Monday, October 13, 2008

The Global Financial Crisis

Let's discuss who are the beneficiaries and who are the losers in the current global financial crisis. Why financial institutions (FIs) in US, EU nations including UK have gone bankrupt is largely because of non-refund of billions of dollars withdrawn from these FIs by the multinationals and transnational companies in these countries. Secondly, large scale lending and non-payment of personal loans by a large population have made shortage of capital. Over dependence on IT based financial accounting with numerous demerits, funding for weapons, bombs and other war machines applied in Iraq, Afghanistan and other African and Latin American nations, rampant corruption and luxurious expenditure by the personnel concerned resulting in meltdown in financial system in those FIs.
And there is a pious call by the leaders of G-7 nations for generous funding to compensate lose by these American and European Banks, Insurance companies and other FIs, many of them have started eating out money from Indian market through setting up its offices. The message is the same for G-20 countries too. Not to discuss the fate of other poor nations in Asia, Africa and Latin America, the people in these countries will be the ultimate and worse sufferers. In order to ensure regular capital inflow into those MNCs and TNCs, the existence of those FIs has been felt essential by Uncle Sam and his stooges. With the strong bail-out package for these bankrupt FIs made through the tax payers money, the US imperialism will sustain for world policing.
I fully endorse the view of a Nobel laureate who recently bagged Nobel in economics. He questioned the fundamentals of the market economy. He opined the monetary system may cheer temporarily with the infusion of government fund into these lose making FIs including Banks in US, EU and allied countries. In future, the crisis will again engulf these lose making FIs and monetary system as a whole. However, the Indian Finance Minister viewed opposite, "the present crisis has nothing to do with the fundamentals of market economy, it was nothing but liquidity shortage of those failed banks. Nothing to be worried for India."
But British government realised the demerits of free market economy. It has infused fund into their lose making Banks but with stringent controls include posting of government administrators and the process of nationalisation of those bankrupt banks in UK is near complete. Thus Indira Gandhi was recalled and yet again her move of nationalisation of Indian private banks in seventies proved to be justified. It was because of the then Congress government at the centre headed by late Mrs. Gandhi, our bank deposits are safe now.
I hope the present leaders in the government would learn lesson from the past and desist from any move for de-nationalisation of the Indian Banks and insist review of fundamentals of liberal market economy as a whole in public interest. We the citizens are interested to know from our union government why big fishes who eaten out thousand of crores of rupees from the our nationalised banks should not be caught and their properties confiscated immediately in order to reduce NPA of those defaulting banks?

1 comment:

Asish said...

Good Understanding of the problem. But please check one spelling, I think it should be "loss" and not "lose"

Asish Deb