution would necessitate investment with extremely high return equal to at least 10-12% of GDP. In rough times, with such a deep economic, social, political and moral decline, the psychological factor becomes crucial. Thus, now Greece is dominated by fear, insecurity, lack of confidence in the various governmental announcements, and nothing works anymore. It is therefore not surprising that Greece ranks among 45 Up to a point, because Greece is a special case, from a geographical-strategic point, as well as form the point of the country’s mineral and marine resources, estimated to be quite significant

the five most pessimistic economies in the world46. N ot surprising, still, that 7 out of 10 young people wish to leave the country. Since the beginning of this plague, Greece records a reduction of wages and pensions, of 25% on average- but still, the Troika believes that this reduction is not enough and that at least an additional 20% is necessary - 439,000 children live in poverty47, students at many public schools faint from hunger, the “rubbish eaters” and the homeless have flooded major cities, the soup kitchens, offered mainly by the church have increased the number of servings by five times, (data referring to only June 2012), and only in Athens 350 desperate people have committed suicide. Industrial production is falling by more than 30%. It is estimated that 500,000 stores have closed down already, while 4 out of 10 consumers declare that they have no income left after meeting their basic needs48. Parents leave their children in orphanages and then commit suicide while in a country with low fertility births are reduced as a result of poverty, which already progressively embraces the middle class. Desperate people are looking for buyers for their organs. Many low-income or low pension citizens are unable to afford heating oil and revert to coal, which was the main heating medium of past decades. The country’s hospitals lack basic drugs and dressings. The defense of the country has essentially been abandoned because every available euro is channeled to the lenders. The state machine is destroyed a little more every month. The NHS is dwindling. Taxes can no longer be collected and the great “crash” is expected in early autumn. However, the application of this inhuman program did not save Greece. On the contrary, our country now lies much closer to bankruptcy than in the beginning of the crisis. The probability of bankruptcy, according to CMA rose to 96.7% in the second quarter of 2012. As one should have expected, tax revenues are plummeting, in spite of the fact that unimaginable taxes were applied for the first time in Greece. These forms of taxation are unconstitutional, undemocratic, counter-progressive and also, highly ineffective. In spite of this whirlwind of taxes, tax revenues have sunk. Let me mention that in April 2012, the VAT revenue was reduced by 13.4%, or € 221 million, compared to the previous year, thus enlarging the Greek problem, while for the full year a reduction of approximately € 1 billion is expected. Rampant recession, rising unemployment, the rapid reduction of total income, the decline of the welfare state and all forms of benefits, an array of new taxes, all of these could undoubtedly be expected to lead to this generalized destruction. Still, the troika continues undaunted. They demand more human sacrifices and persist in carrying out reforms in a direction that has already proven erroneous. They balk even at a hint towards restructuring / rescheduling. They keep repeating that we are responsible for the failure of the program they 46 Published in economikos in July 2012,based on studies of Consumer Confidence by Nielsen, 2nd quarter of 2012. 47 Unicef for Greece 48

have imposed on us, assisted by the officials of some member states, who feel confident about their financial virtue and unscrupulously declare that they “are tired of us .... stealing their hard work and not honoring our obligations”. Unfortunately, they are assisted by the majority of Mass Media49. They certainly know that the program imposed on us leads to a deadlock. They certainly know that they are destroying us. However, their objective never was our salvation. Their goal is to bankrupt us, on their own terms. With the precise that suit them. With our demise as an independent nation, the program imposed by the troika is leading us to our doom. They are reluctant to proceed however, because they fear for the possible consequences on the other southern European economies. Now, with Spain and Italy on the verge of collapsing, Greece is remitted to the sidelines.

2.The destruction of Europe

The destruction of Greece and the whole of southern Europe naturally brings the end of Europe, at least as we know it. Europe, having grievously abused half of herself, embarks on a dangerous one-way journey. The image of Europe has been tarnished by the debt crisis, the unemployment rate reaching 11.5% and the recession. It has also been severely tarnished by the vacuum of democracy, the culmination of disparities, the lack of cohesion and solidarity. Precisely because of the collapse of southern Europe, caused by the requirement for rapid financial reform, a deceleration of economic growth is to be expected in the eurozone, in 2013. Let me indicatively mention the categorical statement by Soros –not the only one- according to which “Germany is pushing Europe to economic disaster.” However, apart from the evolutions within the EU the big question is how can its fate be possibly left to the inspirations and decisions of the leader of just one among the 27 member states, who is assisted, mainly regarding the style at which the European South –and especially Greeceis demeaned, by the head of the IMF Ms. Christine Lagarde. Under these circumstances, one should not be surprised by the results of polls carried out in Europe, showing that while in 2007, 52% of respondents in 27 countries-EU members had a positive opinion on the euro and the eurozone, this figure dropped to no more than 30 % in 2012. It is inconceivable, and yet true that the EU is no longer able to promise the new generation a better future. Even worse is the widening vacuum of democracy in Europe. As an example, let me mention that both in Greece and Italy, non-elected prime ministers came into power in 201150, as a result of various manipulations, but Mrs Merkel felt the right to officially support the candidacy of Mr. Nicolas Sarkozy and vehemently oppose the election of Mr . François Hollande, who however, eventually prevailed. 49

Al Jazeera (22.07.2012):the Greek Mass Media are under the control of the troika!


M.Schuman (2011), “New Faces, Old Problems”, Time 28.11. Il s’agit des M.M. Monti et Papadimos

The disaster scenarios for Europe are numerous and not impossible. These however, shall be the subject of another paper.

General Conclusion

Not only Greece, but the whole South of Europe is the victim of an outright attack from the north and is at grave risk. It is certainly clear that the Greek officials, instead of submitting to the Memoranda, etc., instead of endless discussions and unsubstantiated estimates as to the most effective methods for bleeding the Greek people in order to satisfy the troika, should outright declare that “the program is inhuman and doomed to failure and that consequently, they refuse to continue its enforcement” At the same time, they should have attempted a coalition with the other southern European economies which are also on their way to destruction. Though the attitude of our partners towards Greece, theoretically an equal member state of the EU-eurozone, is unbelievable and unacceptable, it is nevertheless the dismal truth. The memoranda, imposed on us, condemn us to third world conditions, a fact which does not seem to trouble them in the least. On the contrary, they continue to insult us, they fail to recognize our bloody sacrifices, they threaten and blackmail us on a daily basis, they deceive us mercilessly and eventually articulate the final dramatic demand “give up everything”. In any case, all perspectives are desperate, from every angle. The collapse of the large economies of the South, Spain and Italy and perhaps even France, preclude any hope for negotiating a better deal concerning the treatment of the debt.

