Sequel To The Meltdown

The pitfalls of living in a centralized global economic system cannot be overstated. America has been the pillar of world economy too much and for too long. Now that this pillar is about to crumble, it threatens to take the world along with it. Since the fall of Hitler and the creation of the UN, America has been the undisputed guardian of the world, both politically and economically. It has been continuously and stealthily tightening that grip over the years, not too much to the dismay or mortification of any particular nation except, maybe, the Soviet Union.
Americans have been known to possess a tremendous propensity to consume, a trait that has been to the advantage of every country having a trade relationship with the US. However, that relationship may have been carried a bit too far, from the looks of the situation today. America’s mindless policies are now threatening to gobble it up, and the rest of the world is precariously close to the edge of the whirlpool that has been created. Europe is paying the heaviest price for its economic subservience to the US. This means that a major part of the developed world is on the verge of imploding under the pressure of the US financial crisis.

Asian countries had long prided themselves to be insulated from economic disturbances in the US. India was the foremost member in that club. A country deemed structurally strong enough to fend off shock waves from across the Pacific. The Indian capital market bought into that perception lock stock and barrel, which is eminently evident from the distinct sense of dismissiveness that initially prevailed in the market even as ominous signs began to show up in the American and European economies. Soon, the tremors spread to the Indian economy. First, inflation went out of control. Then the Rupee dived into a bottomless pit. All the cockiness in the markets vanished overnight. Now, the Indian capital market seems even more fragile than its Asian counterparts, which is ironic in the sense that all the other economic powers in Asia such as China, Japan and Korea should be much more susceptible to an US slowdown given the magnitudes of their trades with the US as compared to India.

Truth is that the developing industrial nations of Asia too have long been the feeding ground for investors from supersaturated western economies. Thus, indirectly we too have been held to ransom by western, more specifically, American money. Now that cash has become the most scarce commodity in the US and Europe, it is but natural that foreign investors would like to encash their profits in the highly leveraged Asian markets, chief among them being the Indian market. Be that as it may, India and the rest of Asia will have to learn to live without the west. It is time Asian countries re-aligned themselves to cope with the new world economic order that is about to emerge in the aftermath of the collapse of the West.



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