Financial Turmoil -- Indian Situation
Financial Turmoil - Indian Situation
October 12, 2008
Feudal style of our government and media managers? How do we get rid of it?
Sensex is down almost 50% from its highest level. Rupee is down almost 25%. Inflation has remained in double digits for several months. Actual inflation, for sure is much higher than government figures. We still continue to spend more than 2/3rd of what ever we earn from our exports for buying oil and oil prices have tripled.
All these figures show much higher effects on us of financial turmoil than corresponding figures in USA show effects on them.
Still our finance minister, our financial advisors, and commerce minister every one seems to be shouting we are much less affected by financial crisis. There is no problem!! If the above is not a problem then what else can be problem!!
I can understand that we should be a little happy that we did not start big activities in new financial derivatives etc. which have created the current crisis. Our banks have time being a good regulating mechanism at least for this sort of activities. But how on the earth one can say there is no problem for us!
Way the things stand right now, it seems the crisis has been mainly created by the fact that banks and investment banks started creating and trading in lot of these new financial instruments created by mixing risky and less risky such instruments without creating proper regulatory machinery and mathematical and economical tools and software to assess risks involved.
Interesting part is that people from all over world especially in our part of world – perhaps much more in countries like China or Pakistan etc. have started predicting dooms for USA. Some have even started predicting poverty taking over Americans etc.
Is there any sign of it? I at least do not see any. Seems to be more of a wishful thinking among leftists and extremist Muslim groups etc. (these two groups by the way seem to be going often together, at least in our country – strange! Isn’t it?, it is also quite funny that while doing this leftists in our country and our media which is mostly influenced by them are most of the time involved in branding every one else in our country communal!)
One of the strengths of USA, which helps it a lot in overcoming such crisis, like the current turmoil, is quite visible. Americans are talking very openly about what caused the current crisis and steps they should take to overcome it- even when it involves their biggest banks. In almost all other countries, including ours, the first instinct is to try to hide all the problems under the carpet. Phenomenon is similar to ours in Europe, Japan etc. Though, in our country the desire to mange things in feudal style by hiding things under the carpet is much more. It does not matter what is to be managed- Finance, Science research, Education, Industry, political party what ever it is.
What should we do so that our ministers, officials running economy, technology, defense projects, science managers, technology managers have always enough courage to talk a little more openly about things and have faith in our average people that they will understand it? Any ideas!
Is it not true that our silent majority almost always behaves much better? The problem lies more with our managers – ministers, media anchors, science and technology managers, political party bosses etc. What some business guy once said “we work a lot when our government sleeps” is quite true.
It will be interesting to try to understand what caused this financial turmoil. Now that we are little out of bang, though crisis is still far from over, there will be many interesting articles analyzing what happened etc. I will put ideas from some of them which I like and my views about them on my blog-cum –hub regularly.
There is by now very little doubt that the crisis has been caused by financial instruments starting from USA. India is our interest. So our focus will be more on these two countries. Though off course in today’s world every body is linked via internet and turmoil shows that we all are also financially linked too.
Link to an interesting article Stephan Lebaton– on technicalities of what caused this turmoil is given below.
Discussion continued on http://hubpages.com/hub/financial-turmoil-Indian-situation--II
References
1. Stephan Lebaton The Reckoning- Agency’s ’04 Rule Let Banks Pile Up New Debt
http://www.nytimes.com/2008/10/03/business/03sec.html?scp=1&sq=cox&st=cse
2. Shankar Sharma’s interview by Udayan Mukharjee at CNBC-TV18
3. Spengler Gambling, economic growth and imagination
http://atimes.com/atimes/Global_Economy/JJ15Dj08.html
4. Thomas L. Friedman Why How Matters
http://www.nytimes.com/2008/10/15/opinion/15friedman.html?em
