doom and gloom

before anything, just want to congratulate my team, Philadelphia Phillies, on winning the National League East division for the second year in a row. Now simply losing out in the playoffs and still calling it a great season will not do, and we must be at the top. If we win it all, of course, I will be crying tears of blood for not being in Philly at the time.

Coming to the other things, seems like the collapse of Wall Street, and the subsequent failure of the US bailout failing to clear their Congress has overtaken every other news. Of course, our own BSE fell around 6% because of the news, the worst hit being ICICI Bank, which is exposed to around 80 million dollars of bad assets, but in a fickle investor environment as ours, it is enough to kill investor confidence. In the meanwhile, Wachovia Bank, pretty big in Philly too, got brought out by Citigroup, after its shares fell around 90% in just two days. The stock was brought at a dollar! The only connection I have with Wachovia is that I had applied for their credit card, and got turned down. I thought at the time that it was because I wasn't a high net worth individual, or my good credit rating wasnt good enough for them, but I realize now that it was probably because I was a foreigner.

Anyways, even with all the news of economic doom around me, I keep hearing conflicting stories still. The one story I hear, in many variations, is that this is a cycle, and I read about the resilience of the 'free markets' to come back from the dead. Actually, I have heard a lot of iBankers call it a cycle, and how there is still lots of money in it. Of course, they're telling me that because I am training to be an MBA, and if my biggest priority in life isn't money, then there is something wrong with me. Anyway, that is not the point here. The point is that will things really change in the near future, will we see a paradigm shift in the way the western world, particularly the United States, does business? Or will things be back to normal and people will look back and laugh at 2008? I really cant say.

So what if Lehman Brothers failed? So what if Washington Mutual filed for bankruptcy. Its not as if large American corporations haven't failed in the past. Enron failed, so did Worldcom, so what is different this time? Maybe a lot. For one, AIG is one of the world's largest insurance companies, and it is being propped up by the government now. The biggest mortgage lenders of the country, Freddie Mac and Fannie Mae, are under government control, we have already seen three big mergers/takeovers, all of them government sponsored I may add, and finally, the big $700 billion dollar bailout which I hear may rise to over a trillion. Let me add the support systems that the European governments have set up to save their own lenders and institutions. Maybe things are changing for good, and people are actually calling for a change in the way the western world lives, but these calls have been made a lot of time before, and I am only posting them here for posterity.

So what happens to the India growth story? We still need capital, which may be squeezing out now for all the reasons, but the bottomline is that India is still growing and needs more money. So what happens to our own financial systems, and the way we run the economy? I dont know if we will see any major changes, and if the risk appetite of Indian companies is lessened by any degree, but it is still too early to call it the bottom of the market, as I heard an iBanker say, justifying their desire to buy into Indian real estate. Lets wait and watch, while the Tatas slowly shift out of Singur and set up plant elsewhere, most likely Pantnagar in Uttarakhand.