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