The Beginning of The End

I was reading an Article in Economist.com about the Credit Crisis in Emerging Markets. In the views section people are still thinking that India is not effected much and it is just the corrupt American banks that got busted. There was much boasting about surreal achievements and Economic Growth of India. But, I had a different opinion.

Are we not seeing The Beginning of The End...??

May be we need 6 more months to see the true picture of the Economic crisis in the Emerging markets.

In India every Home / Personal / Other kind of loan given by the banks to the people are 'SUB PRIME'. There is nothing like Credit history for anybody there. Till last year a Fresh College Graduate with 6 month payslips got a Home loan to buy a 200 SqYr land in a remote non living area at an unaffordable price .

Lets assume that the Economic Turmoil is going to continue for another 6months or a year. What do you think is going to happen?

1. Job losses / Salary cuts.
2. Investment losses in Stock Markets.
3. Rising commodity prices -- Inflation.

Defaulter toll goes up. Already the Interest rates are quite high. Companies in US are planning to reduce salaries for their employees to cut costs. This impacts the Job holders pay checks in India as well and paying loan becomes a nightmare.

It takes time for the Indicators to show up RED because till the Defaulter count goes up to 10% or so, they do not come into the radars or news and media.So I would assume wait for 6 more months and see the real picture of Credit crisis.

We Pay for our own Greed

The ongoing Economic Crisis, Inflation, Stock Market crash and the turmoil in the Wall Street has broken the Backbone of many Investors like me back home. The question that is haunting me.. 'Am I Paying for my Greed....??'

Back then, a couple of years ago, our own 'Visonary' Capitalist Reliance came up with a huge 3 Billion Dollar IPO. It got oversubscribed to the max. FII's, QIB's, Retail Investors, Mom and Pop shops, you name an X - subscribed for the IPO. When these Foreign Investors were playing big in the field we were Cheer leading for them. We were thinking that India is Growing, we are the best Developing Economy, there is no looking back and all Bull$hit.

Question:
Had there been a Red Tape, FII's are not allowed to Invest in Primary Markets, would there been a sufficient Subscription for Reliance at all...??

Answer:
A simple 2 letter 'No'. Though we have enough money, we do not have enough confidence to raise 3 Billion. Domestic Investors would not have fulfilled "Mere Baap ka sapna.."

What happened now..??
Dollar is 49/- now. Lame question - How is it related in the current context...??

FII's withdrew their Investments. Dollars are going out of the country and that is the reason for the spike in Exchange Rate. They sold all those Reliance shares which are not worth more than a Toilet paper now in the Secondary Market to all of us and took their return flights.

Greed Blinds Wisdom and We pay for own Greed.