Ecofinworld

RBI and CSO data released shows decline in growth allover

2009-01-19T23:53:00.002+05:30

The number crunching game of economics is the only thing at boom in this recessionary atmosphere around the globe. Data is being analyzed rigorously in order to get some positive outcome but the more the data come out and more the analysis done, we get more hopeless results every time. Recently I was going through the data released by the RBI and CSO, few renowned economists in India have predicted over the growth prospects of India in 2008-2009. Things are definitely not as bright as it had been in recent past.

Real growth of GDP(market prices) would fall to 7.1% in 2008-09 from 9.02% and GDP growth at factor cost too would remain at around 7.1% in 2008-09.

Growth of agriculture and allied activities would be at 3.3% this fiscal year when compared to last year's 4.55% growth. Industry sector which was experiencing an average growth of above 10% in last 4 years would decline to dismal 5.7% growth. IIP figures of August showed manufacturing output growth to be at 1.15% which is lowest monthly figure reported since October 1998. Outputs of capital goods have slumped to 2.3% from 20.4% immediately previous month. Tertiary sector or services will grow at 9.0% this year after enjoying a growth of above 10% every year in past three years. Per capita real GDP growth was 7.49% last year and may fall to 5.60% this time round.

Peaking oil prices of 2008 has already added greatly towards the debt of the country. Balance of payment will again remain negative. Exports in 2008-09 would touch $ 200billion from $ 159 billion last fiscal but the gain from exports would be subsided by the increase of imports this year. Imports, this year, will be $ 314 billion from $240 billion last year. Out of this $314 Billion, import crude and products alone accounted for $106 billion.

Data is one part, the current economic turmoil is taking its toll all over the world. US government has bailed out Bank of America and Citi group twice now and still they doesn't seem to be in comfortable position. Bank of America has acquired toxic assets worth $118 billion,when it acquired Merillynch, of which around $100 billion would be bailed out by government itself. According to a report by financial times 50% of US household are on the verge of bankruptcy. Sales of automobile are down by more than 30% now. Spiraling effect of economic activities or no activities has started to make things to get worst. Great depression doesn't seem impossible now.Ripple effects of this downturn is sure to reach India.

Disaster is waiting...be aware!!!

2009-01-15T23:25:00.002+05:30

Indian corporate world has been shaken miserably with the unfolding of the Satyam misgovernment case.This has set inquires by government over the bank accounts of other major business houses in India. Let me tell you what Raju did recently is being done all around the corporate world but only thing is Satyam was involved in multiple frauds and due to this investors lost all his confidence on Satyam.

If these inquiries are carried on properly then be sure of big big defaulters ahead. And the bigger than the biggest is also among one of them,Mr. Mukesh Ambani. Recently he acquired more shares of RIL and his share in RIL rose to 49.03%. Now in last two years he has bought shares of his own company worth $12 Billion(Rs.570 billion). From where did he get this much money??? It certainly came from RIL only through some channels which were disclosed to SEBI but nobody said anything because of the respect which is attached with the name AMBANI.
If we look at the recent earnings of Mukesh Ambani we will find that he never earned anything near to 12 billion to buy these many shares of RIL.
Mr. Ambani has received only Rs. 500 million (USD 11 million) as salary
and commission from RIL, and dividend of Rs. 750 million (USD 16
million) from his shareholding in RIL in past 2 years.
It is the investors money that is being used to buy back the shares of RIL by Mr. Ambani, same that happened in the case of Satyam Computers.
Things doesn't seem to be going well for Indian Corporate giants.We hope Mukesh Ambani would not be next Raju or this will ruin the image of India's honchos which were very recently considered to be the poster boys of new vibrant India.

Indian Media:Irresponsible yet most effective

2009-01-15T12:26:00.001+05:30

Media is supposed to be the mirror of the society. It builds the consensus of a nation over which that nation grows and develops in its culture, dynamism and intellect. But in recent years Indian Television media has put forward such a agnostic picture of themselves that I fail to understand the reason for those channels being aired and concept of media seems to be in doldrums. Democratic system of Indian Republic gave birth to a free and independent media but media has very recently downgraded itself to a new version and its not media, its Entertania(Entertainment+Media).INDIA'S FREE AND INDEPENDENT ENTERTANIA.

