On September 11, Freakonomics club held its first presentation for the new academic year where AUBG alumnus Nikolay Nedelchev spoke to a group of BUS and ECO students about the state of the global financial system today. He touched upon the reasons for the continuing economic crisis, the implications of the severe blows that hit the American financial system a few years ago as well as the challenging financial environment in Europe. Nedelchev also shared useful tips with the future professionals.
He started off by sketching the main working mechanisms of the mortgage market in the US. Nedelchev explained how the lowering of the lending standards and offering higher-risk mortgage products combined with the moral hazard, where each link in the mortgage chain was collecting profits and passing on the risk, led to this global financial crisis. “The over-optimism and the appeal of this lucrative game resulted in an shock waves across the country when hallmark institutions of American capitalism like Lehman Brothers Holdings Inc. and AIG declared insolvency” pointed out Nedelchev.
The former AUBG student also directed his audience’s attention to the European financial markets, which due to the much closer type of financial system plunged slowly into the crisis. What distinguishes the EU from the US in terms of recovery is the time it takes for the markets to adjust to the changing realities – a process occurring at a much slower speed in Europe. This can be seen most clearly in the slow rebounding of the employment opportunities in the business and finance sector. Another problem for Europe, indicated by Nikolay Nedelchev, is the leadership crisis in the Union. It is becoming increasingly difficult to get the big players to agree on the mechanisms ensuring financial stability.
Two roads lie ahead of Europe – a two-speed Europe, where the rich North is lending to the not-so-developed South in order for the latter to trade, live and develop, or a single-speed Europe where a collective responsibility is the leading principle. The second option, however, entails some compromise on behalf of Germany, the country that is currently having the most stable economy. It needs to relax the austerity measures imposed on the struggling economies and to play the role of a “benign leader” – because austerity is necessary but countries need to grow as well.
Nedelchev also gave essential tips to the gathered students. He gained his BA (which he started at AUBG in 1997 and later transferred to the States) and MBA in the US and worked for eight years in the private sector (as part of the IMF, Citi and Metlife). His advice to his listeners was not to be very picky when they receive their university degree. “If you find a position in your specialty, even if it pays less, take it. It is how you build your professional network and your resume – step by step,” said Nedelchev. He encouraged the future professionals to take advantage of positions at big companies even if they feel these job opportunities are way below their level of expertise. “You just need to constantly challenge yourself. Don’t just do the minimum – think of how you can add more value to the firm you are working at and you will get noticed”, finished his presentation Nedelchev.
Story by Venera Nikolaeva
Photos by Evgeniy Denisov