Selective Bibliography *Al Jazeera (.2012), “Tthe Greek Mass Media are under the control of the troika”! 22.07 * Bank of Greece, july/2012 *Consumer Confidence by Nielsen *Cyran, O.,(2012), “L’effroi du retraité allemand face à l’épouvantail grec”, Le *Monde Diplomatique, No 700-59e année, Juillet * Dassù, Μ., (2011), “Une Europe allemande est née”, Courrier International, no 1095 27.10-2.11 *Der Spiegel by economicos, 22.07.2012 * Eleftherotypia of 9.5.1995 signed ΜΑR. ΠΟΛ * Εwing, J.,(2012) , “Berlin clings to austerity despite pleas”, IHT, 9.1 * Fehrie, B., (2011), “Pourquoi Mme Merkel a raison de douter”, Frankfurter Rundschau, publié dans le Courrier International du 6 au 12 octobre *FMI sur la Grèce : *«Greece is a crime scene”, (2011) Video CNBS από την εκπομπή του «Dylan Ratigan Show», 15.11 * =22769&subid =2&pubid =63592023 * * * * * Klein, N., (2010 for the Greek translation, The Shock dogma , Livanis * Krugman., P., (2012), “Europe’s great illusion”IHT, 5.6 * Last FMI report on Greece : * Negreponti-Delivanis,M., (1993) Private and public enterprises, Thessaloniki-Athens, Sakoula, (in greek). * Negreponti-Delivanis,M., (2004), The fate of the euro, Delivanis Foundation and Cornelia Sfakianaki, Thessaloniki (in Greek) * Negreponti-Delivani, M., (2012), Lettre ouverte à Madame Christine Lagarde, Le Monde électronique, 18.06

If the hardships, the privations, the psychological warfare to degrade us, the horrible caricature, which supposedly represents our people and our nation, which has been drawn against us, and spread all around the world by “our partners”, the indescribable panic, skillfully nurtured as to what might happen to us “out of the European fold” .... if all those ordeals we have been witnessing for the past two and a half years have still left us with the remnants of a will to survive, now is the time to run towards our salvation. Staying where we are, we are lost, simply because all our sacrifices benefit our lenders without alleviating our own problems. Taking our fate in our hands, will not eliminated the existing difficulties. There will, however be some hope for improvement, and much will depend on our own decisions. It is simple. Everything will depend on the comparison between the fear that holds us captive to a dead end, and our confidence that we will succeed.

*olympiada (publication 18.7. 2012 * Pavlopoulos, P., (2012), “The constitutional limits of privatization”, olympiada,21.07 *Russia Today, TV with the economic analyst MaxKeiser * Sachs, J.D., (2012), “Why America must revive its middle class”, Time, 10.10 *Schuman, M., (2011), “New Faces, Old Problems”, Time 28.11 * Slavoj Zizek (2012) «Lamentable fiction, l’austérité continue de servir et de servir les Banques, », Le Monde, 13.07 *Studies by Carmen M. Reinhart and Kenneth S. Rogoff * The Economist*“The troika’s scenarios are irrational” (2011) article published in the electronic newspaper of Νew York Times, 7. *Unicef for Greece *Vidéo ici*Wikipedia


MARIA NEGREPONTI-DELIVANIS - Graduate (with honors) of the Aristotelian University of Thessaloniki and the University of Sorbonne in Paris where she studied on a scholarship of the French Government and was awarded the Doctorat d’ Etat es Sciences Economiques with honors and distinction. Student of specific fields at the London School of Economics and the Universities of Berkeley (U.S.A) and the European University Institute of Florence. - Professor and Rector at the University of Macedonia at Thessaloniki, Consultant at the Ministry of Coordination, YPABE and OECD in Paris, member of the International Scientific Board for Vocational Orientation of the University of Marseilles, VicePresident of the Administrative Board of the Union of French Speaking Economists and of CEDIMES , President of the “Dimitri and Maria Delivanis” Institution. - She was honoured by three elections as rector (first woman rector in Greece), she was awarded various scholarships by the French Government, NATO and the European University Institute of Florence, four gold medals by the Holy Metropolis of Thessaloniki, she was awarded the title of honorary citizen of Komotini, the first prize of the Athens Academy, a formal invitation to the USA on the part of the State Department, she was elected a Jean Monnet Fellow, and her doctorate was published all expenses covered by the French CNRS in the SEDES series. She is Doctor Honoris Causa of the Universities of Dimocritos (Komotini), Valahia (Targoviste-Roumania), Kainar (AlmatyKazakhstan), Altai (Barnaoul-Sibéria-Russia) and Annaba (Badji-Mokhtar) in Algeria. She was honoroud of the French Legion d’Honeur and she has been elected honorifique member of the Roumanian Scientific Academy. - She is constantly invited to lecture everywhere in Greece. - She was invited to deliver lectures and lessons by the Universities of Paris, Rome, Bonn, Trieste, Marseilles, Florence, Varsaw, Cracaw, Sophia, Bratislava, Melbourne, South Korea, Cordova, Buenos Aires,Targoviste Haiti, Cameroon, Fribourg, Florina, Rijeka Croatia, and others, and she participated as speaker, organisator and president in numerous congresses all over the world. - Her published works in Greek, French and English numbers to 47 books and research projects and 650 articles, interviews, opinion views and was honored with the award of first prizes, cum laude and critics. Her works were published by publishing companies abroad such as, among others, Macmillan, SEDES Sithoff-Leyden, Cujas, Tiers Monde, Revue d’ Economie Politique, Newsletter, L’Harmattan and in Greece, published by Papazisis, Livanis, Maliaris, Sakoulas etc. Her curriculum vitae has been included in numerous Who’s Who directories all over the world.



The paper shortly presents some actual features of the development of smart devices and generally smart communication and information technologies (CIT), regarding their influence on people personality and behavior. These features are addressing a diversity of applications fields, but maybe the most important is that our device- companion will be a real-time health assistant, monitoring the data of vital functions, connecting them to the expertise of doctors and providing personalized advices. As the direct speech communications with the smartphone will be a default feature, our companion could be a surrogate for a baby sleep/breath monitor, a nurse, a teacher, a coach, a guardian and eventually an expert-adviser for children, young or old people. The paper also presents the mechanisms of the influence of smart ICT on the economical, social, political, ethical, educational and medical factors, which further contribute to the global effect and the extent of deepness on people personality and people’s creative potential. The paper concludes that the smart devices and ICT have a strong influence on the people personality and way of life, as ICT is the main factor of the evolution of IS toward KBS. Also it is confirmed that people get smarter using the benefits of smarter devices, but the evaluation of all the influences of these devices on mankind needs a further and complex analysis, which can also reveal the negative or subliminal effects.


