World is seeing one of the toughest times ever. Banks are going burst.Liquidity in Market is low. Governments are frightened and consumers are cutting their expenses.
This correction was on cards with the type of Surge World Economy saw in last 8 years.
India and China contributed the most.But china is entering this re-cession better prepared.Reason being:
1> No Dollar Debt: Due to dollar strengthening as there is shortage in market , lot of local currencies have shown fall. Rupee has depreciated by 25%. That means if you have 100 rs Loan in dollar sense you will have to pay 125 rs. And china has no debt so it will come out untouched.
2> Stock market Exposure to GDP : China has exposure of only 0.4% of its GDP to Stock Market, where as India has 4%.So when FII pull out their money GDP in India will be more effected in comparison with China.
3> Huge Foreign Reserves : although India also enter this new financial setup with good reserves but china enters with 3 trillion $ reserves which is amazing condition to be in.
These factors are important as only 2 winners in this crisis will be undoubtfully India and China.
World will witness new financial arena where players and their strategy will change.
The major issue of concern is the reason for this meltdown - Is this financial Failure or Capitalism Failure or DEMOCRACY FAILURE
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