World Financial Crises – Is it a terror attack?

We all are about to be engulfed by the wild fire of the US credit crisis.

It is surprising to note that despite the US Govt. having passed the bail-out package still the markets are behaving in a very irrational and illogical manner.

This seems to be a handiwork of the hins and the operators in the market who always play on the short side.

Or is this called as almost a kind of attack by terrorist. Report by Medical Research Association shows that in US 75% Male & 86% Female are impacted due to financial crisis and 22% Male & 15% Female are on alcohol.

If this can impact such a large size of population don’t you really think it’s called a terrorist attack?

I have certain suggestions which may be refined based on the need and applicability to save the situation.

1. All short sales should be curbed immediately until the markets improve by at least 15-20% from the current levels.

2. A concerted campaign must be unleashed to inform the general public that the financial system of India is robust and there is no cause for panic. This should not be done on a piecemeal basis and not when a near panic situation arises-a case in point is that of a rumor doing the rounds that ICICI Bank is going bust. The Govt. (FM), RBI , SEBI & NSDL chiefs of the stock exchanges have to play a pivotal role and should educate the lay investors that there is absolutely no cause for panic.

3. Once this is done, the redemption pressure on the mutual funds and the ULIP insurance companies will ease considerably. Thus, they would not be forced to liquidate their holdings in the markets.

4. Similarly, the Govt. should also notify certain additional tax breaks for investments in the mutual funds. This would enable the funds to garner additional funds for buying securities in a falling market to stem the fall.

5. The US Govt. should be advised to stem the fore-closure of the housing loans by taking appropriate steps. This would reverse the whole cycle of defaults/redemption s etc.

More then anything else believing in India story and make other believe will be the key in the bad time. I know some of us are thinking its good everything is going down but think it this way…if everything goes down…may be your employer / or business will also go down and we will be out of job.

Regards,

Prashant