Smartphones, smart information and communication technologies, information/knowledge based society

JEL Classification: C88, D83 1. The iceberg behind today’s smartphones There is no doubt that the peoples needs, as the Maslow pyramid also reflected them, represent a major factor of the society general development and this is very much confirmed when when we look to the information and communications technologies (ICT) products and services. It is also an evidence that ICT have an amazing effect on mankind and Earth evolution, by their impressive and dynamic force to change the world we are living in. All the above images, although far to be complete, are enough reasons to responsibly think about all the consequences of these evolutions, although it is sure that this goal is not simple. Perhaps a relevant parallel we could choose in this case is the

complex and dynamic evolution of global climate changes we have to think about as much (and as soon) as possible. It is important to recall that the complexity of this problem requests … the future supercomputers (and … more ITC)! So we have to very much and very fast think about! Then one could say: that is why we have all around more and more smart devices! If the situation would be that simple! Of course, who can deny that our precious smartphones became smarter and smarter, although they are “young”! Who would have believed in the ‘90s that after 20 years we will have the power of that wonderful PC in our pocket and … much more ?! Coming back to our days, we have to deeply evaluate what we see on ICT market, where the smartphones, tablets and other smart devices certainly illustrate the state of the art and reveal the tendencies of the main area of ICT mass applications and social impact. We see how, step by step, the smartphone plays, beyond its ubiquitous communication features, a growing role of useful companion. Today there are common tools to have instant access to a clock, calculator, agenda-reminder, radio, camera etc. Our smartphone started to be smarter than us when leading us everywhere on civilized Earth by its GPS navigator, but today on the same “route” it can bring us nearly any information through the infinite source of Internet. As many analysts agree [1], these are only the beginning of a new era, the “childhood” of our companion. That is why I think it is important to evaluate all could come after the top of the “iceberg”. The first reason of doing that is to be sure how big it could be, but secondly it is for sure better to watch over all possible negative implications of a such phenomenon. How big it will be the role of companion is a matter of power and pace of ICT development, but on the other hand we have to generally control, on a multicriteria basis, this “explosive” evolution of ICT on the road of the Information Society (IS) toward the Knowledge Based Society (KBS) [2]. We believe that only in this larger context, of IS and KBS, we have the chance to get a “right” balance of “explosion” in the multisized frame represented by the economic, social and ecologic Earth. This way we see why the situation is not “that simple”. Of course one could have a simpler approach, as all emergent features of smartphones seem to be useful and even leveraging for the quality of people’s life. On this line, the today’s appearance of the “iceberg” is the top where we may remark a lot of features, growing with every new model in the context of a frenetic competition. These features are addressing a diversity of applications fields, but maybe the most important is that our companion will be a real-time health assistant, monitoring the data of vital functions, connecting them to the expertise of doctors and providing personalized advices. As the direct speech communications with our smartphone will be a default feature, although iPhone Sire is already available today, our companion could be a surrogate for a baby sleep/breath monitor, a nurse, a teacher, a coach, a guardian and eventually an expert-adviser for children, young or old people. More than these, the smart devices already started to be helpful for persons with handicap, including technological solutions of communication and social insertion for blind, speechless or impaired persons.

2. Smarter information and communications technologies for tomorrow’s smarter people The analysis of the global effects of the “explosive” development of ICT produces and services [1], including smartphones and all other similar devices, could have a diversity of approaches, but a systemic approach should consider the above mentioned context of IS towards KBS. An even more general approach would consider the general context of the role of ICT as main factor of mankind evolution in Earth ecosystem [3]. The actual paper space and title are rather fitted for a partial approach only, regarding just the starting point of a further analysis of a fundamental problem: how could “smarter” ICT leverage the evolution of mankind towards “smarter people”. At a first glance it is obvious that smarter ICT include the logical elements to educate people in sense of a smarter behavior, at least because they are promoting new and highly sophisticated elements of progress in all applications areas, although usually they are designed to be used as simple and friendly as possible by the people. This way we can observe that the real influence of the way ICT is evolving “smarter”, on the mankind profile, is more complex and difficult to evaluate, because of the superposition of diverse factors with different weights, mechanisms and timing. As a consequence we can include the influence of smart ICT on the economical, social, political, ethical, educational and medical factors, which further contribute to the global effect and to the extent of deepness on people personality and people’s creative potential. An other approach must be also considered, if we evaluate the short or long term influence of smart ICT on people behavior. The most known influence is on short term, as hobbies, tools or toys are leading to a better life, understanding, efficiency or growing. About long term one could speak of changes in the mental processes, as growing of logical and precise approaches. A further and deeper analysis on long time should consider the above changes as an integrating process inside IS toward KBS, where the context is very complex due to the iterative actions of the mentioned factors. For an accurate analysis, we must admit that a smarter man in KBS will be the result of the influence of the above factors, adding every time the specific and complicate mechanisms of iterative generation of the “new” refined “knowledge” where ICT has a major role, but not exclusively [4]. For example, that global result and every iterative refined knowledge are strongly influenced by the political, philosophical, ethical, educational and even genetic environment of the people.

3. Conclusions The smart devices and ICT have a strong influence on the people personality and way of life, as ICT is the main factor of the evolution of IS toward KBS.It is a matter of evidence that people get smarter using the benefits of smarter devices, but the evaluation of all the influences of these devices on mankind needs a further and complex analysis, which can also reveal the negative or subliminal effects.

REFERENCES [1] Dan Siewiorek, “Generation Smartphone”, IEEE Spectrum, sep.2012. [2] *** Towards a knowledge based Europe The European Union and the information society, European Commission Directorate General Press and Communication, October 2002. [3] Steve Furber, To build a brain, IEEE Spectrum, aug.2012. [4] *** DIRECTIVE 2003/98/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 17 November 2003 on the re-use of public sector information.

The Significance of Strategic Service Innovation Management in Retailing by George Cosmin Tănase

Abstract Innovation is the key to the creation of a sustainable competitive advantage in most industries. Since costs and cost reductions play an important role in service management, the service innovation process must be discussed from a service operations point of view. An important objective of service, however, is to differentiate the company by creating more value and satisfying the customer better than competitors. According to the service dominant logic – the point of view that customers derive value from the service a product provides them with – much of the value obtained from the retailing experience is co-created by the customer.


Competitive advantage, profitability, service quality, strategic innovation projects, customer loyalty, repositioning.

Creating an innovative retail organization is of outright strategic importance. Retailers suffer from substantial threats in their industrial environment. Suppliers – such as Unilever, Procter and Gamble, Sara Lee, Nestlé, etc. – are multinational players, concentrated and very powerful. The entry barriers to the retail industry and levels of differentiation are relatively low, while many substitutes – think of e-tailers, outlet stores, and single brand outlets – exist. This situation leads usually to high levels of price competition – negatively affecting average profitability in an industry, which is indeed the case in many retail sectors. At the same time, customers have increasingly become better informed – they use the Information Superhighway, e.g., through apps for their tablets and smartphones, to look for special offers, and compare prices between retailers – and they have become ever more demanding in terms of price and service. Customers are also less and less loyal to specific outlets. This is partially due to the commoditization of products and services: as a result of technological developments, quality differences between products and services are becoming smaller, often even nonexistent. The retail industry not only suffers from important competitive threats but also goes through a high level of change in the retail environment. Suppliers regularly launch new products and services, in response to customers who continuously develop new needs and wants. Furthermore, retail customers have come to expect fast, cheap, and customized solutions to their individual retailing needs. Finally, competitors compete with evermore sophisticated weapons, often in more than one distribution channel, for example, offering the possibility to order products online and pick them up at the store or at the gas station. To sustainably generate above average profits in such a dynamic and competitive industry is only possible if a firm continuously invests sufficient human and financial resources in exploiting opportunities and neutralizing threats. Innovation allows differentiating the retailing offer by creating advantages that customers really appreciate and value. Strategic innovation projects must be in line with the strategy of the company and are meant to actually realize or implement the corporate strategy. If the organization adheres to a low-cost strategy, strategic service innovation projects will likely be meant to lead to a further increase of the efficiency and a reduction of the costs of processes, without negatively affecting service quality (e.g., Aldi, Lidl, and Kmart). If the company adheres to a focus or niche strategy, e.g., by addressing relatively homogeneous segments of customers with specific needs, then service innovation projects will be directed at better satisfying those special needs, e.g., by developing more effective services without increasing the costs (e.g. Giant Food). In the end, competitive advantage makes customers choose and prefer a brand, because it leads to higher levels of satisfaction. Competitive advantage is only sustainable, however, if the service innovation is not easily imitable. If the company differentiates its offer by means of low prices, the innovative cost reductions should by any means be hard to copy for competitors. Satisfied and loyal customers are of great importance to the retailing business, since customer loyalty is associated with a number of behaviors that lead to lower marketing expenditure, and higher revenue per customer. Loyal customers are considered to develop a preference for the brand they patronize. This implies that when they have to choose between various retail outlets, after the identification of a need or want, they will most probably choose to make their purchases at the retail outlets of the brand of their preference. Satisfied and loyal customers often recommend or speak positively about the brand they patronize (positive word of mouth), repurchase the same or similar goods from their preferred store, and are even prepared to pay a price premium.

