Friday, September 19, 2008

Financial Times... Un-Financial Times..

What happens in a recession? What happens in a depression? How does an economy lose its top-most position and become just another country following the leader? All these questions will get answered in the coming 2-5 years time. An experience and an occurrence which happens once in a lifetime.

As most people would know, or would have found out by now, the bubble called United States of America, the dreamland, the benchmark for all countries to achieve, is on the verge of bursting. Just like other bubbles, for e.g. the dot-com bubble, this will be a very big reality check for the world. It will be a check for people to understand and realize the value of money. USA and all its luxuries and spending habits eroded the value of money. People all across the world have been for many years adopting all the habits (i must admit that some good but mostly bad ones) of the Americans and Americanizing themselves forgetting their own cultures and heritage. As a result, everywhere people have forgotten the value of money. They don't realize that earning money is hard enough but making it grow and multiply is harder still. Once they start earning they seem to think that can afford anything and take loans and start living on credit. WAKE UP everyone! See what that has done to Uncle Sam and will ultimately do to us.

Lehman Brothers, AIG, Bear Stearns, Morgan Stanley.... how many more great names will be added to this list? how many countries will come in this list? USA? Japan? India?..

Centrals Banks trying to increase global liquidity and stabilizing the US Dollar shows that some people have realized the threat. But what they have done is just extended the time needed for the collapse of the US Dollar. The average person who reads the newspapers will not realize the extent to which this can and will effect us and most of the countries round the world. USD is the only international currency in today's world. When it collapses what will the world use to trade with each other? Will they still value everything in the USD? or will we have to alternate to the Barter System?

This current international monetary system was established in 1945 with the Bretton Woods Conference. Valuing everything to the Dollar was decided, it probably, was the intelligent thought of the day then! But for more than 60 years this system has not been changed, has not been adjusted, has not been modified for the current scenario and trends. This system is obviously unsuitable for today's level of cross-border transactions and transfer of money. How valuing currencies of so many countries to one currency could stand the test of 60 years is something i will never understand! You are valuing something with reference to something whose intrinsic value itself keeps on changing and shifting with time. This is probably the most foolish thing to do. The value of a standard against which other things are valued should be stable and its worth should not change in the short-term.

We should never have stopped valuing our currencies against Gold. It was the currency in ancient times and should be the value of our currencies now. The Economists of the world have studied in detail and understood the repurcussions of the previous gold-standard, they can help us devise a new standard based on gold such that those repurcusssions do not occur again. A standard which will be flexible and adopt itself as society changes itself over time.

Ultimately we should look at Free Trade Areas with a more open mind. With the working of the EU we now know that however difficult, FTAs do work. Our ultimate aim and goal should be to make the whole world an FTA such that we have one currency. Its then and only then that there will come about a betterment in other areas of life and human aspects.

The collapse of the US into a catastrophic recession is not far, it has been inevitable for the past 4 years and is not far away. Look ahead for hard times to come, especially for countries like China, India, Japan, Britain. Its going to get tough soon. 1929 will soon seem like a walk in the park. Whether the Tough will get going is yet to be seen.

But it is a big chance for India, we should pull up our pants and get ready to provide leadership to the world. This chance will not come again for a long long time. Will we be ready then (i mean the next time this chance comes around)? we can't say, but for now we should open the door when opportunity knocks and here she is standing outside the door waiting for the correct time to knock.

--> SJ


  1. he he ... If my apprehension is right .. then USA was always aware of what would happen hence the focus on making it petro dollar .. the new benchmark to measuring currencies .. but i guess they fell short on time ...
    I have been doing some research on the IT/ITES bubble in india .. and I am 50 50 about how it willl go .. foreign markets are going down ... but domestic markets are witnessing a 50% growth ... You maybe right in saying that maybe we are going to be handed a once in a lifetime opportunity .. but considering the UNITY we Indians have in almost anything on the surface of this planet .... he he he .. I wonder !
    btw .. aapke darshan nahi hote aajkal .. cat ki taiyari kaisi hai aapki ?

  2. amazing stuff.. I agree with bursting of the American bubble and I cant believe I'm not the only person who believes in the preservation of our own culture and anti-Americanization. You should read this book called "the Post American World" by Fareed Zakaria. You will love it. It is basically your article expanded into a book. Shabaash mere heere!

  3. @sid... dude USA aware!?? they arent even aware now!! they're nothing but a bunch of dumbasses who dint leran anything from 1929, cold war, gulf wars, and Vietnam! haha.. i'll be surprised if they manage to save their butts from fryin! :D ..aur prep chalu hai bhai.. ab sab upar walle ke haath mein

    @skannd.. thanx dude! :) bot the book already will read it as soon as i get time..

  4. Good post dude...

    1929 may repeat itself. Only thing, this time around, India won't be spared.


  5. And oh yeah... Welcome back to bloggersville! Good luck with your preparations...

  6. oh...I guess I could cancel my US dreams and stick around where I am...thats a good Idea no?

    Scribblers Inc.



Thanx for viewing my page and for reading the post.

Do drop me a line and i'll get back to you as soon as possible.

Sorry about the captcha & the moderation. They help me prevent spam.