Recently I was in Noida discussing about Indian Media with a businessman named Sajeev Mathur. He told me about a incident which happened recently in Noida. He said that in a house in nearby sector there lived a family of three. Husband and Wife ,aging around 40, with their niece.There was some quarrel between this girl and her local guardian who were the people with whom she was living in Noida. Girl went to police station and filed a complaint against her local guardian charging the man, who was living there, of molestation and attempt to rape.This news some how reached to media people. They made their own judgement and showed the story on TV and declared those local guardians as convicts while police was yet to take action.Now these husband and wife,they were so ashamed and there ego so much hurt that they both committed suicide.Later, after police investigation it was found that husband wife were not the culprits rather it was the girl who used to go around with a boy and when guardians tried to resist her she used to get angry and often quarrel with them and one day she decided to take revenge.So she reported fake molestation charges to police.The two innocent died because they could not bear the desolate from the society. None of the media person ever came up for any kind of apology, showing height of irr esponsibleness. I was shocked after hearing this news. But now a days these shocks have become so common that every time you open a news channel they are ever ready to serve you with some new kind of shock. Mumbai terror attacks showed entirely new face of media. Media reporters are great actors too. They were posing themselves as they are more close to terrorist than the policemen who were fighting there. One of the reporter was lying on the floor and reporting in that posture only, while a policeman was standing beside them comfortably and a news reporter from some foreign news agency was reporting with all ease while standing. More respectful journalist like Barkha Dutt was pretending herself ,which was very easy for someone to understand, that those crocodile tears are not for the nation but for the TRP which is the first and last thing which matters the most to these media..

News channels have become combo pack channels containing a bit of other entertainment channels and these stuffs have nothing to do with any kind of news. These ENTERTANIA channels have done something to the viewers. They have divided them into two groups, one running away from such media and other group enjoying it. People in real search of news are moving towards more contemporary news style like online contents and blogs. But the thing of concern is that the media today is reeling under identity crisis...people have forgotten the role of media in shaping up the society and they think media channels to be a great time pass with every news being a breaking news.

Bailout word itself is depressing...it wont bring back the lost sentiments

2009-01-11T13:39:00.004+05:30

World is rotating at its axis and economic world is rotating over bailout packages. Axis and bailout has analogy here, there subjects would end if they seize to exist. Americans have now become afraid of this word. Every time a bailout is announced it sends a signal to the world that there are another new defaulters in the market and this brings down the sentiments of the consumers further.
This is not the case in countries like India where bailout is being taken in good spirits. There is a reason for this difference in the way same word is being used today. When a bailout is announced in India its basically a economic stimulus package not the bailout like that in America where bailout is being given to save the big defaulters. Bailout of bankers like AIG,Citi and others had brought a depressing effect over the people. I am telling this story because in this grim situation US government should try to improve the sentiments of consumers more than anything else. Until the consumer spending kicks off again nothing is going to happen. Just bailing out the defaulters wont work.US is already reeling with the worst economic deficit in history totaling to staggering $1 Trillion which is almost equal to the entire GDP of India.With that kind of deficit what will happen if situation does not improve after these bailouts as it has been happening till date and government is in no position to bail out further because of low availability of dollar. Even if that does not happen and bail outs work for now, US will generate such a deficit that it will have horrendous impact over its reserves and dollar itself which would give other competing currencies to built their supremacy over dollar.I think this situation is now quite apparent to Mr. President elect too and that is why he recently said that bailing out is not the solution to the problem and they will have to devise some better plan. Hope his economic advisory team which has the best of the minds and experience of the world would soon come up with something which would bring in much needed confidence among the consumers.

Russia's Economic revival may be the revival of COLD WAR era...