Different categories of innovation projects address different strategic needs. Sometimes the environment changes fast – e.g., when a competitor introduces a radically new business model – and retailers need to fundamentally improve their offer to remain competitive. Sometimes slower evolutions occur, and through innovation processes are just kept up to slowly evolving standards – for example, an increase in hygienic standards. Depending on the relative newness of the innovation, and the relationship between the new service and previously existing versions, we can therefore distinguish between various types and categories of innovations. In the first place, we can make a distinction between incremental and radical service innovations. The relative degree of newness of service innovations can help us to position service innovations on a continuum between incremental or minor changes to an existing service and radical or fundamental innovation. At one extreme of the continuum, we find incremental service innovations. Incremental innovations are minor, particular, changes made to the design of the service or the service process. They have the purpose of either correcting minor faults in the process and improving the service experience (increasing service quality, raising the standards, or adapting the value created by the service), thereby increasing the efficiency (reducing the costs) of the process, or both. An example of an incremental services innovation would be changing the colors used in signalization in a supermarket, using better readable fonts, or a slight change in the design of the furniture. At the other extreme of the continuum we find radical service innovations. Radical or fundamental service innovation is often complex, and touches many aspects of the service at once. The so-called architectural innovations change the connection of parts of the process, the structure of the service (e.g., the order of activities, the distribution channel, etc.). In the case of radical service innovation, the new service is radically different, either in the perception of the customer (e.g., changing the interface of an electronic service) or with respect to operational aspects (e.g., changing the distribution of products). Radical innovation may also offer an entirely new bundle of benefits to both the company and the customer.

Advantages and Disadvantages of Radical Innovation Radical innovations are more complex, more costly, and riskier and generally take much more time to develop and to realize. The advantage of radical service innovations is that generally the firm will create a more substantial competitive advantage – when the innovation is successful. Radical, complex innovations are often also more difficult to imitate, which makes the competitive advantages they create more sustainable. When customers do not perceive the changes as an improvement, or do not seek or value the new benefits the service may offer, or when costs have not been reduced, the innovation must be considered unsuccessful and a waste of resources. The more complex, the more radical a retail service innovation, the higher the potential return, and also the higher the risk of unsuccessfulness.

Imitability of Service Innovation However, since most service innovations are fairly easy to copy, the duration of the competitive advantage will be limited in time. Only few mechanisms exist to protect intellectual property in service innovation. Patents do not exist, although they can be used for tangible aspects of the innovation. The more complex the service innovation is, the more difficult it will be for competitors to un-

derstand the service and to copy it. Incremental service innovations are generally less costly, and often require smaller investments to implement them than radical innovations. To make optimum use of available resources, and to limit the risks of failure, most companies try to balance incremental and radical service innovations. They try to constitute a portfolio of innovation projects that distributes risk and return over a limited number of projects. Retail innovation can, for example, focus on innovating the core services and introducing or developing complementary services. While designing a competitive strategy and a portfolio of service innovation projects, senior management must take into account the developments in a number of dimensions of the general business environment and the retail industry in particular. In general, changes take place in the political, economic, social, technical, ecological, and legal dimensions of the retailing environment. In the economic dimension, competitors exert an important influence. Competing retailers continuously make strategic decisions about repositioning their activities, refocusing their service offers, relocating or expanding their networks, etc. These are all aspects that need to be taken into account when designing a strategic portfolio of innovation projects. In many cases, retail service innovations are used to reduce or neutralize strategic threats. For example, while some supermarket chains – in an attempt to maximize economies of scale – have focused on the creation of mega-markets on the outskirts of towns, other supermarket chains have (re-) opened small city-stores, offering a basic assortment near populated areas, or areas where office buildings are located. By focusing on specific needs, although being more expensive in their operation, and therefore higher priced, they compete successfully with the megamarkets. In other cases, opportunities may be created as a result of strategic activities of competing retail chains. In that case, retail service innovation projects may be designed to capitalize on these opportunities. Important changes are taking place in the domain of retail customer behavior. Customers increasingly value their time, are less and less willing to wait for service, and, as a result, have increasing preferences for fast self-service. Self-service has therefore taken an important position in retailing. Several aspects of the retailing service experience can be automated or create some sort of potential for self-service. Examples are selecting fruit, vegetables, cheese, meat and fish products. Another service is the return of empty and cautioned packaging, such as bottles or crates. Finally, activities such as pick-up of (mail- or Internet) ordered products and the automation of the checkout are often part of self-service initiatives. Retailing services are unique in the sense that customers use them almost on a daily basis, and, therefore, notice changes (and faults) in the service system very rapidly. Some consumers consider shopping a necessary evil, while often being under time pressure. Since they use retailing services so frequently, small service failures can easily lead to irritations, complaints, and dissatisfaction, which makes it very important to keep a close eye on the customer experience. An important source of creativity and ideas for innovation in retailing services is the customer. Customer feedback can serve as a relatively inexpensive source of inspiration, especially in cases where customers complain about service quality. Nowadays, this feedback can often be found on the Internet, on social media platforms such as Facebook or Twitter. Equally important is to anticipate customer complaints, by doing research. Research can be done in a structured way, guided by research questions, or in a more unstructured way by observation, or by organizing focus groups. Staff involved in service provision can also serve as an important source of feedback about efficiency and effectiveness of existing service processes.

Conclusion Retailing is a very dynamic and competitive industry. To survive and sustainably generate above-average profits in this industry, companies need to continuously improve and innovate their offerings: through creative thinking they can offer more and better value to their customers. They can do this by developing a portfolio of core and complementary service innovation and new service projects, and carefully manage these projects – thus mitigating the risk of failure. Equally important as the development and launch of the service innovations are the evaluation and control of the results.

