The stigma of financial markets across the globe is
pushing the economies into a greater tribulation.
The trouble shooter, i.e., the US subprime crisis, spread its
tentacles to every country in Europe and is slowly entering Asian
countries. During first quarter of the year `Bear Stearns' an
investment bank in the US bankrupted. In the same year during
September, `Lehman Brothers' and `Goldman sacks' followed suit the
Bear Stearns. Even giants like `AIG' and `Morgan Stanley' were on
the verge of bankruptcy. The US alone has 19 banks that have
collapsed within a span of two years. The Iceland financial debacle at
this juncture caused financial analysts to cross fingers. By and large,
the international economic crisis has crippled all the economies of
the world irrespective of size. We may guess the seriousness of the
current fragile financial conditions in the capitalist US, when the
Federal Bank of America announced a rescue package of $700 bn.
The banking sector, stock markets, the insurance sector and the
entire financial spectrum is looking out for the ways to ride out of
the current storm.
The vibrations of shrinking European markets did not spare India. The Sensex is showing
quite a wayward trend and exhibiting uncertainty in its functioning.
At times it tumbled down to less than 9,000 points first time after
2004. The small and sophisticated investors turned panic of these
developments. They are running from pillar to post to find safe niche
for their hard earned money. The banking system which is
hitherto strongly believed to have been a cache for the house hold
investments is also looked suspiciously. A forceful canard aired over
the Indian markets that banks in private sector like ICICI is
running short of funds and going to close the shutters any moment
caused a strong alarm among small savers. Union Finance Minister
K Chidambaram and CEO of the ICICI Bank Kamath rushed to
the media and tried to pre-empt the fears among the public. As
is rightly disclosed by the governor Reserve Bank of India (RBI),
vast domestic demand and consumption engineers growth
parameters in India traditionally. He says the global financial turmoil
would have a less affect on the Indian that economy. In order to ally
the apprehensions of liquidity constraints, the monetary and
fiscal measures that are initiated in the month of October pumped
Rs. 1,85,000 cr through the banking system, besides one per
cent cut in repo rate.
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