Let me confess at the outset that I have been a lifelong free market entrepreneur. A heavy hand of the government has been an anathema to me and my core beliefs. Yet, the current financial crisis has given me a pause and a reevaluation of my fundamental thinking. I still vehemently oppose the communist-socialist logic but my confidence in the free market is definitely shaken. I was always aware of the inherent risk in credit card business, both for lenders as well as the borrowers. What shocked me most was the lunacy of the regular banks and their current lending practices. The mortgage market has been on the thin ice, I sort of suspected. What came as a total surprise to me was the selling of the risk by the regulated banks to the non-banking financial institutions. If a Bank of America, Citibank or J P Morgan Chase did some hanky-panky, I could understand that, but an ICICI Bank or an HDFC Bank in India taking such liberties was beyond my imagination. I have been quite familiar with the culture at the ICICI Bank and HDFC Bank in India. For these two banks to loose confidence of the depositors in favor of the State Bank of India is beyond my wildest imagination. This rare public sector victory of some sorts would have far reaching implications in Indian market and beyond. The Left-Parties in India are bound to throw this in Dr Manmohan Singh’s face. Just THINK about the collateral damage!
Filed under: Corporate India, Indian Economy, Indian Politics, Indo-US relations, International Tagged: | Bank of America, Citibank, Communist, confidence in the free market, current financial crisis, Dr. Manmohan Singh, free market entrepreneur, HDFC Bank, heavy hand of the government, ICICI Bank, India, J P Morgan Chase, Left Parties in India, Socialist, State Bank of India
Don’t feel shaken, you just are viewing the free market incorrectly. At times, due to massive manipulation of money and credit, people are fooled into doing things they would not otherwise do.
The free market did not cause the crisis. Just as it would be absurd to say the plane crashed because of gravity, it is absurd to say the crisis was caused by greed. The reality, is what enabled the greed, and that is an unnatural, non-free market entity: the federal reserve.
The central control of money and credit destroys the economy, and has nothing to do with the free market.
Check out Thomas E. Woods Jr.’s amazing book on the crisis called “Meltdown: A Free-Market look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse.”
- Trav
Please email me if you’d like to chat more about this.
Thanks Travis, my instincts are to agree with you but your observation appears to be based on American or European experience. I was talking more globally, especially Asia!