References [1] Van Riel, A. C. R. and A. Lievens. 2004. New service development in high tech sectors: A decision making perspective. International Journal of Service Industry Management. [2] Froehle, C. M., A. V. Roth, R. B. Chase and C. A. Voss. 2000. Antecedents of new service development effectiveness: An exploratory examination of strategic operations choices. Journal of Service Research. [3] Van Riel, A. C. R., V. Liljander and P. Jurriëns. 2001. Exploring consumer evaluations of e-services: A portal site. International Journal of Service Industry Management. [4] Sundbo, J. 1997. Management of innovation in services. The Service Industries Journal. [5] Storey, C. and C. Easingwood. 1998. The augmented service offering: A conceptualization and study of its impact on new service success. Journal of Product Innovation Management. [6] Tax, S. S. and F. I. Stuart. 1997. Designing and implementing new services: The challenges of integrating service systems. Journal of Retailing. [7] Fitzsimmons, J. A. and M. J. Fitzsimmons 2000. New service development: Creating memorable experiences. Thousand Oaks, CA: Sage.

Inflation targeting: dead or alive? Author: Adelina Georgiana Barbalau


The present paper investigates how the global financial crisis has prompted the need to revise monetary policy in general and inflation targeting in particular, with the final purpose of establishing whether the crisis has rendered inflation targeting obsolete or has only strengthened its position as the central banking orthodoxy of our days. Departing from an outline of inflation targeting fundamentals and a brief history of monetary policy, the paper explores the merits of and criticism on inflation targeting from a theoretical as well as practical perspective. Finally, conclusions are drawn upon the analysis and prospects for the future, including proposed successors of inflation targeting, are briefly explored


Inflation targeting, monetary policy, central banks.

JEL Classification: E3, E31, E4, E5

Introduction Amidst the world economic turmoil that began in mid 2007 and continues to claim its victims ever since, the death announcement of inflation targeting came in May 2012. The obituary of inflation targeting was written by Jeffrey Frankel, professor at Harvard University and former economic advisor to the Clinton administration, who argued that the monetary policy regime born in New Zealand in March 1990, passed away in September 2008, when the subprime mortgage crisis reached its critical stage. Oddly enough, the death announcement was made almost five years after the unfortunate event itself, which is said to be partly due to the difficulty of finding a suitable successor. But as this problem seems to have been finally figured out, Frankel (2012) decided to take a stance and made the traditional proclamation: “Inflation targeting is dead: long live nominal GDP targeting”. Since its first formal adoption in 1990, the monetary policy strategy centered on meeting publicly announced medium-term numerical targets for inflation gained great popularity and was adhered to by an increasing number of central banks around the world. As of today, there are approximately 39 countries all over the world that have either fully adopted, are in the process of adopting inflation targeting or are implicit inflation targeters (Warburton & Davies, 2012). No country has so far abandoned inflation targeting after adopting it, except for joining the euro area (Svensson, 2010) , which suggests that its performance has been quite satisfactory. A key advantage of inflation targeting is the fact that it is easily understood by the public and is highly transparent. A great importance is placed on transparency and regular communications with the public, which contributes significantly to reducing uncertainty about monetary policy, interest rates and inflation, and promotes public debate on monetary policy. Add to this superior level of information and understanding the fact that inflation targeting is based on an explicit numerical target for inflation, and you obtain a great tool for holding central banks accountable. Furthermore, inflation targeting diminishes the potential for central banks to fall into the time-inconsistency trap, which consists in increasing short-run economic growth and employment at the expense of increased long-run inflation (Mishkin, 2000).

Nevertheless, the recent financial crisis has revealed some disturbing failures of inflation targeting and has brought the future of the monetary policy under severe scrutiny. The lively debate about what caused the crisis questioned severely the soundness of monetary policy and blamed it for laying the foundations for the crisis. The opinions are, however, split on whether the crisis has rendered inflation targeting obsolete or has only strengthened its position as the best-practice monetary policy regime. The debate continues but one thing is certain: inflation targeting is a reality of our days. The purpose of the present paper is to assess the merits and failures of inflation targeting, and hopefully to provide a clear answer to the question of whether inflation targeting is dead or alive.

A historical pattern There aren’t few the ones who view the wide acceptance of inflation targeting merely as a pragmatic response to the failure of other monetary policy regimes rather than the result of new economic thinking (Jahan, 2012). Indeed, a brief glance at the recent history of monetary policy reveals a pattern of the kind. In the early 1980’s money-supply targeting was the monetary policy of choice (Frankel, 2012). It consisted in targeting the growth of a nation’s money supply with the purpose of controlling inflation, strategy which could have went fairly well provided that central banks were actually able to control the money supply and there existed a stable relation over time between money supply and inflation. But as innovations in the financial markets began to spread and gain magnitude, the demand for money became highly unstable and the reign of moneysupply targeting was abruptly terminated in favor of exchange-rate targeting. Intuitively enough, exchange-rate targeting involved linking the value of a country’s domestic currency to that of a presumably stable, low-inflation country called anchor country. This implied that the targeting country was forced to pursue essentially the same monetary policy as the anchor country and so it lost the ability to respond to domestic shocks that were independent of those hitting the anchor country (Mishkin, 2004). However, it was the exposure of countries to speculative attacks on their currencies that represented the biggest problem inherent to exchange-

rate targeting and it was the very problem that brought the regime to an end. It happened during the currency crises of the 1990’s, when many speculators attacked the foreign exchange value of various targeting countries’ currencies by making massive bets on their depreciation against the anchor country’s currency. The result was a sharp depreciation of the attacked currencies and the ultimate demise of exchange-rate targeting. In this context where authorities truly needed to anchor public expectations regarding monetary policy, inflation targeting was, as Jeffrey Frankel simply puts it, “in the right place at the right time”. Unlike moneysupply targeting, its success was independent from the existence of a stable relationship between money and inflation. Unlike exchange-rate targeting, it allowed focusing on domestic considerations and respond to domestic shocks. Add to these the advantages of increased transparency and accountability as well as the fact that inflation targeting employs all available information, and not just monetary aggregates, in the process of monetary policy setting and it becomes clear why, by the end of the 1990’s, inflation targeting had become the new central banking orthodoxy (Warburton & Davies, 2012). The privileged position held by inflation targeting as the best-practice monetary policy was, however, shaken by the 2008 financial crisis and the resulting deep recession, just as it happened with the currency crisis that hit exchange-rate targeting in the 1990’s. The future of monetary policy is yet to be decided but if we go by the old saying “history repeats itself”, we might as well acknowledge that the glory days of inflation targeting might have passed and a new “star” is to be found. One leading candidate for this position, proposed by Frankel, is nominal GDP targeting, a variation on inflation targeting which targets the growth rate of nominal GDP ( real GDP times the price level) rather than inflation (Mishkin, 2004). It remains, however, to be seen whether nominal GDP targeting will occupy a place in the history of monetary policy as the successor of inflation targeting.

