Megatrend Review Vol.5

Vol. 5 (2) 2008 Vol. 5 (2) 2008 • UDK 33 • ISSN 1820-4570 Contents Global economy 5-22 Banks and financial market 23-38 Economy of region 39-78 Management and marketing 79-112 Business, analysis and planning 113-150 Book reviews 151-168 The international review review megatrend of applied economics megatrend review Megatrend University, Belgrade Megatrend Review The international review of applied economics Vol. 5 (2) 2008. Megatrend University, Belgrade Megatrend Review The international review of applied economics Vol. 5 (2) 2008. Published by: For publisher: Megatrend University Nevenka Trifunoviæ Publishing director: Dragan Karanoviæ Editorial board: Editorial staff Professor Miæa Jovanoviæ, PhD, President Professor Dragana Gnjatoviæ, PhD, Vice-President Editor-in-chief and revisor: Professor Jean Jacques Chanaron, PhD Professor Dragana Gnjatoviæ, PhD Professor Wolfgang Jahnke, PhD Members: Professor Momèilo Milisavljeviæ, PhD Professor Galen Amstutz, PhD Professor Momèilo Živkoviæ, PhD Professor Jean Jacques Chanaron, PhD Professor Vladimir Prvuloviæ, PhD Professor András Hernádi, PhD Professor Oskar Kovaè, PhD Professor Maria de Monserat Llairó, PhD Professor Veljko Spasiæ, PhD Professor Laura Ruis Jimenez, PhD Professor Aleksandar Ivanc, PhD Professor Jana Lenghardtová, PhD Professor Zoran Bingulac, PhD Professor Vladimir Davidov, PhD Professor Slavoljub Vukiæeviæ, PhD Professor Marija Mojca Terèelj, PhD Professor Mirko Kuliæ, PhD Professor Vladimir Grbiæ, PhD Professor Milivoje Pavloviæ, PhD Professor Dušan Joksimoviæ, PhD Professor Srbobran Brankoviæ, PhD Professor Gordana Komazec, PhD Professor Slobodan Kotlica, PhD Professor Živko Kuliæ, PhD Professor Slobodan Pajoviæ, PhD Professor Božidar Lekoviæ, PhD Professor Dragan Kostiæ, PhD Assistant Professor Vesna Aleksiæ, PhD Professor Janko Cvijanoviæ, PhD Snežana Grk, PhD, Principal Research Fellow Professor Jelena Boškoviæ, PhD Assistant Professor Vesna Milanoviæ-Goluboviæ, PhD Secretary & Serbian language editor: Irina Milutinoviæ English translation: ISSN 1820-4570 Aleksandar Paviæ Technical editor: UDK 33 Tatjana Stojkoviæ The review is published twice a year in Serbian and Cover design: twice a year in English language. Milenko Kusuroviæ All papers have been reviewed. Adress: Megatrend Review Goce Delèeva 9a, 11070 Belgrade, Serbia Tel: +381 11 220 30 61, Fax: +381 11 220 30 47 e-mail: [email protected] [email protected] 3 CONTENTS GLOBAL ECONOMY Professor Ivica Stojanović, PhD Faculty of Business Studies, Megatrend University, Belgrade THE ECONOMIC CRISIS IN AMERICA – THE “GLORY” AND THE GRIEF OF GLOBALIZATION 5 BANKS AND FINANCIAL MARKET Snežana Grk, PhD, Principal Research Fellow Institute for Social Sciences, Belgrade Professor Nataša Cvetković, PhD, Faculty of Business Studies, Megatrend University, Belgrade Professor Mirjana Vidas-Bubanja, PhD Belgrade Business School, Belgrade and Faculty of Trade and Banking, BK University, Belgrade INTEREST RATE CHANGES – A POTENTIAL RISK FOR INVESTORS AND BANKS UNDER THE CONDITIONS OF THE FINANCIAL CRISIS 23 ECONOMY OF REGION Professor Žarko Lazarević, PhD Institute for Contemporary History, Ljubljana, Slovenia THE PERCEPTION OF THE YUGOSLAV ECONOMIC SPACE IN SLOVENIA 39 Professor Dragan Kostić, PhD Faculty of Geoeconomics, Megatrend University, Belgrade THE MONETARY-FINANCIAL ORGANS OF THE EUROPEAN UNION 57 MANAGEMENT AND MARKETING Smilja Rakas, PhD, Associate Professor Faculty of Business Studies, Megatrend University, Belgrade CREATIVITY AS ONE OF THE FACTORS OF MANAGEMENT DEVELOPMENT 79 Katarina Zakić, M.A. Megatrend Business School, Belgrade JAPANESE MANAGEMENT: A SYNTHESIS OF DOMESTIC HERITAGE AND FOREIGN EXPERIENCES 93 Megatrend Review, vol. 5 (2) 2008 4 Contents BUSSINES, ANALYSIS AND PLANNING Saša Tomić, M.A. Vaso Arsenović, M.A. Slobomir P University, Bijeljina, Bosnia and Herzegovina THE ROLE OF THE BALANCED SCORECARD CONCEPT IN THE PROCESS OF FORMULATING AND IMPLEMENTING COMPANY POLICY 113 Isidora Ljumović, M.A. Faculty of Business Studies, Megatrend University, Belgrade THE SIMULATION MODEL AS SUPPORT FOR CORPORATIVE FINANCIAL PLANNING 131 BOOK REVIEWS Professor Ana Langović-Milićević, PhD Faculty of Business Studies, Megatrend University, Belgrade BUSINESS AS THE ART OF LIVING • BUSINESS – ART DE VIVRE 151 Professor Snežana Popovčić-Avrić, PhD College of Economics, Finance and Administration, Belgrade SERBIA ON THE ROAD TO THE EUROPEAN UNION 155 Jelena Batić, M.A. Faculty of Geoeconomics, Megatrend University, Belgrade THE PROSPECTS OF ECONOMIC, SOCIAL AND ECOLOGICAL SUSTAINABILITY IN THE ERA OF GLOBALIZATION 161 Megatrend Review, vol. 5 (2) 2008 Professor Ivica Stojanoviæ, PhD 5 Original scientific paper UDC 338.124.2(73) Received: November 3rd, 2008 ID 154165772 Professor Ivica Stojanović, PhD