Government Seizes WaMu and Sells Some Assets
The last time I was at a nationalized bank in India, a sarcastic branch manager told me that the worst loans that our system made was to fund cows and bullock carts - under political pressure. But the American mistakes surely pale in comparison.
As noted below (and much to san's fuming) - buying American financial stock at the moment is a needless play for Indian banks. It is better to fund productive assets at home. In fact, given the amount of black money collateral - it is actually safer for a bank to fund real estate loans in India than to pick up these stakes. There are more shocks coming - Nouriel Roubini* has predicted that the next ones up are hedge funds http://www.rgemonitor.com/blog/roubini
(* note to Nizhal Yoddha - Roubini is the economist whose analysis has been partly used by the man you rightly credit - S Gurumurthy- for saying that the emperor has no clothes. A finer explanation is provided by another man from Chennai)
6 comments:
ghost, i used to read roubini's blog before he started charging for it :-( and yes, he says sensible things. you may well be right that the thing to do is to sit tight now and invest in real estate in india when the bubble bursts in a few months.
Rajeev,
Roubini does not charge for the blogs anymore. If you log in, you can now access all of the content for free.
The silver lining is funds for evangelism in India will be cut off. 70% of it comes from the United States.
Hi Rajeev
I think dailyreckoning.com is also involved in writing sensible (at least to me) things.
USSA is living on borrowed money.
I call your attention to how the Indian parliamentary system would have coped with this kind of crisis... here we see both Republicans and Democrats working overnight to rescue the nation from this crappy situation.
In India, coalition members would have withdrawn support by now and rampant horse trading and noisy elections would have ensued.
Problems are unavoidable. How we address them is more important. Our Parliamentary system is our major weakness.
Roubini's blog is free now - only requires registration. I think he charges for some of the deep analysis.
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