A theoretical perspective Needles to stress out, the flawless monetary policy is yet to be discovered and inflation targeting makes no exception, as a regime with inherent disadvantages. One common concern about inflation targeting is that it leads to low growth in output and employment. This concern is rooted in a theory dating

back to 1958, known as the Phillips curve tradeoff, according to which there is a long-run tradeoff between inflation and unemployment, and monetary authorities can achieve a permanently lower rate of unemployment by accepting a rise in inflation (Bernanke, Laubach, Mishkin & Posen, 2001). Ten years later, this theory was declared wrong by Friedman and Phelps, who argued that higher inflation can indeed stimulate the economy and lower employment for short periods, but in the long-run output and unemployment will return to their normal levels and only inflation will have been permanently affected (Bernanke at all., 2001). A conservative conclusion is that although inflation reduction adversely affects economic growth and employment in the short-run, once the low inflation target is achieved output and employment will bounce back to levels as high as before (Mishkin, 2004). The apparently exclusive focus of inflation targeting on price stability to the detriment of other macroeconomic goals represents another topic that has raised major concerns regarding inflation targeting. The rationale for which the primary-goal of monetary policy should be price stability has been long documented and explained by Bernanke et all. (2001) who rest their case on the following three arguments. First of all, three decades of monetary policy history have led most macroeconomists to recognize that, in the long run, inflation is the only variable that can be affected by monetary policy. Secondly, there is a macroeconomic consensus that the maintenance of a low and stable rate of inflation is not only important, but perhaps necessary, for the achievement of other macroeconomic goals. Thirdly, an inflation target serves as an anchor for the expectations of financial markets and the public in general, and imposes discipline and accountability in conducting monetary policy by serving as a reference point against which to judge the desirability of short-run policies against the long-run inflation goals. These strong arguments in favor of centering monetary policy on price stability should not, however, lead to the deceitful impression that inflation targets are so important that they must be pursued at all costs. This point is emphasized by Svensson (2010), who makes a distinction between strict inflation targeting, which aims at stabilizing only inflation with no regard to the stability of the real economy, and flexible inflation targeting, which aims at stabilizing both inflation and real economic developments. In practice inflation targeting is always flexible, with the monetary authorities addressing not only price stability but also the stabilization of resource utilization around a

normal level (Svensson, 2010). Nevertheless, an important criticism of inflation targeting is that an exclusive focus on inflation would lead to very poor economic outcomes and would destabilize the economy in the event of large supply side shocks (Bernanke at all., 2001). Simply put, rigid adherence to inflation targets alone has the potential of increasing output instability. To convey a picture in this sense, imagine the case of a negative supply shock that raises the inflation rate and lowers output; if the only concern of the monetary authority is price stability, this will trigger a tightening of monetary policy to meet the target inflation rate which will cause the output to decline even further. The fact that all inflation targeting countries have set their inflation targets above zero is, however, a clear proof that monetary authorities do display concern about output fluctuations and acknowledge the fact that a particularly low level of inflation can have substantial negative effects on real economic activity. Furthermore, there aren’t few the critics that interpret inflation targeting as a rigid rule on monetary policy, which prescribes simple and mechanical instructions on how monetary policy should be conducted and thus limits the discretion of monetary authorities to respond to unforeseen circumstances (Mishkin, 2004). Advocates of inflation targeting could not disagree more with this view, as they argue that inflation targeting is far from being rigid and would be better described as a “constrained discretion” policy in which central banks are left with considerable scope to respond to short-run phenomena while keeping in mind the constraints imposed by the long-term inflation targets (Bernanke at all., 2001; Mishkin, 2004; Kuttner & Posen, 2012). Elements of flexibility in inflation-targeting regimes consist in allowing inflation to deviate from the target or modifying the target, as well as modifying the price index on which the inflation targets are based in order to exclude or moderate the effect of supply shocks. Furthermore, research has revealed that the monetary policy frameworks that formally target inflation are by no means less flexible than those that do not have formal inflation targets (Kuttner & Posen, 2012).

targeting was Joseph Stiglitz, Nobel laureate in economics, in an article dating back to 2008, the year of the alleged death. He argued that the that the crude recipe laying at the core of inflation targeting of raising interest rates whenever price growth exceeds a target level, not only that is based on little economic theory or empirical evidence but it completely disregards the source of inflation by applying a single best “treatment” to all types of inflation. His article made the case of developing countries facing imported inflation due to high international prices of food and fuel, for which domestic measures of raising interest rates to bring down inflation would have little or even negative effects, causing marked economic slowdowns and high unemployment. He argued that only action from the world economic powers could meaningfully influence international prices and concluded that in the context of rising food and energy prices, the economic slowdowns and higher unemployment brought by inflation targeting would only make survival more difficult for developing as well as developed countries. The inappropriate response of inflation targeting to supply shocks1 and terms-of-trade shocks2 was also cited by Frankel in his 2012 article. The specific way in which inflation targeting fell short of appropriately addressing these aspects consists in its anomalous response to terms of trade fluctuations, which is due to the choice of the consumer price index (CPI) as the operational target used to measure inflation. The appropriate response to an increase in the world price of imported commodities is the loosening of monetary policy, but the response commanded by CPI inflation targeting is to tighten money enough to appreciate the currency (Frankel, 2012). Conversely, the appropriate response to an increase in the world price of exported commodities is the tightening of monetary policy, but a CPI inflation target prevents the monetary authorities from tightening money (Frankel, 2012). Simply stated, strict adherence to a CPI target delivers exactly the wrong outcome. Unfortunately, this is not a theoretical example of what can go wrong with inflation targeting. The puzzling decision of the European Central Bank to raise interest rates in July 2008, when the economy was facing the toughest moment since the 1930’s, is widely suspected to have been an attempt to stabilize the CPI as oil prices were Besides these textbook pros and cons of reaching record high levels (Frankel, 2012). It may inflation targeting, the current financial crisis has seem therefore that rigid adherence to inflation targets revealed some practical shortcomings of the regime, can preclude, after all, other considerations. which might prove to be the only ones that matter in All things considered, the strongest argument shocks are events that cause sudden changes in the relative prices of certain commodities or services, deciding the future of inflation targeting. One of the 1 such as technologySupply and raw materials, which influence production costs and therefore the aggregate supply of an economy (Ball & Mankiw, 1995; Mishkin, 2004). first economists to highlight the failure of inflation 2 Terms of trade shocks, on the other hand, reflect sudden, large, and enduring changes either in import or

A practical perspective

export prices which in turn affect national wealth and growth. (Funke, Granziera & Imam, 2008)

against inflation targeting, also brought by Frankel, is its lack of response to asset-price bubbles. The burst of the subprime mortgage crisis made it clear that asset bubble had not been paid sufficient attention and one important factor which led to the aforementioned situation is said to have been inflation targeting and its sole focus on the operational target used to measure inflation, meaning the CPI. Needless to stress out, the CPI captures only the price level of consumer goods and services, and does not account for investment items such as real estate, insurance and financial instruments in general. Central banks thought, however, that housing and equity prices implied information regarding goods inflation and therefore were paid all the attention they deserved. This proved to be awfully wrong and this is how the boom-bust cycle came without inflation (Frankel, 2012). There is no doubt that inflation targeting failed to signal the asset-price bubble and the problem seems to have been the price index it employed. But the declaration of the Bank of Thailand’s Chairman, Virabongsa Ramangkura, that ”inflation targeting is no longer effective because inflation has been globalised” might just have been, if not the last, at least another nail in the coffin of inflation targeting. Virabongsa stated that in small economies with a high degree of openness to trade, such as Thailand, local commodity prices are determined by global supply and demand forces, and not by the policy of a particular country; the source of instability for emerging countries is thus foreign exchange and not inflation. A monetary policy debate has sparked after this declaration has been made, at the beginning of August 2012, and alternatives frameworks are now being proposed to replace inflation targeting in the pursuit of economic growth.

