Tumultuous year is gonna end!

I have move my blog to www.spotalks.com

Year 2008 is unforgettable for numerous reasons. It might be remembered for the collapse of capitalism in US, selection of “Black American “president, Mumbai terror attacks in India. Many people in the world considered year 2008 to be tumultuous. According to me, this year 2008 taught lessons to the global leaders around the world. The supremacy of American policies is collapsed and USA is brought into knees. I was following “The Financial Times” newspaper’s editorial closely to understand the complexities of this “Global Financial crisis”. To be very frank, I didn’t understand much of it. In this blog, I’d like to share some of my thought process regarding this global economic crisis.

I think almost every person on the planet “Earth” might have read something about the financial crisis. The causes of this crisis must be left to academics to analysis and understand to come up with credible answers to be the unanswered questions of this crisis. One of my friends working in sector related to Banking remarked to me, financial world works on two phenomena i.e. Credit and Debt. Developed World such as USA and UK has left a huge hole in the credit by spending a lot and they also borrowed a huge sum of money from so called Sea of foreign reserve country “China”. In process, USA and UK markets are left with limited credit to finance their business operations. This failure was also accompanied by the apparent bust of housing market in USA and UK. Then everything else is history, the collapse of Bear Stearns, Lehman Brothers and near bankruptcy of American International Group (AIG) and Fannie Mae and Freddie Mac.

All these lack of credit and too much of debt problems caused banks not to finance to other banks and other business. This has now led to the global recession accompanied by severe loss of employment. It is estimated over 3 million people have lost jobs in US and about somewhere in UK and Europe. Almost all the developed world is right now in severe recession. I am a resident of Singapore. Singapore doesn’t have a market of its own. It was very successful in creating hinterlands in USA markets. So when USA market was hit badly by recession and low consumer spending, Singapore acknowledged that it will contract its economy. The job losses in Singapore is also severe and Government is doing all it can do to prevent it. This is what all the Governments around the world are doing like bailing out its banks and companies.

What is really fascinating to me is the end of free market economy in the land which staunchly supported and campaigned for it i.e. USA. The people who work or manage Banks are considered to be high IQ people. Only selective people can go to Investment Banks and its one of the highly financially rewarding jobs. Ironically, it’s these high IQ people who screwed the system and got swayed by the money. Every common man on the street asks why should I pay my tax money to save those greedy bankers? We should also understand that Banks are epicenter of any recession because all the business activities depends on the financing of banks. Hence it may be rational to bail out banks.

This Global economic crisis will teach every individual some form of lesson. It will make some countries more competitive, some may embrace protectionist policies. Human mind constantly thinks to innovate. It is always said only at crisis time, the true potential of a human is tested. I think, we will innovate some model which will be resilient to this scale of crisis in the future. This crisis has once again reinstated those old Buddha’s words. The root cause of all evils is money. I think we should invent something else apart from money to differ each one of us. I am kidding anyway. I seriously don’t know what will happen to the world in 2009. I pray to God like everyone to be pleasant and enchanting.