What should I call? FATE or REALITY. Why it's happening? Some of the experts are saying market condition is not good. There is a complete pandemonium in the market space. I'm in a dilemma whether to believe it or not. The experts are not God. They are also just human beings like us.
I read an article today regarding "Impact of US and EURO crisis in India". Before reading the article I asked myself WHAT IS IN IT FOR ME? The reply that I received from my mind was "NOTHING". But something that prevented me to keep the magazine again in the rack without reading. That is "PLACEMENT". So, I read it.
I found something interesting. I just want to share those things.
Reasons for the US crisis:
US crisis was because of sub prime loans and credit default swap. Because of these, bankruptcy happened. The banks could not recover those sub prime loans and also they could not pay the compensation to the institution or any organisation who bought the credit default swap. Everyone knows the bank "Lehmann Brothers". It got bankrupted.
The hot news in the last month was "US degraded in their credit rating from AAA to AA+ by Standard's and Poor". It created a shock wave around the world. It showed that the risk in US securities and bonds increased. The impact of this degrade in credit rating in India is, US debt to India is US$ 41 billion. India occupies 7th. China ranks 1st. US debt to china is US$ 1.4 trillion. US total debt is US$15 trillion. The degrade in the credit rating shows that the risk in repaying the debt by US. This will have great impact in China as well as in India.
EURO crisis is because of sovereign debt. The European countries like Greece, Portugal and Spain are under pressure due to the sovereign debt. The failure of the bonds. Those countries are in a critical situation to manage the sovereign debt. The sovereign debt of Greece is about 130% of its GDP. So, pathetic. Now, the Greece government is taking necessary steps to come of the great financial depression. They are cutting the government jobs and government expenses. The unemployment rate in the government sector in Greece increased. That's big storyyyyyyyyyyyyyyyyyyy
Though some of our politicians and other economics experts saying that Indian economy is operating based on the domestic consumption. These crisis don't have much impact on India. India is also having enough liquidity to manage if something happens.
But in reality, India mostly depend on US and EUROPEAN countries in term of exports. Due to the crisis in those eastern countries, their consumption and spending is decreasing. This will lead to the domino effect. Suppression in their GDP growth. This will affect the Indian exports especially IT. This will affect the Indian economy. The depreciation rupee to dollar also occurs. The status of rupee now is US$ 1= 49.37 INR. In the coming days it may reach 50 INR. This will affect our importers.
POSITIVE IMPACT OF THESE CRISIS:
There may be decrease in the value of crude oil. Folks, remember the crude oil price went up to US$ 200 per barrel. Now it's reducing. The reason for the decrease in crude oil price is because US and European countries consume more oil. If they are in crisis, obviously they will reduce the consumption of oil. So, they may be a chance in the reduction of fuel price. It may benefit INDIA.
There are many pros and cons are there due to the crisis in US and EUROPE. The impact in India depends on the weightage of those pros and cons.
"IF SOMEONE WANTS TO GET SOMETHING OUT OF NOTHING, IT'S VERY DIFFICULT TO RESIST".
I think we can't change the above statement. We always want good result without doing anything. When it's going to change?
Note: There may be some variations in the above figures. I read those figures long back.
