2008 Crisis : My Take On Coming Full Circle

Yesterday it was Carlyle capital, today its Bears Sterns & Co and rumors are hot that Lehman Brothers is also in a bit of trouble. The story keeps getting better or morbid whatever way you call it. Are there any lessons to be learned from so much deadwood floating around. Yes, Obviously for one greed is bad, it always has been bad, two convenience (i am not sure if its the right word) is not always such a good thing, making it possible for sub prime credit rating people to own homes was not probably the brightest of ideas. Attempting to build castles that has its foundations of sand is always a risky proposition, but then greed took care of pragmatism. Third, such moderation is maybe good or even necessary every decade to remove the complacency that builds up into the system. Fourth, this recession could lead to cooling of commodity prices worldwide that have been on the roll for quite some time now, last seen Brent was at $111 a barrel, I can still recall when the basket was ruling at sub-10 levels (around 1997). Every central bank worldwide is having a tightrope to walk between recession & inflation and Last this could be a clarion call to the US that its no longer the centre of the economic & industrial activity that it had been till now, the balance of power has started to move towards Asia and US can not continue hoping that it can be the richest borrower for all its life and not keep its own house in order.

Are there any lessons to be learned from this for India, Yes, one there is nothing like decoupling, we will not go into negative growth, but yes we will feel the pain,see ICICI Bank sub prime write-offs. second, avoid excesses in investments of any kind as you could be holding on to an assets for a long amount of time as market moves possibly sideways. Third, the India growth story is intact but the exuberance could wear of a little, so no more of hefty jumps on job hopping, Fourth growth would now have to be created as world economy has slowed, earlier we were on a gravy train that built the our growth rate with its own momentum, no since the train is de-accelerating India must push its engine harder to keep the train going faster. To take growth to the next level we needs reforms, solid reforms & with the election just around the corner, I am not putting my buck on reforms.