2009-01-10T19:54:00.002+05:30

Fall of Russian communism may have sent a good signal to the world and the feel of triumph for the western countries because of their belief that this would bring much needed stability to the world, but the humiliation within the former USSR is becoming evident as it tries to gain back its lost supremacy. Best example to resurgence of Russian might in post Cold War era was war with Georgia. Mr. Vladimir Putin is said to be a man from that totalitarian system which ended with lowering flag above Kremlin. Mikhail Gorbachev, the last president of Soviet Union, said "The totalitarian system has been eliminated.. free election ,free press, freedom of worship, representative legislatures and the multi party system have all become reality." US were the first to recognize and welcome the new independent and democratic Russia.

10 Years after cold war era ended Russia started to grow its economy the high growth rate and sought to regain its lost glory. But in its attempt to strengthen itself it has constantly increased its pre-cold war era activities as it gain economic power. Russia has tried to show that it has always been at par with US even after its great demise in 1991.Russia's war in Georgia and its unilateral recognition of South Ossetia and Abghazia copied the west's recognition of Kosovo in the Balkans, Mr. Putin said unilateral recognition of Kosovo was "immoral and illegitimate". Russia very recently developed and tried to strike a defense deal with India providing Missile Defense System when US was trying to do that.

I seem Russia has still not been able to come out of the COLD WAR era hangover. Russia still has to go a long way before it can come somewhere near might of US. Russia still suffers from low level of income and poverty, per capita earning being just 700$ per month. Divide between the rich and poor is increasing and the corruption in Russian oligopolistic system which is eating it away from inside.

Mental divide still a hinderance

2009-01-09T17:55:00.000+05:30

This is not like my typical blog on economics rather its something related to it through my personal experience. I am in a train and 10 minutes ago was really getting bored so I decided to write a post because the constant murmuring of few people did not allow me to sleep even. I then decided to hear those murmur more seriously as the topic they discussing interested me a bit. They were discussing over the topic : The role of youth in education today.

This train goes from Delhi to Mussfarnagar. Delhi is off course well known but Mussafarnagar is a small town in Bihar, I have never visited it though. Most of the people are from Bihar except few like me and my friend, a couple sitting above talking continuously as the time is really running short for them and a pretty girl sitting in front me and reading 5 point someone. These people will probably drop at the Lucknow Station. Same sense of looking the way people are talking and doing has made me to derive this logical conclusion and this demarcation is so big in India that one can easily reach such conclusions. Again back to the group discussion taking place in my fellow compartment and which has gained even more energy and participation of the people around. I said i have a bit of interest on such topic so I had my own view point over this. As I started to listen to these people I was bit amused over the way the education is imparted in my country and the education system about which these people were talking about.

One person here is a teacher from a degree college in Balia, a place very close to Bihar. His anguish for the students was more than evident. He said, one of his fellow teacher was recently murdered by a student and it was not the first instant that this has happened in his area. It is been happening in regular succession there. This drew my attention even more towards them. He went on to demean the students in his college by giving examples as to how the students produced fake mark sheets and certificates, how they got involved in politics of the colleges and committed crimes to prove that they are best suited to the Indian politics. Another men sitting there started to applaud there own student age when they used to study and used to get beaten hard for not doing so. All of them together produced such a dismal picture of the student and education system that I had nothing to say but to be astonished. My astonishment was obvious, if I had been asked to speak or put me view I would have initiated with all applauds for the youth and would have given evidences has how youth is constructing the future of this nation by there efforts. I had been very proud of the youth of India before I listened to these people but now I think it is not whole of the young Indian lot that making India shine but a part of it and that part is really very small.

I am certainly not happy when I come to know that changing India has not changed much but unfortunately it happens very often everyday. Things have changed a lot in metros but most of the India still remains unvisited by the development. Reason has to be in the roots only. Why the youth from one part of the India is creating incredible India and why some other youth are far away from thinking about development???? We need to change the mind set of the youth and that can be done only by imparting correct education right from the basic level. Correct brining up changes the way one things. I had different perspective about Indian youth because I had been brought up in that way. For me the young Indians are my friends, my idols whom I see on TV and young entrepreneurs but for them its entirely different story. They live in environment where crimes, stealing and murders are part of life. I am still in train and something very disgusting had just happened which I will tell you some other day.

