Monday, October 27, 2008

India PM says India's economy in good shape, identifies causes of financial crisis

Source: PM dissects global crisis in China as world listens, rediff NEWS.

India’s economy is in good shape, according to its prime minister and world renowned economist Dr. Manmohan Singh, in spite of the current credit crisis. He said that “India’s banking system is sound and well-capitalized. It is not exposed to the type of assets which have given rise to the crisis” and is still likely to grow at 7 to 7.5 percent. Although the financial crisis will eventually hit the “real” economy and India will feel some of the effects of the credit crunch, Singh sounded optimistic about India’s financial standing.

While reporting on the shape of India’s financial system and stating that India stands ready to cooperate with the international community to fix the broken financial system, Singh stole the spotlight at the Asia-Europe Summit on Friday, October 24. During his address at the summit, Singh elaborated on the views of IMF managing director Dominique Strauss-Kahn , who had previously laid out three causes of the current economic crisis. These causes, Singh said, were

1. Regulatory and supervisory failure in developed countries.
2. Failure in risk management in private financial institutions.
3. Failure in market discipline mechanisms.

Singh argued during that although the world has developed a truly global economy, that economy is not supported to any kind of effective global governance. To solve the crisis caused by a lack of leadership and regulation, he said, it is necessary to “de-clog the credit markets the world over. Coordinated global action is essential to restore a measure of confidence in the credit market.” He told the world leaders gathered at the summit that increasing infrastructure investments in developing countries and backing the increase with increased resource flows from multinational financial institutions could lead to stabilization of the world’s financial system. He also said that the effort to reform the financial system must be a collective one undertaken by the entire international community because the world’s economies and financial systems are so interconnected. Finally, he claimed that if there had been a good regulatory mechanism in place, the global financial crisis would not have happened.


1. Did Singh accurately pinpoint the causes of the current financial crisis?

2. Is India’s economy likely to remain strong in the face of the current financial crisis?

3. Will European and Asian countries be able to work together effectively to stabilize the global financial system?

1 comment:

A said...

There is a principle called Ockham's razor which is attributed to the 14th-century English logician and Franciscan friar, William of Ockham. It basically states that – "All other things being equal, the simplest solution is the best."

The following are two simple ideas that effectively create the ideal social construct.

Simple Idea #1

1. Socialize ALL Land

2. Charge leases on ALL Land based on demand.

3. Return 100% of the resulting revenue to every man, woman and child in the form of a yearly dividend check.

4. Make the Universal Birthright of Land an Everlasting Standard in the education of every Child.

This effectively makes the average piece of Land Free for every Living Soul and restores our Natural Birthright as well as coupling our social construct to the Principles of Life.

Simple Idea #2

1. Remove ALL FORMS of taxation

2. Implement a Tax on ALL new goods based on the resources they contain and the resources they use in production and delivery (this can easily be implemented with the current barcode system used at the checkout)

3. Use this system to encourage/discourage various resource usages (High tax on non-renewable/ecosystem damaging products and low/no tax on renewable/ecosystem enhancing products) and to encourage purchasing of local products.

4. Use the resulting revenue to fund infrastructure expenses and the restoration of ecosystems.

This effectively encourages the creation/use of longer lasting, high quality products as well as encouraging recycling and reuse of existing products.

Idea #2 effectively constrains the ravaging appetite of the capitalistic consumer society within the Boundaries of Sustainability while Idea #1 effectively encloses both Sustainability and capitalism within the Principles of Life.

That's it!!! Simple and Effective