The recent upheavals in the financial sector have brought a series of Tsunamis in all the countries of the world. The age old adage, “ TOO BIG TO FAIL” has failed following the fall of Biggies of the financial sector. What were the reasons behind for such a free fall of such big entities like Lehman Brothers, Wachovia, Merill Lynch & countless others. Experts say that the main cause behind such a turmoil is the Sub-Prime lending of loans by the banks & the further trading of the related derivatives done by such Big-Wigs complicated the whole matter & made it all the big.
Another reason commonly known which is frequently published in the public domain is that of the decrease of real estate prices in USA which made all the assets of these banks redundant & thus the banks were not able to extract their principal amount out even. But, I beg to differ from the above mentioned logic & sport an altogether viewpoint by going a bit beyond the obviously looking answers to such a problem which has created havoc in all the economies of the world. I would reason two factors behind such a abysmal fall , one The excessive CAPITALIST mindset & the unbridled autonomy given to Capitalists in the world & second, The increasing globalisation which is exposing the economies to all the lucrative but the most risky wrong doings of the Bullish capitalist nations.
The former reason is all the more powerful & pervading than the latter, because the whole world danced on the seemingly fabulous symphonies of these Modern Mozarts which originated out of whims & fancies of the Capitalists. For long, the whole world has been hailing the Capitalism as it has brought prosperity & growth to nearly all parts of the world wherever it has gone. CAPITALISM has certainly improved the quality of life that we live, it has exposed us to better technologies at competitive prices which are available to us at our convenience. But, does that define the overall happiness for a human being. Capitalism has PROFIT MAKING in its roots & stands tall on the same, ignoring the basic utilitarian premise of Larger Good for Larger mass. This has provided a firm footing for western researchers to develop texts & papers which focussed on developing strategies & maximising the value. But, a basic question that arises here is , “ Does Profit making is the only way to sustain in this world ?” which in my view attracts a big NO.
Few entities in the western world who had profit making & value maximisation only on their minds which they got sharpened at few of the best training grounds of the planet revolved the money many times over so as to get the maximum output which was not optimum. They trusted(un/intentionally) on the people who had a bad credit worthiness in the market & charged huge interest rates. They treated the above as a bait for the still bigger capitalists & sold these sub-prime but high yielding assets thus taking out their investments & passing the buck to others & booking the profit in the process. This vicious cycle continued again & again pacified the high return desire & finally culminated into such a big abyss that it has engulfed the entire world.
Globalization which got a boost with improvements in technology has made this world with over 6billion human beings & over 200 countries a small village with enhanced capabilities of doing business at any hour of time from any part of the world. The formation of regulatory agencies which have an aim to increase world trade exposed the people of different countries to each other & also their businesses. People invested in diiferent businesses in different countries to diversify their risks & also in order to increase their ROI. But, things always don’t happen the way you desire them to be & that’s exactly what happened in America.
The optimisation of the risk & returns was
The above writings doesn’t mean that I support communism or something similar but it is just that I oppose the Extremism. As also the Sanskrit adage goes, “ ATI SARVATRA VARJAYET”, i.e. excess of everything is undesired for. The criticism here is for the unbridled freedom that the capitalists enjoyed in the world’s economic power which has led to this chaos. Capitalism is for sure good for the human society & its growth because of the very fact that it promotes competition which leads to improvements & development. But, tigers if left untamed are for sure going to create bloodbath in the society . This is where I praise the Indian leaders who decided to have a Mixed economy in India , though India faced the music for not switching to capitalist policies for long, & ultimately shifted to a more regulated & controlled capitalistic outlook. This step wise & well regulated process of exposition of Indian Economy has so far ensured a sustainable damage to Indian Markets & Indian Companies. So,this is the time when the Indian Leaders (Business & Political ) to take a note of such a turbulence & make strategies which would spell out safer heavens with moderate returns for the country ,thus achieving the socialist motive of Larger Good for larger masses.
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