Exchanges Causing Volatility,Cant we go Euro way???

2009-01-06T01:04:00.001+05:30

I might be questioning very fundamental on which current global exchange rate trading fraternity exists but the same economic crisis has made me to think that way. This New Year was not like the past ones. Credit crunched citizens did not spend and enjoy as they were doing in the past. The reason is very obvious, known and talked about in every corner of the world today. Many conclusions are being drafted every second and most of them pointing towards one solution and that being more regulations. Now again a question arises: How much regulation? Applying high level of regulation would question entire concept of free market and having low degree of regulation would lead to disasters like current economic crisis. So, regulation may only be the part of the solution, not the complete solution. Then what can be the other solution??

Euro has turned 10 this New Year eve.Though not much hype was created on this context but Euro has traveled a long way since its inception in 1999 when 11 nations of the Europe agreed to integrate their currency and form a common one.Current economic crisis has shown something good coming out of it. Countries using Euro as currency has somewhat saved themselves from this meltdown and the reason is simple,they have a unified and integrated economic system between them so they are less exposed to the volatility of exchange. "The euro is sheltering businesses from the exchange rate volatility, which has battered them in previous downturns," Barroso said on Monday. "To put it simply, the euro works." Members in Euro community has increased to 16 with the addition of its newest member Slovakia. Currently Euro is covering around 320 million population. That is remarkable achievement for a currency started just a decade ago. Even Iceland which not a EU country is eyeing into euronization. I am not sure, will Euro replace the Dollar as the global currency or not,neither am I much bothered about arguing which one is the best but current insulation from volatility which Euro has provided to its nations has made me think that having a common world currency would save us from devaluating our currencies at the time of such crisis and save us from pathetic government and central regulations. Having a common currency would make trade between the countries lot more simple and markets more susceptible to volatility. I think rounds and rounds of WTO meeting without outcome would then finally provide more leveled play field between developing and developed world.

It was a race of one round. Did India start late or are we about to win?

2009-01-03T23:15:00.001+05:30

It was called a prosperity regime and was thought to be the best one in the world: Western Capitalism.

Whichever nation adopted it, showed unrelentingly high economic growth trajectory. Last century not only saw world wars but also the war between the forms of governance. Industrial revolution made us to think of a good system which would lead to a sustained growth in future. Among the competitors were Socialism or Capitalism,Democracy or Communism. Post world war II saw upcoming of Socialists with Soviet Union leading the Socialist flag. But with the demise of Soviet Union socialist era ended all of a sudden. From that time onwards it was capitalism pronounced by the western world which was thought to be the most compatible system with economic growth and undoubtedly yes, Capitalism made the world economies to grow faster and faster. More and more goods and services were produced into this era and were serviced to the mankind.Capitalism was growing and spreading into the different corners of the world and capitalist nations became richer and more powerful day by day.

While all these developments were making the nations to be called as developed world Indian leaders were living into a hypothetically ideal world made up of Marxist ideologies. They failed to realize that they have lost industrial revolution by 50 years which meant being backward for long period ahead. So, instead of opting for a growth oriented capitalist structure they went for a socialistic approach. India got freedom after 200 years of colonial rule,may be that the fear of past did not allow them to go for a open path and rather opt act in a protectionist way. After losing everything we switched finally from Socialist to Capitalist economy. Results soon started pouring in as Capitalism started doing the same as it was doing to other nations for last one century. Growth was tremendous and soon it was confirm that CAPITALISM was the best for humanity to grow.

