Let me first start by assuring you that I am not a sadist. It is not good to see age old institutions crumble. It is definitely not good to see investors lose out millions of $$$ when such a crisis hits the street. But it is important to realize that it is the same set of greedy investors and limited-vision top-management that have caused downfalls of esteemed financial institutions.
The success of capitalism lies in the concept of wealth-creation. Remember that wealth creation refers to society in general. And this leads to betterment of lives of people. However financial institutions and greedy investors have read the text completely wrong. All they have managed to do is to just recycle wealth smartly.
And while taking someone else's wealth at the pretext of expanding it, the financial institutions have managed to keep a larger cut for themselves. As they ran out of ideas on this and the greedy investors pushed these companies to show increased growth every quarter, the companies hired brains from top schools, made them think like Shylocks and finally ended up innovating on stuff like sub-prime lending and reverse mortagages. In India, we have had similar innovations on sub-prime credit cards, unasked personal loans and improperly checked home loans.
The middle class, which is cursed to be a loser in every game, fell for this trap as usual. All these financial institutions have done is to suck blood of these unsuspecting middle class. When the loose foundation begins to crumble, these companies have no option but to cave in. Lehman, Merril Lynch, Bear Sterns, AIG - all are nothing but a failure in their own greed.. And with this downfall, they will take their greedy investors and unfortunately dependent industries and whole economy with them.
In India, good institutions like ICICI are also moving towards innovating on this sector. What everyone has to remember that success of institutions and economy & capitalism come by wealth-creation, not by robbing middle class and the like. I really hope that ICICI, HDFC etc.,
take good lessons from these fallen US giants. And IIMs and other institutions should stop teaching their students to be money bloodsuckers and instead show them the right way to make good growth.
And yeah, the rhetoric. The middle class should learn. After depression, sub prime, recessions, chit-funds, Harshad Mehta scandals, credit card payment issues etc., it is time to realize that only hard earned money and smart investments will sustain.
The success of capitalism lies in the concept of wealth-creation. Remember that wealth creation refers to society in general. And this leads to betterment of lives of people. However financial institutions and greedy investors have read the text completely wrong. All they have managed to do is to just recycle wealth smartly.
And while taking someone else's wealth at the pretext of expanding it, the financial institutions have managed to keep a larger cut for themselves. As they ran out of ideas on this and the greedy investors pushed these companies to show increased growth every quarter, the companies hired brains from top schools, made them think like Shylocks and finally ended up innovating on stuff like sub-prime lending and reverse mortagages. In India, we have had similar innovations on sub-prime credit cards, unasked personal loans and improperly checked home loans.
The middle class, which is cursed to be a loser in every game, fell for this trap as usual. All these financial institutions have done is to suck blood of these unsuspecting middle class. When the loose foundation begins to crumble, these companies have no option but to cave in. Lehman, Merril Lynch, Bear Sterns, AIG - all are nothing but a failure in their own greed.. And with this downfall, they will take their greedy investors and unfortunately dependent industries and whole economy with them.
In India, good institutions like ICICI are also moving towards innovating on this sector. What everyone has to remember that success of institutions and economy & capitalism come by wealth-creation, not by robbing middle class and the like. I really hope that ICICI, HDFC etc.,
take good lessons from these fallen US giants. And IIMs and other institutions should stop teaching their students to be money bloodsuckers and instead show them the right way to make good growth.
And yeah, the rhetoric. The middle class should learn. After depression, sub prime, recessions, chit-funds, Harshad Mehta scandals, credit card payment issues etc., it is time to realize that only hard earned money and smart investments will sustain.
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4 comments:
My thought is why wouldn't people look for it and see if it is a right investment they should make? I guess they were all carried away by flowery marketing words from these investment firms? Who else is there to blame? Didnt people know when they took a sub prime housing loan, they cannot afford it? Why did a waitress buy a beach bungalow for $1 million? I think the fault is one both sides, we cannot pinpoint it to the institutions alone, can we?
Well.. if you blame me for keeping my purse so that it is steal-able and say that I have to bear equal responsibility with the thief.... then I will concede..
And my rhtoric says it anyway :)
What is ur opinion on the effect of this on international markets, especially India. Did u see PC had to put his financial reforms on hold because of this ?
Surprisingly, contrary to what I have believed I support the holding of reforms. I am impressed with what Stiglitz said about low income countries being like a small boat in a large ocean. You cannot leave them as is to be a fully liberalized economy. There have to be supports if a big wave comes along.
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