Conclusions and prospects for the future Despite the criticism and failures of inflation targeting, the regime still has its supporters. According to Svensson (2010), flexible inflation targeting, applied in the right way and using all the relevant information for the forecast of inflation and resource utilization, remains the best-practice monetary policy before, during, and after the financial crisis. Mark Carney (2012), governor of the Bank of Canada, refers to flexible inflation targeting as being arguably the most successful monetary policy idea in history and holds the view that is not the time to risk abandoning frameworks that have proved their worth through the crisis and will probably be essential to sustain the recovery. Furthermore, it is a fact that no central bank has yet formally abandoned inflation targeting and the Federal Reserve has even released this year, for the first time in its history, an explicit inflation target. However, the global financial crisis has revealed some serious shortcomings of inflation targeting, namely its lack of response to asset-price bubble as well as its inappropriate response to supply shocks and terms-of-trade shocks. The operational target used to measure inflation (the consumer price index) has proved to be one of the major causes of the regime’s failures, and an alternative monetary policy proposed by Frankel (2012) to address this issue is product-price targeting, a monetary policy focused on stabilizing an index of producer prices rather than an index of consumer prices. The regime preferred by Frankel (2012) to succeed inflation targeting is, however, nominal GDP targeting, a monetary policy targeting a country’s value of output for a given year as measured by the prices prevailing during that year. Quite obviously, it holds an advantage over inflation targeting in that it puts weight both on prices and on output, and thus it does not cause excessive tightening in response to adverse supply shocks. But most importantly, nominal GDP targeting is believed to provide a way of achieving monetary expansion, which in the context of the present economic state of affairs is unarguably its biggest advantage. The validity of both the merits and the criticism of inflation targeting remains arguable, but inflation targeting seems indeed to be dying. I would personally not declare it dead yet, and even less so agree with the statement that it died in 2008, but its effectiveness has been seriously impaired by the so-called globalization of inflation, as the power to control inflation has been shifted from the hands of individual countries to a more international level. This phenomenon is even more exacerbated for small developing countries that are highly dependent on international trade, and which will be probably forced to demise inflation targeting. Inflation targeting may, however, survive in developed countries that can actually exercise an influence on international prices, but this is something that only time can tell. The fact that inflation targeting has resisted the past five years of economic turmoil is by no means a negligible fact and, regardless of the final outcome, inflation targeting has proved to be a very powerful and esteemed monetary policy strategy; if, however, inflation targeting will successfully survive the biggest depression from the 1930’s, then it is the greatest monetary

policy framework in history. As to the question of what will be the successor of inflation targeting, I think that there will be no single regime suitable to all the countries that are currently targeting inflation, and that the choice of a new regime will be tailored to the stage of economic development and the particularities of each individual country. References · Ball, L., Mankiw, G. (1995). Relative-Price Changes as Aggregate Supply Shocks, The Quarterly Journal of Economics, January 1995. Available at · Bernanke, B. S., Laubach, T., Mishkin, F. S., Posen, A. S. (2001). Inflation targeting: Lessons from the International Experience. Princeton University Press. · Carney, M. (2012). A Cautionary Tale of Inflation and Growth, Financial Times, May 10, 2012. Available at http://www. · Frankel, J. (2012, May 16). The Death of Inflation Targeting, Project Syndicate. Available at commentary/the-death-of-inflation-targeting · Funke, N., Granziera, E., Imam, P. (2008). Terms of Trade Shocks and Economic Recovery, International Monetary Fund Working Paper, WP/08/36, February 2008. Available at: · Jahan, S. (2012, March 28). Inflation Targeting: Holding the Line. International Monetary Fund Publications: Finance & Development. Available at: · Kuttner, K. N., Posen, A. S. (2012). How Flexile Can Inflation Targeting Be and Still Work, International Journal of Central Banking, Vol. 8, No. S1, pp. 65- 99, January 2012. · Mishkin, F. S. (2000). What Should Central Banks Do, Homer Jones Lecture, Federal Reserve Bank of St. Louis, March 30, 2000. Available at · Mishkin, F. S. (2004). The Economics of Money, Banking and Financial Markets (7th edition). Pearson - Addison Wesley series in economics. · Stiglitz, Joseph (2008, May 6). The Failure of Inflation Targetin, Project Syndicate. Available at http://www.project-syndicate. org/commentary/the-failure-of-inflation-targeting · Svensson, Lars E. O. (2010, February). Inflation targeting after the financial crisis. Speech at the International Research Conference “Challenges to Central Banking in the Context of Financial Crisis”, Mumbai, 12 February 2010. Available at · Svensson, Lars E. O. (2010, December). Inflation Targeting, National Bureau of Economic Research - Working Paper Series. Available at · Warburton, P., Davies, J. (2012, February 21). Inflation targeting: a child of its time, Central Banking Journal, pp. 39-48. Available at · Yuvejwattana, S. (2012). Bank of Thailand’s Virabongsa Says Inflation Target Ineffective, Bloomberg, August 8, 2012. Available at

The Conference Corner: ECRM 2012 (Bolton, England)

a n d GI K A 2 0 1 2 (Valencia, Spain)

By Irina Purcarea As a researcher, it is highly important to participate at high-level conferences that would give you the opportunity to improve your „research know-how” as I call it. And this is the feeling I got after participating in two important conferences this year. It made me reflect so much more on the research skills and knowledge I managed to acquire until now and helped me better see those „gaps” in my research approach. The first conference was the 11th European Conference on Research Methodology for Business and Management Studies, in England, and the second one was the Global Innovation and Knowledge Academy conference (GIKA), in Spain. But let’s start with the beginning... The first conference I attended was the 11th European Conference on Research Methodology for Business and Management Studies which took place at the University of Bolton, 28-29 June 2012. The conference was chaired by Dr. Gill Green and Dr Rachel Mclean from the University of Bolton, UK. There were three keynote speeches given during the conference. Professor Bob Wood from the University of Manchester, UK, delivered a presentation on the topic “Mixed, Multi and Muddled: Methods, Paradigms and Research Integrity”. Professor Peter Kawalek (University of Manchester, UK) gave a speech entitled “The Struggle to be Engaged and Relevant”. The third presentation was delivered by Dr Tony Hirst from the Open University, UK. What I particularly enjoyed about this conference was the quality of the presentations and the participants’ enthusiasm. I attended very interesting debates after each presentation and everyone was very eager to share his/her points of view on the topic and gain new perspectives on it. I participated at this conference with a work-in-progress and presented my work via Poster (please see photo). The title of my work was: „Enhancing students’ academic skills. The case of Bucharest Academy of Economic Studies”.