India was growing at furious pace.It seemed that after a wait of so many years we finally have got the right path and such a pace of growth will make India a superpower very soon. But as and when things started looking bright soon came a economic disaster which took away with it all the confidence and faith people had in Capitalism. Collapse of market worldwide,closing of big banks,interest rates lowest than ever,deflation due to plummeting demand,many economies getting into recession.Whole world is gripped into the problems which we owe it to capitalism. When the big banks faulted it was the government which came to rescue and took control of these big organizations. It seems world again is looking most socialist today. Private control is automatically going into the hands of government. Bankruptcy of Lehman Brother has same significance for capitalism as fall of Soviet Union had for Socialism in 1989. Both up to some extend signifies end of an era.Suddenly when capitalism was looking best for India now socialism is being said to be a better option. Does that mean that in time to come we will again have to follow the world and will again have to become socialist???

India has a better option. We can use this opportunity to show the world that capitalism has not failed rather given us a chance to strengthen ourselves. World is slowly starting to disbelief Capitalist idea of free economy. They are forgetting that it is this capitalism that has brought prosperity to humanity faster than any other thing on this earth.World has experimented and knows it best that socialist can never be a good option for us. Capitalism will be restored once this economic crisis gets over. Developed world will be heavily effected by this whereas developing nations would have some insulation and this would give chance to the developing countries to shed the gap between them and developed once.Lets see if India is able to make it this time round.

I BELIEVE CAPITALISM WOULD NOT CHANGE BUT RESTRUCTURE ITSELF.

I may not be Gandhi but some part exists…

2008-12-30T02:42:00.004+05:30

The anger of Indians against Pakistan is more than visible everywhere in India now. We want end of PAKISTAN SPONSORED TERRORISM NOW.

I am a free thinker. I won’t comprehend the story until I get to listen to both the parties. This is why in past few days I have tried to get the views of Pakistani people about the current boiling issues between India and Pakistan. My thought is to find a long term solution of the problem and to do this understanding the mindset of the people is most important. I don’t believe completely in two sources of news when solving these types of problems. First is News Media itself and the other source is Politicians.

When you have an emotional attachment or detachment with someone you want him to be happy or miserable accordingly. This is what the media knows best and exploits it to the greatest extent in order to escalate its TRP. They have generated a view into our minds about Pakistan and now using our emotional detachment to make profits. We have now started to love Pakistan’s misery and started to believe that anti-Indian stand of Pakistan can be broken through only one mean and that is war..NOW JUST THINK FOR A MOMENT... We are into the same hysteria which Pakistani people have gone through in last 60 years and made many of them, firstly just the anti-Indian and then the terrorist. Few small groups of people changed the minds of people in Pakistan like this and now media is making us a war loving people. This thought of mine would offend many patriotic Indians as I am being pro-Pakistani but it is up to them to think that are they more patriotic for their own country or are they more anti-patriotic a FOR Pakistan. I am putting this view after taking the thoughts of people of Pakistan and after analyzing them I found exactly same thing is fed into their minds as in ours. One Pakistani man said that in Pakistan all the bomb blasts that happened are said to be conducted by Indian agencies. Off course that’s wrong and the reality is other way round but sometimes a small dozes of so called anti-Pakistanism every now and then has made us to think that the war is the only viable solution. War is not the solution, its an open invitation to more problems. Never think that India would carpet bomb Pakistan and kill the entire terrorist in few days and win the war against terrorism. It would require a hell lot more resources both human and capital and lot of time. It would lead to more loss of life and money which we have lost due to terrorist activities till now and if we fight a incomplete war then its even more waste of money and life because destroying few camps would suppress terrorist for few days but then again new camps will come up. But fighting a complete war won’t be possible because it will come at the cost of all the developments which we have had in recent times. Take example of US. It fought war against Iraq and are still fighting. Same is happening in Afghanistan too. US, most advanced country in warfare, need help of Pakistan to fight a war against a country that does not know anything about modern age technological war. Now just think how much will it take India to fight a war against Pakistan who has modern war weapons, it doesn’t matter how they acquired those weapons and then they have mother of all weapons NUCLEAR WARFARES. It is also sure if nuclear war does happen Pakistan will undoubtedly be using it first because they will use even the last arsenal to stop Indians and Nuclear option may come at any point, last option may even become first, we never know. If Pakistan does that, first city it will target is our National Capital because of its closeness to Pakistan and make it a point that the loss that we would suffer from that one strike would account more even if India destroys whole Pakistan with its nuclear might afterwards. People say war would lead to third world war….Hahahaha…sorry for that unofficial language but irony has made me do that…COUNTRY THAT STARTED NON ALIGN MOVEMENT IN ONE WORLD WAR WOULD BE THAT FIRST TO START THE THIRD AND PERHAPS THE LAST ONE BECAUSE HUMANITY WONT EXIST TO FIGHT THE FOURTH ONE.