Faculty of Business Studies, Megatrend University, Belgrade THE ECONOMIC CRISIS IN AMERICA – THE “GLORY” & THE GRIEF OF GLOBALIZATION Abstract: The current economic crisis that is shaking the United States and threat- ening the stability of the entire world with the prospect of economic collapse did not come as a great surprise to careful analysts of socio-financial tendencies in the world’s leading economies. The crisis that has appeared at the beginning of this millennium is greatly reminiscent of the Great Economic Crisis of 1929. Paul Krugman, this year’s Nobel Prize laureate in Economics, has pointed this out, among others. Using Keynesian methodology in analyzing the period preceding the Great Economic Crisis, between 1923 and 1929, one notes conspicuous similarities with the economic hab- its in banking and financial operations, and the loss of control over the financial system, mostly in the US, in the period at the beginning of the 21st century. What has, in fact, happened, and on what basis does Krugman draw his parallels between the Great Economic Crisis of 1929 and 1930 and the economic crisis of 2007 and 2008? Does this not confirm yet again the “glory” and the grief of globalization as an (in) corrigible and universal phenomenon of historicity? Key words: economic crisis, globalization, deregulation of financial markets, state intervention, economic neoliberalism. JEL classification: F02, F4, G21 1. Introduction Truly, like a “bolt from the sky,” the news about the financial and economic crisis in the US have started to pour in, primarily through the print media1 and from America itself. Some are even comparing the crisis with 1 Truth be told, economists, professors and scholars are still hesitant to write more serious articles about the current events, for numerous reasons. It is certainly difficult to obtain sound data, but many are also confused by the newly developed situation and are reluctant Megatrend Review, vol. 5 (2) 2008 6 The Economic Crisis in America... the Great Economic Crisis of 1929, among them this year’s Nobel Prize win- ner for Economics, Paul Krugman.2 It seems as though Krugman is reminding us of Hegel’s maxim, i.e., that we have forgotten what happened during the 1930s and, by refusing to learn from history, are making the same mistakes again. In that context, Krugman is warn- ing us that, contrary to popular opinion, the stock market crash of 1929 was not the key moment in the Great Depression. The key moment in the Great Depres- sion, which turned an ordinary recession into a collapse with civilizational ramifications, was the wave of “bank runs” in America during 1930 and 1931. The banking crisis of the 1930s showed that unregulated and unsupervised financial markets are overly prone to catastrophic meltdowns. Nevertheless, with the passage of decades, this lesson has been forgotten and we are now learn- ing it once more, in a harder way – concludes Krugman. 2. What happened in 1930 and 1931? Banks seek to reconcile the opposing interests of savers and borrowers. Sav- ers desire free access to their money, within a short period of time. The borrower seeks confidence: he does not wish to risk a sudden demand for repayment in full. Banks usually satisfy the wishes of both sides: depositors have access to their money whenever they wish, while the largest portion of the money entrusted to banks goes into long-term credits. This functions because new deposits, mean- ing that the bank needs only modest reserves of money on hand in order to ful- fill its promises, more-or-less replace the money that is withdrawn. However, sometimes – often on the basis of mere rumors – a large number of depositors tries to withdraw money from one or more banks at the same time. Thus, the bank from which depositors want to withdraw money is left without the cash needed to meet the demand, and may fail even if the rumor turns out to be false. To make matters even worse, a “bank run” may be contagious. If depositors in one bank lose money, it is probable that depositors of a second bank will become nervous, which starts a chain reaction. And the economic ramifications may become even broader: while the surviving banks are attempting to hoard cash by stopping credit approval, a vicious circle forms, in which bank runs result in a meltdown of the credit market, causing other firms to fail, which in turn creates new problems for the banks, and so on. Briefly, that is what happened in 1930 and 1931, and that is why the Great Depression was dramatic. to engage in more serious analyses, using the scientific methodological method, of the causes and effects of the newly occurring economic crisis. 2 P. Krugman, “Partying Like It’s 1929”, New York Times, March 21, 2008 Megatrend

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