The Chartered Accountant

INDUSTRY-SPECIFIC
Greed or Bonus Bonus or Both?
While
in the past
US has definitely
aided growth in several countries
including India, which should
be thankfully acknowledged, today they are responsible
(may be due to few greedy bankers !!) for the
mess they have created for themselves as well as for other countries.
It’s time for them to introspect and act quickly to stem the crisis and
ensure that greed does not result in one more financial catastrophe. We in
India should also think and act fast on preventive and remedial measures,
particularly in the present scenario when the growth is slowing down across
all sectors and the bankers are wary of lending?
The US financial system is going
through air pockets. As the turbulence
increases everyday it is
essential for us to understand the cause
and effect, as the economies of the various
countries including India have become
or are increasingly becoming inter-dependent.
As the US catches a cold (winter has
approached) Indians are already affected
with sore throats. Before
the virus starts spreading,
can we look at the reasons
and also look at some remedial
actions. (May be
very obvious!)
We all know that the US
economy is consumption
driven and that the savings
rate is negative. Last week I
— CA. s. Chandramohan
(The author is a member of the Institute
working as CFO TAFE Motors and
Tractors Limited. He can be reached at
mohan_54_in@yahoo.com)
heard from a banker in India that his friend,
who was drawing $ 20,000 per month plus
bonus, lost his job and he informed him that
he has money only to run his family for 1
month! or maximum 2 months.
Today the current account deficit of the US
of approx $ 9 trillion (From 1985 till 2008) is
funded by various countries including Asia,
Middle East and even partly India.
In the past three years, as long
as property prices were going
up in the US, nobody bothered
whether the banker was lending
on the same property more
than once, whether the tenure
was too long, whether the individual
income was sufficient to
THE CHARTERED ACCOUNTANT 1029 DECEMBER 2008