Well, the other day I got a call from my friend in Hyderabad. She mentioned something about meeting her "just-friend-but-still-not- boyfriend"'s parents. Her excitement was clearly visible but there was a clearly a restrain to it. The Madrasi parents want a "Vadagalai-Iyengar" bahu for their son who was doting my friend. My friend listened patiently to their woes on their son's reluctance to get married. She herself being punjoo was wondering what was the fascination with madrasi bahus. I explained to her that it has little to do with caste than with the object of maintaining the conservative approach to life.
Its not too hard imagine how our economy has progressed from being an ultra conservative one to being a semi-market economy. By and large though people still criticise Nehruvian theory of planned approach & Public enterprise. The idea holds true in today's context of failing financial behemoth's being rescued by central government. We (me & my friends in financial markets) were already reeling under the pressure of rising interest rates & crude oil prices, but we were certainly fairly unaware of the mischief's of our American cousins. I remember in 2005, when I was just learning the alphabets of financial markets that I came across an article in bloomberg talking about the possibility of a recession led by housing market.
So, the last few days the pink pages have turned yellow & Udayan Mukherjee has become Dilip Kumar of financial industry. First it was the turn of Bear Stearns. Rescued by JP Morgan Chase bank piggy banking on Fed Reserve's assured financial support. In the last two days, it seems to have developed into a pattern of sorts. Its the turn of two of the biggest investment banks in US - Merill Lynch & Lehmann Bros. Closely followed by them is America's biggest insurance company - AIG. All strapped by over exposure to mortgage securities & associated derivative transactions. Questions are now being asked about the sustainability of the other two investment banks - Goldman Sachs & Morgan Stanley. As of now they seem safe. But that was the scene with the other two as well a few weeks back.
The three parties in question moved swiftly to the Fed seeking their support in rescuing them. While ML still managed to save itself by getting absorbed by BankAm, it was Lehmann which was the more desperate after failing to find a rescuer. Shunned out by the Government, LB now has filed for bankruptcy, leaving numerous shareholders with wet eyes. AIG, today managed to get support of the Government, given the ramifications of AIG's failure could have on the global financial industry. Introspection is now left for financial historians trying to reason out why a proponent of Free economy can resort to government intervention.
America for long has fought war on ensuring democracy across the world. Though most of these have been on a diabolical standard especially in the middle east, where puppet governments have been established to ensure US's oil interest. But by and large, they are the ones who seem to project themselves as upholding the rights of people & advocating freedom of speech & action. An American dream is that of fearlessness & of being a risk taker. The failure never matters but it is the reward of taking unprecedented risks that propels them to where they are today in the world. Driving the world's political & economic scenario. They seem to take decisions with an underlying assumption that they are after all the caretaker of the world. Thats not too far away from truth, but it is certainly not the truth. The double standard of US is not only visible in political scenario, but is also now evident in the manner they are handling the current economic situation in their country.
We cannot deny the fact that financial markets across the world are fairly integrated. No event can be viewed in isolation however small it be. So, the failing of financial behemoths in the US is sure to leave the financial world with a sufficient void. The question to be asked is that in the name of free economy you cannot shy away from the responsibility of being a regulator. That you allowed such entities to punt with minimum or no regulation is blasphemy. Given that it has happened in the past in Enron, the laxity shown in enforcing stricter governance standards is totally unforgiveable. Another point is that whether the US Government bails them out or they get bust, the cost of it has to be shared globally.
When these firms were reaping benefits from the regulatory body's blind eye, nobody bothered. But now that they were burdened by their own misdeeds, they rushed to the government to save them. Either the Federal Reserve should not be bailing them out or it should exercise greater control over the disclosures by the market participants. Financial operations like love is a two way street. But more importantly, these firms should not have crossed the lines given the leeway they were being given by the authorities in the US. Just like a South Indian bride exercising greater discretion in her actions...
So, I told my friend that Madrasis are very lenient people in terms of the norms of life, but its just they expect a great amount of restrain & discipline in return for the freedom of their lives.
When these firms were reaping benefits from the regulatory body's blind eye, nobody bothered. But now that they were burdened by their own misdeeds, they rushed to the government to save them. Either the Federal Reserve should not be bailing them out or it should exercise greater control over the disclosures by the market participants. Financial operations like love is a two way street. But more importantly, these firms should not have crossed the lines given the leeway they were being given by the authorities in the US. Just like a South Indian bride exercising greater discretion in her actions...
So, I told my friend that Madrasis are very lenient people in terms of the norms of life, but its just they expect a great amount of restrain & discipline in return for the freedom of their lives.
