RE:BIGGEST LOOSER CITIBANK
by Ramesh R on Feb 10, 2008 05:20 PM Permalink
Now here is another reason why the Citi will never sleep ... (cos it has incurred enough losses to lose all its sleep) ;)
In the next article, can you kindly elaborate on the possible reasons behind -"...interest rates increased, the rates on floating home loans too went up..".
RE:Reason behind increased interest rates
by raj kolakkal on Feb 09, 2008 06:53 PM Permalink
Hi Bibek, Interest rates were increased by Federal bank primarily to bring Inflation under control.
I am an American, I enjoy your post's addressing the Sub Prime problem which has spread around the world. I agree with almost everything that has been said regarding the belief of Americans that they can buy now and pay later, when in fact most homes never get paid off anymore. I purchased one home in my lifetime, I paid 50% down and it took me 20 years to pay it off. Americans who got burned by the sub prime fiasco, forgot one thing, a home is a necessity, it is not an investment. In America homes were promoted as investments when in fact, a home has never been something one could classify as an investment unless you were a real estate speculator. Many of the subprime, and other mortgages were made to speculators in Florida, Arizona, and California hoping to flip the property and make a quick profit; they never expected to be the holder of a house that they could not get rid of. I think that homes are necessities and should not be equated with investments which are bought and sold. Have a great day. I am glad to see that somewhere in the world, common sense still exists. John
RE:Sub Prime and India
by suryakant agrawal on Feb 09, 2008 06:52 PM Permalink
The one way to overcome this crisis in no time is to allow Indian to buy propoerties in USA and allow them to migrate. In six months you will see the trend has reversed.
I am Indian, I am happy that you have come out with such real mindsets about what Americans think of Homeloans. But I am very upset to say that how come such big banking giants where not aware of the situation long back and let the country's economy fell into recession. Because of this banks the country is facing a severe financial crisis. This has not only affected US but the entire world.
My opinion would be that each and every american has to think about the country and do something to avoid the country to fell into recession and also save the world from such financial crisis.
RE:Sub Prime and India
by Sunil Kumar on Feb 09, 2008 06:07 PM Permalink
Do not worry buddy. Some measures will certainly pull off the problem. I think the banks as a policy should forget that part of the money that has been lost. If all the people involved think the similar way and never very much, things will start afresh and pick up in a more better way. At least, as a layman, I feel this way. The more intelligent people have a differente perspective altogether
Americans travel the world giving out pearls of wisdom on finance & business. The subprime losses expose their utter folly and failure of any control and their hypocrisy.
Thank God, rupee is not convertible. Otherwise, losses of our banks would have run into billions. The poorer Indians would have also picked up the tab of the Americans' excesses.
US is unable to face the reality of excessive cosumerism. They have no qualms in importing oil for their multiple SUVs, MPVs with borrowed money. Their foreign policy is tailored towards their need for raw materials. No wonder, these have rubbed into the man in the street for living beyond his means. Their credit card debts are mounting. They feel they can live by printing their dollars forever. The reality jolt will have cascading effect. Already their big companies are going hat in hand for survival. They have avoided China with their $1.5 trillion reserves. It is only a matter of time, the dragon flexes its muscles and gobble up all in its way.
The sleek marketing by US has its limitations. Before long, old fashioned prudence will win the day. The US gives intant gratification to its top CEOs based on short term profits. By the time their follies are exposed, they have left the scene. Even if around, they are given hundreds of million pay outs.
We can learn a lot from US from their plusses of innovations & cretivity, but more from their excesses of living in a make believe world of opportunism.
RE:failure of controls
by Sid Batchu on Feb 09, 2008 12:51 AM Permalink
Well, somewhere along I get the feel that we are doing a US vs. India scenario here which I always disagree with. Both countries have different cultures and dynamics and macros which makes any comparison baseless. As far as excessive consumerism goes, all I have to say is that citizens with no money lead a better life in America although they maybe living on living on borrowed money. Where as in a country like india [although i hate comparisons]they dont even have that option.Afterall everyone has one life live. I agree there should have been more controls while disbursing loans, but no country is perfect, just have to learn from mistakes.
RE:failure of controls
by shiva on Feb 09, 2008 07:10 AM Permalink
Sid Batchu,
The thrust of my argument was US has to put its house in order to be credible. Their huge trade & current account deficits are unsustainable and will make the whole world monetary system go into a tail spin. I get the feel that the US is smug, as it has got away with printing dollars and attracting investment in Treasury Bills etc to meet the huge deficits.
The bottom has to give way at some time. Though we have our poverty to content with, let India be prudent, learning from the American excessess of capitalism while embracing the plusses with a pinch of salt.
RE:failure of controls
by Sid Batchu on Feb 09, 2008 08:21 PM Permalink
I agree, although I believe the economic boom in India is mostly a result of global cycle and availability of cheap labor. But, as in most instances India appears to be mimicking US and creatign a dangerous situation for itself. The same consumer credit issues are fast surfacing there. The current boom in India is a result of a global phenomenon and availability of cheap labor. Labor costs are rising very fast and how long can we sustain with a falling dollar.
At the end of the day, this is not just about sub-prime loans. Many people with good credits have been dabbling in the property markets for investment. When their property prices fall to values less than what they owe, they also walk out and force foreclosure. Then there are people who have bought expensive houses to keep up with the joneses. When the economy slows down, you will hear some howling from these quarters as well. The mess is far from over. At the same time, if you think Indian economy and real estate will escape this slowdown, then you are just dreaming. When western companies downsize, offshore offices get hit as well. Whether there will be a bloodbath or not in India, will depend on how many excesses have occurred. But, surely it will not be painless.
So agreed that 40 billion was lost but who gained ? or what is used to build massive housing in the US, which will later on turn to be US assets !!! am i right ?? can any one explain ...
RE:I dont get it !!!
by Kaushik Das on Feb 07, 2008 12:40 AM Permalink
In fact, this is a good point - but only restricted to the long run. In the long run, this money may return to India again as investment.
In fact, reducing the floating rate may achieve this objective. It may allow many borrowers to actually pay back - that brings more money into the system and stabilises it.
India should also have lower interests in these periods of growth. I don't know why it hasn't. India has full chances of subprime crises in the future - who will bail us out? The banks here give loans to just about anybody for amounts like crores for a flat. The greed of the bankers and the developers combined may cause big time harm to india.
