The big bubble was in waiting to burst. Starting in early 2007, the financial crisis related with the real estate mortgaging and subsequent impact on the investment banks came as global tsunami devastating the financial giants like Leyman Bros, Merrill Lynch, and now the insurance giant American International Group (AIG). The US Federal Reserve is trying to bail out the companies by pumping-in billions of dollars. Take-overs are the buzz word everywhere. The US government should step in decisively to prevent bankruptcy of these institutions.
The employees in these companies are facing a un-precedence insecurity in their jobs. The fallout of the collapse of the major international companies (MNCs) on India is also tremendous. Thousands of people may loose their jobs, and face severe financial crunch in repaying the EMIs for housing and vehicles bought during good times. Real estate prices also on a downward trend. Stock markets are falling like pack of cards. Even the oil prices have crashed. The Indian rupee is suffering the steepest fall in 10 years!
The India government should prepare itself to face a financial crisis similar to that faced in USA. Banks have been giving easy loans for housing and buying vehicles. One can find thousands of confiscated vehicles parked under the fly-overs in Mumbai and Navi Mumbai for non-payment of EMIs to the financial institutions. In real sense, they are worth not even 10% of the loan advanced by the banks! Fortunately, in India, real estate prices have not yet nose-dived. But, anything can happen under the present uncertain situation.
It is absolutely necessary that government should intervene at the right time so that crisis of the kind witnessed in US is not repeated in India. Already, enough damage has been done to the financial institutions by the India government waiver of 70,000 Crore rupees of loans advanced to the farmers.
Good sense, not the vote-catching sense, should prevail upon the government to protect the financial institutions and the hard-earned public money invested in these institutions.
It is time that the Indian business houses such as Reliance and Tatas should look at the options of takeover of these companies, if not in full, at least the Indian operations. India flags on top of the American companies!
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