phew .. october just flew by without a post ! What on earth was i doing ? Just two things broadly — (a) really trying to be regular about my meditation. (b) following the ongoing financial tsunami. No school can better the real time education from current events, i say. Since we live in the age of ‘homo economicus’, our handling of economy, more than anything else probably, says a lot about our priorities and state-of-the-species.
So, without further ado, let me present my thesis on state of affairs. Wait .. thats still cooking. In the meantime, let me serve up a random email moment, and save it from being forever lost to public eye among terrabytes of archived data at google warehouses. ( not that it specially deserves the honor or anything 
)
Yesterday, a cousin sent me an email, about a story on how the current global bumpy-ride is affecting real estate markets (and some unfortunate players) in India ..
The story (unknown original source)
The real estate industry that was the major stepping stone for the city of Hyderabad to come into the world focus has now become a barren tale of losses, suicides, dashed hopes and what not. Given the fact that the growth rate depended mainly on the NRI funds, the economic recession in the US has shown its power and thousands of people who have literally changed their lifestyle in the real estate dream have now landed in a major mess.
A large chunk of the downfall can also be attributed to the success of K Chandrasekhar Rao and his TRS party that gave the big companies to come up with a new concept of Andhra and Telangana and start selling lands. Crores of rupees have been spent in buying the lands and today not one unit linked to the real estate stream is in a position to breathe properly.
The farmers who got used to lavish lifestyle after tasting money ended up with big loans from banks for cars and houses and now they are unable to pay up. Many youngsters who took to this field with the idea of quick money have now lost their livelihood and are on the verge of suicides and absconding. Many companies who have spent crores of rupees buying acres of land are now hunting flies unable to send a single plot. They have now compromised that a break even price is more than sufficient profit.
Hot spots like Kokapet, Narsingi, Puppalaguda, Madhapur, Shamshabad and many other places were given undue hype during the boom and crores of transactions took place by selling the ‘real’ dreams. This was the scene about an year ago and today, things have turned for the worse with not a single penny being spent and those lands that were priced at crores per acre are not finding a buyer even at the rate of few paltry lakhs.
The recession began about a year back and just when experts were thinking that it will be alright in a year or two, the financial crisis in the US market and the current political confusions have added to the woes. On the smarter side, few big companies who anticipated such things have slowly shouldered few ventures on the lesser players and have taken their cushion.
This has shown an adverse affect on the financial institutions here unable to deal with the increasing loan defaulters and their money stuck with many who jumped into the real estate stream. Even the registrations department has shown an alarming dip in the number of registrations given the present condition and there seems to be no ray of hope at least for sometime.
At this rate, it will be a long while before things will come back to normalcy and it remains to be seen how many lives get plundered in this resurrection.
My quick-and-dirty big picture response
I wouldn’t blame the politicians fully. where is people’s discretion ? People who have leveraged beyond their means to pay back, will have to suffer the consequences of their actions. People who are prudent and bought only stuff they can afford to pay even in rough times, will survive. Yes, politicians whipped up the sentiment, but there can’t be a clap without two hands. Ofcourse, there are always people who genuinely bought their first homes at high rates, because they feared they’d otherwise never be able to afford in the future. Lot of innocent people got caught up in the frenzy. Unfortunately, those innocents are the collateral damage in any bust, be it dot com, or real estate or tulip bulbs or stocks.
I agree, overall india will not be immune to the current global downturn. Although, i think it will be less impacted in the short term because various factors like high savings rate, relatively less exposure to globalization, currently low commodity prices, demographics etc etc.
Long term (and iam talking 10 20 30 years), i believe all our economies have a problem when we start to hit physical constraints of the planet — energy, resources, climate etc. The current crisis is just man-made (financial). we can get over this, given enough time. But, we ought to be very careful about not going into physical constraint crisis, without adequate restructing of economies away from consumption oriented economies to simple low footprint sustainable economies.
But i don’t see any such measures currently. If you follow the discourse in the US, its all short term thinking. They are asking banks to lend, lend, lend, repeating the same mistake, trying to stimulate the economy articially again. Who will they lend to ? How will people pay back ? The consumer is tapped out. There should be more emphasis on getting people to save and repay national debt.
my 3 cents
