Fair point..well argued but this choking of credit resulted in India growing at a rate of 2-3% p.a for the first several decades of its independence..the poverty, illiteracy and lack of sanitation is staggering...was it worth it - try going to vast slum lands like Dharavi in Mumbai and then answer the question..just trying not to be one sided.
Posted by Bala at December 23, 2008 10:43 AMBala,
The post-independence period in India can't really be compared to the last 10 years where there has been a strong drive towards opening markets and liberalizing the economic regime while maintaining some safeguards in terms of regulations.
True, the immediate period after India's independence (1947+) had a fairly socialist focus under Jawaharlal Nehru, with Government leading the way in rebuilding India, but the historical record shows that there was significant consensus for those policies at the time even amongst economists and business groups in India. Recall, that was a period where even Western economies, post WWII were adopting fairly socialist policies. Lyndon Johnson was of course responsible for the emergence of the Great Society in the US in the 1960s. What was problematic in India was some of the economic policies under Indira Gandhi in the 1970s.
I'll try to write more about India - both from an economic and national security standpoint - sometime in early 2009.
Posted by eriposte at December 23, 2008 10:54 AMdifferenence between India and US in recent economic policy. The Indian guy had a brain and used it. The US guy had no brain or common sense....he was a repuke and got what they wanted...failure...
Posted by headxray at December 23, 2008 11:19 AMUh, a little revisionist history here.
Barney Frank discovers regulation.
Despite the Bush pleas in 2003 for regulation of banking, what did Barney have to say? Check out the link for the Hearing from September 2003 on an administration proposal to alter the regulation of GSEs like Fannie Mae and Freddie Mac. See Congressman Barney Frank's opening statement, which begins at 4:40. It's rather amusing.
Posted by Muck at December 23, 2008 11:53 AMhahahaha, Muck. You never fail to amuse. Anyone who has been following this knows that this financial disaster was created by Alan Greenspan and his love of "creative financial packages" and his pushing risky lending policies. Here's Uncle Alan in 2003 giving his philosophy about derivatives (aka: the financial weapons of mass destruction)
For more than a decade, the former Federal Reserve Chairman Alan Greenspan has fiercely objected whenever derivatives have come under scrutiny in Congress or on Wall Street. "What we have found over the years in the marketplace is that derivatives have been an extraordinarily useful vehicle to transfer risk from those who shouldn’t be taking it to those who are willing to and are capable of doing so," Mr. Greenspan told the Senate Banking Committee in 2003. "We think it would be a mistake" to more deeply regulate the contracts, he added.
Funny how that all worked, until it didn't work anymore.
So who's talking about revisionist history?
Posted by Mary at December 23, 2008 12:57 PMeR, thank you for this post. It is refreshing to see that when sensible policies were followed, the results were also sane. I am very glad to hear that India did not fall into this financial pit.
Posted by Mary at December 23, 2008 01:10 PMI second Mary's thanks, eriposte! As always, fascinating reading.
“How,” he wondered aloud, “did we get here?”
Says it all, doesn't it?
Posted by iamcoyote at December 23, 2008 01:19 PMMuck. Keep digging that hole..
Posted by headxray at December 23, 2008 03:52 PMIt still amazes me that Greenspan never believed there could be a "flaw". History is full of human behavior that is very flawed.
Milton Friedman economics, deregulation, republi-con greed and Greenspan built the perfect storm for Wall St. Morals and ethics do not exist when profits are stake... never have.
History continues to repeat hard learned lessons.
Free markets, deregulation, outrageous spending, conservatism greed is a thing of the past... fucking sickening to think my son and his children will be paying for this criminal behavior!
Morals vs sin, ethics vs greed, spend vs save, regulate vs deregulate, republi-con grifters vs Democratic revivers... India has done very well, the U.S. not so much.
Yes. We did well. Hats off to Y.V.Reddy.
But, unfortunately, unwinding of what goods that Reddy did has started, in the name of Subbarao - A person with close interest of FM - Who in turn is a heavy Real Estate investor at personal level. Subbarao, without any background was brought into the system just to ensure that Real Estate prices do not crash in India and so that all politicians do not need to incur loss.
What happened in US, will happen in India going forward. Subbarao has reduced interest rates /CRR 6 times in last 50 days. He has gone gung-ho on Real Estate reducing the risk levels. Finally, the day will come when the property prices in India will sink by 40% and the loans provided by Public Sector Banks in India will become NPAs. The day is not very far when you will start hearing that major Indian Banks went Belly up. Thanks to Subbarao, Thanks to Chidambaram and Thanks to the greed of Real Estate Lobby in India.
Posted by Atul at December 24, 2008 04:05 AM