Woke up this morning and reluctantly (all the bad news) turned to the business section of the NYTimes, and was intrigued by this piece....
Talking Business: How India Avoided a Crisis By JOE NOCERA.
As the financial crisis and the real estate bubble here imploded I wondered how India was doing for it has been growing by leaps and bounds lately. Did they avoid this? How did they?
This article does provide some insights on this. India has been rightly critiqued for it's excessive regulatory policies (and rightly so at times) but this does appear to be a good example of perhaps what Alan Greenspan should have been doing.
Snippets from the article below...
“What has taken a number of us by surprise is the lack of adequate supervision and regulation,” Rana Kapoor was saying the other day. “This was despite the fact that Enron had happened and you passed Sarbanes-Oxley. We don’t understand it. Maybe it’s because we sit in a more controlled economy but ....” He smiled sweetly as his voice trailed off, as if to take the sting off his comments. But they stung nonetheless.Yes because enough fools believed that the free market can correct or regulate itself. An unregulated free market was to make all of us rich!
Yet two years ago, the Indian real estate market — commercial and residential alike — was every bit as frothy as the American market. High-rises were being slapped up on spec. Housing developments were sprouting up everywhere. And there was plenty of money flowing into India, mainly from private equity and hedge funds, to fuel the commercial real estate bubble in particular. Goldman Sachs, Carlyle, Blackstone, Citibank — they were all here, throwing money at developers. So why did the Indian banks stay on the sidelines and avoid most of the pain that has been suffered by the big American banks?Part of the reason is cultural. Indians are simply not as comfortable with credit as Americans. “A lot of Indians, when you push them, will say that if you spend more than you earn you will get in trouble,” an Indian consultant told me. “Americans spent more than they earned.”