Nehruvian Hangover

2008-12-25T00:48:00.000+05:30

India is changing is what we can hear from everyone in our country, whether its a businessman or a small villager at remotest corner . All these developments in recent years have brought immense change to the living standards of the people here. Post reform period has seen wealth of pouring into our country at a pace never seen before in past 250 years or so . It seems path is set now for a new dynamic and vibrant India where youngsters are starving to perform for their nation's glory. Young generation is doing everything to change the we have been doing in last 60 years. They want success and they are ready to sacrifice their comfort and struggle for living better life and a safe future. Post reform period has changed many things and the most important of all of them is the thought process of youngsters . They are more risk taking now , ready to give away their job to fulfill their entrepreneurial dreams . They are not willing to join government job just because their less work and job security. They are adding immensely towards the productivity of our country and their efforts are paying , India is developing at a sustained growth rate of more than 8% for last decade or so.

Youth have made us proud in all walks of life. A serviceman working in a small government firm in a small town of Faizabad proudly says to a mobile repair shop vendor that "don't think i am a fool . You cant charge so much for just this small repair. I also know these things. My son is an engineer." The last statement obviously comes with lot of pride and confidence. Every generation has to make some sacrifice so that the next generation may reap the benefit of that sacrifice. I salute these parents who sacrificed their dreams to fulfill the dream of their children. I salute this young generation who sacrificed their comfort to make a better nation called INDIA.

In India fastest growing segment of people is middle class because they have learn t to sacrifice .They are small businessmen and servicemen. They want their children to move to big cities and work their .I asked my father for a trip to Malaysia as these days cost to travel have come down considerably .He replied "son, I have made an investment and when the returns come i will surely go .Malaysia is a beautiful place I have heard." I asked "what investment and where??" He said "its you . Its you who can take me to Malaysia and if i go to Malaysia then how will i pay for your college fees . Choice is never between good or bad its always between good or better, better or best."

Their sacrifice has made me an engineer and now a MBA aspirant . My story is story of modern India. Its story of common middle class family in India .

BUT Something is bringing in frustration in youth. Why cant our policy maker see our zeal and passion in us? Still same problem of unemployment, Still civil amenities lack. Problem from that side are innumerable.

Why are we failing to reform more now? When everything is so clearly visible about opening up of sectors and good coming afterward then why still government bodies with so many of highly qualified and learned people fail?

Its because of the age they have lived in . They lived their times In Nehruvian age .Post independence era made us closed economy .Our policy makers did blunder when they decided to follow socialist path than a open economy .Nehru was our hero that time and everybody thought whatever he does was right .We accepted his policy as the best in the world .But closing up of economy had terrible impact on us .Our growth was virtually stagnant.We followed so called golden path , both Capitalism and Socialism , so as to again benefits of both the systems but we ended up caught up into the side effects of the both these systems.We failed miserably in providing equality that the socialism promises and on the other hand we failed to develop with the momentum with which other Asian and western economies were developing. We didn’t even learn from other Asian economies who were opening up in 1960s , 70s and 80s. Japan reforms came in 60s then came Malaysia, China, Taiwan, Indonesia .All made huge progress but we never took them seriously .Ultimately when our economy was in verge of collapsing then came the reforms which took only 8 hours by a team to 3 great economist and Politician to end a deadlock of past 40 yrs and rest is history .India started growing to become one of the fastest growing economies of the world .But even now our Politician feel good about Nehruvian system .This may be because they are not ready to adjust with current system .They are not fast enough to make new policy or amend the new one , thanks to Nehruvian age. Nehruvian age has made whole of our system inefficient. Still police functions old fashion. Big government bodies are still the market place for all corrupt practices. Again thanks to Nehru for making civil services the most valued post and then post civil servants to run government industries .Mr Jawahar Lal Nehru once said that these big industries are not meant to make profits but to provide money to the poor .This could the weirdest way to make poor rich.Government wanted to make poor rich by making rich poorer.What a disgusting stand.Most of the people in most important posts in our country belong to that age and they have seen only the lazy and lethargic India and they tend to continue with that way of working. Now since most of this people are in politics or government sector so undoubtedly these are the center for all the lethargic activities of India. So its time that old generation should take retirement if they feel they cant bear the burden of ultra fast Indian development and pass the baton to new age sprinter. Now its not just about running in the race...its about winning and speed is SUPERSONIC.