Next conference will take place at the University of Minho (Guimaraes), in Portugal, on July 4th and 5th, 2013. It will be chaired by Isabel Ramos from University of Minho. Hope to see everyone next year, in Portugal! For more information, please see: ecrm/ecrm2013/ecrm13-home.htm The second conference I participated at was GIKA (Global Innovation and Knowledge Academy), in July, in Valencia (Spain). I was very happy to be back to Valencia (in March I participated at INBAM 2012, in Valencia). Valencia is a very nice city, with warm and friendly people and it is always nice to go back to. The 1st 2012 Global Innovation and Knowledge Academy Bi-Annual Conference (2012 GIKA) was held in the University of Valencia and the Polytechnic University of Valencia, Spain, from July 10th (Tuesday) to July 12th (Thursday), 2012. The Journal of Business Research (JBR) was the sponsorship journal for the Academy. One of the aims of the Conference was to select papers that, depending on the quality of the papers, would constitute a special issue of the JBR on Innovation and Entrepreneurship in Knowledge Industries. The Guest Editors for this issue of JBR are David B. Audretsch (University of Indiana) and Domingo Ribeiro (University of Valencia). The conference was chaired by Arch Woodside from Caroll School of Management in Boston College (Honorary Chair) along with Domingo Ribeiro Soriano (University of Valencia, Spain) and Kun Huang Huarng (Feng Chia University, Taiwan).

The sessions were very interesting, with very good presentations, very good papers (an Awards Ceremony was held on the last day of the conference, at the Gala Dinner, when awards were given for the best papers). For me, attending this event represented a great learning experience. I participated in the conference with a paper entitled “Innovation and knowledge creation. Perspectives on the SMEs sector”, co-authored by Maria del Mar Benavides Espinosa (University of Valencia, Spain) and Andreea Apetrei (University Alexandru Ioan Cuza, Romania). I presented the paper in the first day of the conference (please see photo). I appreciated the fact that, after each presentation, the participants would ask questions and offer recommendations for further research on the topic. I truly believe that this is one of the most important benefits of attending these conferences, the fact that you get to share your insights with other people that can offer you advice or suggestions on how to improve/expand your work. The 2nd GIKA Annual Conference will be held in the University of Valencia and the Polytechnic University of Valencia, Spain, from July 9th (Tuesday) to July 11th (Thursday), 2013. The Conference Theme is “Developmental Management: Theories, Methods, and Applications in Entrepreneurship, Innovation and Sense making by Individuals, Firms, Governmental Agencies, NGO, Cities, Regions, and Nations”. For more information, please see:

A few years ago, the Romanian Distribution Committee website was emphasizing the fact that the author of the lines below is caressing us with soulful words (about the beauty of the National Museum Complex ASTRA from Dumbrava Sibiului, a region enjoying a large international recognition), brings joy to our hearts, displaying images expressing a profound artistical feeling, challenging our mind and feelings to a reflection on spiritual regeneration through love for the beauty, through education and culture. Then, at the beginning of Spring 2012, we enjoyed a “March in Herastrau” thanks to the flowing of a big part of the warmth of the

author into the Herastrau park, where it merged with nature warmth and to that of human nature highlighted in different instances. The result? A special kind of music produced by caressed strings so as not to disturb life awakening which is characteristic to the season, and by the eyes feeding on the power of the inside music of each person and all of the participants in this show of the time that passes and comes in spite of times. We see therefore remarkable evolutions of the brand “Gabriela Alba”, confirming the words of Andre Maurois: “If you create a habit, you create a character. If you create a character, you create a destiny.”

Photography as a Spiritual Path By Gabriela Alba

Ever since I was I little child, I have been fascinated by visual image, shapes and colors. I used to draw and paint instead of playing like most of the other children. But then, as I grew older, I lost my way for awhile. I studied economy, PR, psychology, I worked at a travel agency... Until four years ago, at 27 years old, when a providential meeting with a professional photographer mirrored the artistic side of my soul and revealed it to myself again. I started to study photography, not as much as a hobby, but as a spiritual path or as a rebirth process. One of the most impressive learning experiences was during the classes held by the Society of Wedding and Portraiture Photographers, in London, at the beginning of 2012.

Seeing deeper behind the shape Although I haven’t been painting for many years, I wouldn’t say I quit painting, but I have given it a dynamic form. I found out the paradox that immortalizing the moment makes me live in the present with great intensiy. I also feel that the lens is a gate to my subjects’ inner world, as now I can see deeper behind the shape. When I photograph people, I enjoy connecting to their souls and immortalize the straight and powerful message of their natural emotions. I do not like to direct them much, for I prefer being a discreet witness of their intimate states. This is why some of my favorite subjects are the artists on stage and children. Architecture photography reminds me of my old passion - painting. I dive my mind into abstract visual bliss when I am in front of beautiful geometric patterns and harmonic shapes.

… „Getting closer to the true meaning of things” The artist that inspires me the most is not a photographer or a painter, but the Romanian genius of sculpture, Constantin Brancusi. I do believe that „The reason for wich artists exist is revealing the beauty of the world” and „Simplicity is not a goal in art, but they reach it spontaneously while getting closer to the true meaning of things”(C. Brancusi). A dear photo of mine represents one of the best Romanian violinists, Alexandru Tomescu, while playing a Caprice by Paganini. The image was selected within the „Live the Art to the Maximum” contest organized by the cultural site to take part of a double group exhibition, in autumn 2012 , at Casa Matei in Cluj-Napoca city and at the Odeon Art Gallery in Bucharest. I am proud that Alexandru Tomescu announced he might be present there to support me. Until the exhibition, you are more than welcome on my website: .

A short presentation of the latest issue of our partner journal, „Contemporary Economics”, Vol.6, issue 2/2012, Quarterly of University of Finance and Management in Warsaw by Irina Purcărea

We are happy to receive by post the latest issue of our partner journal, „Contemporary Economics”, Vol.6, issue 2/2012. “Contemporary Economics” is an academic quarterly addressed to academicians, economic policymakers as well as to students of finance, accounting, management and economics. In particular, the quarterly contains academic manuscripts on problems of contemporary economics, finance, banking, accounting and management examined from various research perspectives. Some of the interesting topics covered in this issue include theory of competition, growth rate volatility, globalization, analysis of non-stationary time series, business tax policies. The first article entitled „Trust, Personal Moral Codes, and the Resource-Advantage Theory of Competition: Explaining Productivity, Economic Gowth and Wealth Creation” uses resource – advantage theory to explain the process by which trust-promoting, societallevel moral codes promote productivity and economic growth. The article entitled „Operational Risk, Translation, and Globalization” compares a translation of a global (more specifically, European) regulation into two local contexts, setting this process in a broader context of the all-pervading risk management. The two countries of focus are Sweden and Poland. „The Analysis of Nonstationary Time Series Using Regression, Correlation and Cointegration” is an article that analy-

ses by examples the effect of nonstationarity on inference using these methods and compare them to model based inference using the cointegrated vector autoregressive model. Another article identifies numerous issues that may be critical to firms when designing an optimal tax policy, without losing sight of the fact that fiscal policy is an essential determinant of the financial standing of a company. Other paper expands on the existing literature about the computational stability of abortion-crime regressions by testing the sensitivity of coefficients’ estimates to small amounts of data perturbation. One of the articles included in this issue presents the possibility of creating reliable, dynamic rankings of measured items and measuring the complex phenomena with the use of composite indices. There are several potential solutions presented on the basis of a review of the international literature. Some advantages and disadvantages of the presented solutions are described and an example of a new approach is shown. The paper „Investor Reaction to Mandatory Offers on the Warsaw Stock Exchange” aims to assess investor reaction to mandatory offers on the Warsaw Stock Exchange, highlighting the importance of procedure in making a mandatory offer and its grounds in the Polish legal system.

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