Our leaders did not have much sense of governance and economics and their successors are still not able to get out of those days hangover .

History repeats and changes..

2008-12-25T00:36:00.000+05:30

Economic turmoil has set economist across the globe debating about best economic system which could immune this world from such crashes in future.Looking into the past suggests us that whichever way of economic administration we follow or whatever theory economist suggest...CYCLE OF DOWNTURN AND UPTURN goes on and on.Free market or Marxist way or Keynesian way to control the uncontrolled..debate will go on.
History is repeating.Great depression, which is the most dreaded event of our economic history about which it was thought that we have learned enough now to keep ourselves aloof from it, is once again in minds of everybody around the globe.
There are many analogies between the GREAT DEPRESSION and 2008 economic disaster as many may quote.

The Great Depression was not triggered by a sudden, total collapse in the stock market. The stock market turned upward in early 1930, returning to early 1929 levels by April, though still almost 30 percent below the peak of September 1929 .Together, government and business actually spent more in the first half of 1930 than in the corresponding period of the previous year. But consumers, many of whom had suffered severe losses in the stock market the previous year, cut back their expenditures by ten percent, and a severe drought ravaged the agricultural heartland of the USA beginning in the summer of 1930.

Now compare it with situation today.Stock markets in US has crashed and government is out with bailout packages which may some how resist the current downturn and even help DOW and NASDAQ to take a break from riding bear and move up but next year when consumer would cut their expenditure by 10 percent or 15 percent could lead to another great crash of stock market and with banks and big sectors already faulting at regular basis,commodity prices continuously hitting low and unemployment hitting highs,are we heading towards another Great Depression.Lehman brother could survive great depression but failed to do so in this turmoil.Will situation get worse from hereon???

Certainly Yes,history repeats itself.We may not fall into the lows of that period but things will be difficult in times to come.Cities all around the world will be hit hard. Real estate sector will be virtually halted in many countries. Steel and other commodities have already suffered from price fall by roughly 30 percent. Facing plummeting demand with few alternate sources of jobs, areas dependent on primary sector industries such as farming, mining and logging too will suffer.This all seems very similar to what has happened around 88 years ago.

But history does not only repeats, it also changes the way this world functions.

The global economic depression of the 1930s had a crushing and widespread impact on Latin America, forcing Latin American nations to change their economic policies away from export-oriented growth and more toward the long-neglected diversification of their economies. In particular, these nations toward an endogenous economic model based on industrialization. The economic crisis and the endogenous reforms that resulted from it led to significant social and political consequences and major transformations of social structures within Latin America.These changes helped US to build better economy and become a economic giant for next 100 years or so.

This turmoil has opened chance for the world again.This is a great chance for developing countries like India and China to shift the economic power towards themselves but that would require more than just the government determination. India and China with large skilled and cheap human capital can make use of this opportunity to strengthen economy.New York can be replaced by Shanghai or Mumbai or Bangalore as economic capital of the world.Developing countries like India have already started getting some benefit from this recession as big companies have started outsourcing more to developing ones in order to be cost effective and save their balance sheets from drought of funds. Asia can come out to become next economic hub when this recession gets over. Unipolar economic world might not remain same in next 20 years.

Let us see will it be US for next 100 years or will there be a replacement this time.